University of Chicago
Type of paper: Thesis/Dissertation Chapter
WOT analysis: a tool for making better business decisions
SWOT analysis is defined as a list that is usually organized that outlines the business’s greatest strengths, weaknesses, opportunities and threats. Conducting SWOT analysis helps the business owner to develop better strategies by making sure that all the factors that affect the business are taken into account. Both the strengths and weaknesses are concepts that come from within the business, for example, patents, location and reputation. The factors affect the business directly both positively and negatively. These factors can be changed over time, but some work has to be included in order to realize a tangible result.
Furthermore, opportunities and threats represent the external factors that affect the business. For example suppliers, prices, changing market trends and pricing. All these can work in favor or against the business. These factors cannot be changed by the business owner and they should be embraced and the business should be able to adapt to changing times and trends. In order to carry out a successful SWOT analysis, it is required that different people get involved because of their varied perspectives. For a successful SWOT analysis, it is required that members of management, customer service and also the customers participate in order to give a different insight into the review.
For a successful SWOT analysis, it is important to compile all the data collected from the participants and then prioritize it. The purpose of prioritization is to enable management to improvise both long-term and short-term strategies for the business. However, the only importance of this analysis is to strengthen the good about the business and at the same time rectify the weaknesses. This can only be done while making the business ready for more opportunities and watching out for the threats that could befall the company in the future. The only requirement for being ready is to identify where the strengths, weaknesses, opportunities and threats overlap. Sometimes, this is referred to as a TOWS analysis SWOT analysis is required to identify and provide solutions for correcting the weaknesses, while at the same time making the business ready for any threat. For example, a strength-opportunity strategy is one that is developed when the business identifies its strengths and intends to use them to capitalize on the opportunities. On the other hand, a strength-threat strategy is where the business uses its strengths to cushion itself from potential and expected threats. A strength-weakness strategy is adopted when the business identifies its strengths and used them to improve on the weaknesses that it has. Finally, a weakness-opportunity is a strategy adopted when the business seeks opportunities that would uplift the weaknesses so that it can be strong all round so as to ensure maximum profitability.
In conclusion, SWOT analysis avails the business a new perspective in terms of identification of areas that could have otherwise gone unnoticed. Carrying out an analysis is required especially when there are imminent factors that could benefit or threaten the business. It is, therefore, required that review meetings be organized as often as possible in order to evaluate the strategies developed as a result of the SWOT analysis. Also, through repeat review, the business can identify new opportunities, threats, weaknesses or strengths that can in turn develop as a result of the implementation of the SWOT analysis.
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