Most business organisations are increasingly adopting all sorts of measures and policies today to establish themselves at the top. The competition in the Indian markets is cutthroat, with various new entrants rapidly drawing attention and steadily progressing towards the aim of market domination. Each business has the main objectives of survival and continuance of operations, increasing the profits earned and expanding their business. An efficient mechanism to help achieve these objectives is SWOT Analysis.
SWOT Analysis is the abbreviation for Strength, Weakness, Opportunity and Threat. It is a measure or a matrix containing information of any and all possible advantage and disadvantage to an organisation. Hence, SWOT Analysis helps in the research and development of the goods and services provided by the business, as well as all benefits and drawbacks the business is subjected to in the market environment.
Breaking down the components of SWOT Analysis, Strength can be described as the internal factors of a business that are positive and add to the benefit and profit of the business. It refers to the morale and motivation of the employees, a strong channel of communication, efficient division of work and so on. A Weakness refers to an attribute that is internal to the organisation and results in a disadvantage to the business or hinders its output, productivity or revenue generation. Weaknesses include lack of specialisation and division of labour, too much centralisation of work resulting in delay in decision making and workflow, understaffed departments and so on.
The external factors of the organisation that forms part of the outer environment of the business refers to Opportunity and Strength. An Opportunity refers to a situation where there is something favourable to the business that the business can use to its advantage. An example in this regard can be an opening in a foreign market which the business organisation can expand its operations to or an offer for a partnership with another company outside of India in order to expand operations. A Threat is an unfavourable situation in the foreign market that causes a disadvantage or potential harm to the business organisation. The most pertinent example in this regard is the entry of a new and strong competitor in market. The expansion of a renowned company can be a big threat when diversification of range of products is indulged in.
SWOT Analysis is usually done in the form of a matrix with four columns, one component in each column. After thorough research, each column is filled with all the possible data that is relevant for the business organisation. After the collection of all the data and categorising the same, the SWOT Analysis is ready to be observed and drawn inferences from. The organisation should build on maintaining the Strengths, building on the Weaknesses to develop them into positive features, tap the Opportunities by immediately work towards them and safeguard itself from the Threats. This could be done in multiple ways such as improving the quality of goods produced, improving after sales services and so on.
A SWOT Analysis is immensely important for the prosperity of a business organisation as it makes the organisation aware of what traits and practices must be maintained and all the possible changes that need to be made to fulfil the ulterior motive of the organisation.
Tags : Business