A comprehensive strategic plan does for your existing business what the business plan does for start-up businesses: It establishes the direction and action steps required to grow your business. SWOT stands for strengths, weaknesses, opportunities and threats. A SWOT analysis is important to strategic planning in identifying key internal and external influences that are responsible for your company's current position, and that favor and inhibit the prospects of moving it to where you want it to be.
Your Battle Plan
Strategic planning requires an objective assessment of the strengths and weaknesses of your available internal resources. Your internal resources are variables under your control. This is analogous to an army general taking inventory of his war materiel and "boots-on-the-ground" fighting capacity. He will not engage the enemy in combat before compensating for deficiencies in his war-waging capabilities. Strategic planning also requires an objective assessment of the external forces — the opportunities and threats — over which you have no direct control. Similarly, the general will reconnoiter his enemy's fighting capabilities and the lay-of-the-land where he will engage the enemy. He will use the battlefield terrain to his advantage and not cede those advantages to the enemy. Moreover, the general will adapt his engagement plan to minimize the hazard of enemy threats that could endanger his troops.
Internal Resources
Your SWOT analysis is implicitly an exercise in relativity — relative to your competition. You must first precisely define and identify the businesses that are your competition and your reasons why. Your strengths are those internal resources where you enjoy a competitive advantage. Your company-wide assessment of strengths could include product or service superiority, first-mover advantage, cutting-edge distribution and logistics, patent exclusivity, product or service development dominance, and excellence in marketing and sales. The same applies in reverse when assessing your internal weaknesses. Your internal resources may not be readily apparent. The key is to ask: Where do we excel? Where do we fall short?
External Forces
External variables are opportunities and threats over which you have no control. These are market and industry-driven forces that characterize the customer and competitive environments of your business. Market and industry-driven changes can present opportunities and threats to your business. Consequently, view your customers and your competition from the competing perspectives of advocate and antagonist. A few examples of external forces that could present opportunities or threats to your business include changes in demand due to opening or closing of important market segments, aging or emerging distribution models, competitor's first-mover advantage, technology changes, and changes in customer spending due to lifestyle or economic factors
Tried and Proven
SWOT analysis has been an integral part of strategic planning since the 1960s. Proposed improvements to SWOT analysis over the years appear to be refinements to the general SWOT technique. Regardless of the technique employed, you must assess the internal and external forces that regulate your company's ability to move to the next level. SWOT analysis has delivered on this mandate for thousands of businesses simply because it withstands the test of time.
References
Writer Bio
George Boykin started writing in 2009 after retiring from a career in marketing management spanning 35 years, including several years as CMO for two consumer products national advertisers and as VP for an AAAA consumer products advertising agency. Boykin mainly writes about advertising and marketing for SMBs.
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Any business needs to look into their selves to get settled up in a market or to complete the desired project within a deadline. To run a successful business one should always evaluate processes to ensure whether you are working up to your efficiencies or not. Without evaluating one cannot find loopholes in the product marketing and other important processes of the company.
The best way to look into and evaluate to make strategic planning of the company is a SWOT analysis. SWOT analysis helps to evaluate a company or a certain project. Many benefits of swot analysis in strategic planning.
SWOT analysis is a method created by Albert Humphrey of Stanford Research Institute in 1960. SWOT, term is an abbreviation of Strength, Weakness, Opportunities, and Threats. With the use of SWOT analysis, a business can be settled up or can get a desired pace of growth.
Let’s know what SWOT analysis exactly means and how it helps to evaluate business or project process.
SWOT analysis provides information about resources and capabilities to the competitive environment in which it operates. To cope up with a race in the market every business should run a SWOT analysis often.
Strength
Every firm has its special abilities that differ from its competitors. Such abilities of the firm keep them ahead in the market race. To run a business process a company needs strong resources. These resources are one of the elements of the important strength of the company. If the staff of a particular company is specially trained and able to run crucial processes in a simpler way and the given deadline, the company can complete any project in terms of quantity as well as quality.
If a company has a specially designed product or a concept protected with IP laws that become tangible assets of the company. Every employee is a valuable asset to the company. If someone is bad at something he must be good at something else. Every company should know its staff very well. Skillful staff is the strength of the company. If a company knows its strength it can face any problems and can run any heavy project within the desired time.
Weakness
It’s not like that a company always has all the strength. There are always some lacks in management, production, or staff productivity. If a company knows where it lacks then only it can work accordingly to reduce lacking points and boost up productivity. If a competitor does a thing better than you then there must be some lacks in your firm’s management.
If you keep an eye on the activities of your competitor then you can evaluate where your company lacks. By overcoming this lacking points a company can boost up productivity and work towards achieving goals. If resources are the strength of any company then it is obvious that if a company doesn’t have enough resources it becomes a weakness. Getting known about your weaknesses can help to give a pace to the company’s growth.
Opportunities
Opportunities are the only way too rich to the success point. If one grabs an opportunity at the perfect time that can be the ladder to the limitless sky of success. Being updated with the latest technologies can open up the doors to more opportunities. If a company studies unfulfilled customer needs and provides services and products for the same that can be the profit-making thing for the company.
Many times government’s rules and regulations become a hustle for business. Removal of such regulations can create more business opportunities. Every business wishes to expand internationally. Removal of barriers in international trade opens up endless opportunities to expand the business. Once we know opportunities then we can work towards achieving goals.
Threats
Threats are those that can damage your organization or its product. Threats can prevent the manufacturing of a product of the organization. In a digital era, every day dawns with new technology at hand. Customers are always being in search of new products and services. The updating technology brings a shift in consumer’s tastes. If your product doesn’t match to consumer’s needs then it can be a barrier in the company’s growth.
If a company keeps updating its products based on consumers taste then only a company can survive in the market. The government’s new regulations can prevent growth in the company’s business. Trade barriers can become the biggest threats to the company’s growth. Emerging competitors in the same business with higher qualities and lesser cost can make your business full of hustle. One should always know about the threats that prevent a company’s growth.
All the companies should run a SWOT analysis process to look into, evaluate and overcome drawbacks in the production process. Unless and until a company knows about its strength, weakness, opportunities, and threats, it can’t achieve a goal they are willing for.
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