Strategic use of a SWOT analysis

The SWOT analysis is usually used in analysing a company, business or operation not only on its own in order to identify areas where the firm has done well and areas that are dragging performance but against competitors within its industry. The SWOT analysis will provide management a view on the business' strengths which should be built on and not lose focus on as other opportunities are addressed within the business and operations.

The weaknesses are the areas which management should explore further into why the weaknesses are there in the first place and what can be done to rectify issues or lack of performance in those areas. Some weaknesses can be structural and out of the business control such as scale of operation to compete against bigger multinationals. These weaknesses can be turned into strengths by creative brand and product offerings as an example.

Opportunities are generally operational areas or business ventures which can provide organic, entry into new markets or acquisition based growth for the firm and increased efficiencies. These can and should be explored further by the use of problem analysis tools, continuous improvement techniques and strategic analysis and fit for potential acquisitions. The threats are factors or potential risks which may erode business value and profitability. Strategist and consultants usually analyse and map out these threats with the use of a strategic analysis within the firm's industry and propose business solutions and goals to lessen these risks.

The strategic use of the SWOT analysis lies in performing the same study for all competitors in the marketplace and placing them side to side with the SWOT analysis for the firm in question. The threats and weaknesses of the competing firms can sometimes lead to ideas that can generate opportunities and business strategies that could increase in market share. The strengths and opportunities of companies may provide insights into how they have become large or dominant players and how these strengths provide them a competitive advantage in the industry.

Exploiting competitor's weaknesses such as inferior product quality or product ranges, higher production costs, limited geographical reach, or unorganized management can place your business a few steps in front of the competition. A great deal of analysis and resources may be spent on performing this type of analysis on competitors, but the analysis can yield good results which may provide strategic direction, business and sales stretegies to become a strong competitor against other businesses and achieve a strong market position.

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