1. Resource allocation:
Many times businesses misplace valuable resources. Resources may be human or finances or even hardware. For example an employee with great talent in converting a lead into a customer should not be spending majority of his time on preparing analytical reports. Performing a thorough SWOT enables the management to identify the firm’s weakness in spending too much time on analysis and reporting, while on the other hand it sees that the same resource could be much better employed in raking in revenues through winning new customers.
2. Uncover unexpected prospects:
New prospects can arise from unexpected areas. For example, if a locality already has two grocery stores, the opening of a third one that sells organic produce and has an attached café that serves organic food to its customers would put this business ahead of the other two; especially if its pricing is competitive. In order for this third business to have made this decision to sell organic produce, it would have had to be aware of its competition and what they do and do not offer. The business uncovered an opportunity that was previously untapped. Business SWOT analysis thus shows itself to be a valuable tool to drive success.
3. Risk Mitigation:
Part of strategic business planning includes assessing potential threats in the external environment and creating a Risk Mitigation Plan in the rare event that the risk happens. For example: Planting specific species of trees in the neighborhood, to turn away environmental activists’ attention from having cut down the same species of tree for manufacturing purposes.
4. Identifying shortfalls:
If a business does not realize the areas in which it is weak, it will be left without being aware of its areas for improvement. Such ignorance could cost the business its profits and eventually lead to its downfall. Example: If the business is not strong on organizing its data, it must identify this weakness and make plans to acquire a technology that can automate the organization of data successfully.
An organization’s continuous awareness and hence regular scanning of its internal and external environments is an essential input to Business growth. Swotcompare.com offers a brilliant easy to use tool for this purpose. The impact and roles of factors considered by the PESTLE analysis (Political, Economic, Social, Technological, Legal and Environmental factors) can be assessed using www.swotcompare.com