All businesses – from major corporations to a single-person, home-based business – must keep up with the changing times, marketplace and competition. It is essential that managers, leaders and business owners conduct a SWOT analysis. This is a very important tool in making the strategic plan, setting goals and creating objectives for the business. Without properly conducting a SWOT analysis, the company is doomed to failure.
What is SWOT? It is an acronym for a company’s internal strengths and weaknesses and the external opportunities and threats. It provides key information that helps managers match the company’s capabilities and resources to the competing environment.
One company may offer a strong brand name and a high quality product. However, the business may not be able to produce the product at the lowest possible price. Another company may produce a similar product at a lower price. However, it may have a weaker brand image than competing companies. These are both examples of internal strengths and weaknesses.
The external environment is often unpredictable. Managers in any company must look at opportunities to help gain and maintain the competitive advantage. They must be innovative by creating, testing and introducing new products to the consumer. They must look into emerging technologies that will benefit the company in the long run. They must be aware of the threats that would impact the company. The most common ones are the increasing cost of living, such as rises in fuel and medical prices. The consumer needs are constantly changing. What was hot last year may be out dated this year. Another threat is the competing markets. If other companies are offering similar products, consumers will purchase the product that costs the least.
The information gathered from a SWOT analysis can be used in many ways. These include:
Showing where the business stands in the competing environment.
Focusing on opportunities that tie in with the organization’s internal strengths
Focusing on the strengths and make use of the opportunities
Using the strengths to lessen the impact of the threats.
Lessening the weaknesses by focusing on the opportunities
Avoiding threats.
eBay auctions have been around for years. I shop whenever I want something. Nine times out of ten, I will find a product at a lower price than at a store. This organization’s strengths would include amazing use of Internet technology and a large diversity of products offered by the sellers. Weakness include dissatisfied users, this is either where a customer does not receive an item after paying for it or the seller does not receive payment for a product. Another weakness would be having to wait for the product to get shipped. When customers buy something, they want it as soon as they pay for it. Sometimes it may take a week or longer to finally get the product.
The opportunities include excellent growth potential. More and more people are selling items on eBay. eBay offers an international presence. Individuals from different countries sell and buy on eBay. eBay improved its presence by offering fixed, or buy it now, prices. This way customers do not have to wait until the auction ends. eBay also has an excellent use of innovation and technology by giving the sellers the option to set up storefronts where they can list items for a longer period of time. While I enjoy shopping on eBay, the increases in the cost of living prevents me from shopping often. After paying bills, filling my car with gas and getting groceries, I usually do not have the extra money for pleasure spending. Competition from other sites, such as Amazon, is another threat. With lower fees, people list their products on the competing auction sites.
