Perhaps in a business, there is a strategy that seems effective. For some reason, it is not producing what was expected. So, they must rethink the strengths and weaknesses of a company. The solution to your problem is called SWOT. What is swot analysis? It is the internal analysis of a company to detect strengths and weaknesses, as well as external factors: opportunities and threats. In this article, we will explain What is swot analysis and how you can use it to improve the performance of your company. In addition, we will talk about the main strengths and weaknesses of a company.
What is swot analysis?
As mentioned before, the SWOT analysis is a tool used to understand the current situation of a company. The purpose of this tool is to help you diagnose the status of your company to foresee and solve.
With the help of SWOT you can detect:
Strengths of a company: Those elements that make your company strong and different.
Opportunities in the environment: These are factors that could benefit a company, or affect it if they are not recognized on time. Among these factors is the economic, cultural, technological, etc.
Weaknesses of a company: They are the problems that your company presents and that place it in an unfavorable position compared to the competition.
Threats in the environment: Variables present in the company that may turn out to be negative for their development and which, when recognized. It may turn into opportunities.
Strengths of a company
Strengths are used to determine what your business does best. If you know the strengths of your business you can exploit them to beat your competition.
For example, you can evaluate the performance of your staff and the capital you use to expand your business; imagine that there is great growth in demand for your product, so you could start exporting. Now think that both your work team and your capital are stable. If you compare the external situation (opportunity of expansion of your business) with the inside (good results in your business). Then you can say that you have strengths in a company, to such an extent that you would generate the expected results.
In short, the strengths of a company:
- Proper advertising and promotion
- Effective customer service
- Clear profitability of the business
- Possibility of investment to expand
- Constant flow of cash
- Possibility of rewarding your employees (vouchers, incentives, bonuses, etc.)
- Excellent work communication
- Motivation and empathy with the staff
- Product control (inventories)
- Logistics (transport of products)
- Efficient work tools (technology, instrumentation, furniture, etc.)
- Excellent leadership
Opportunities for a company
In this case, the opportunities for a company based on external factors. The options offered by society and from which we can take advantage to grow as a company. In this sense, there are different market niches that we can find which must be used together with our strengths to generate the desired profitability.
How to know an opportunity for a company?
If you already started that business and want to know the opportunities of what you offer, then ask yourself the following questions:
- Does your product or service raise its cost due to socioeconomic issues?
- Do climatic or seasonal issues influence you to sell your product or service better?
- Does your product or service raise its cost due to shortages in your area?
- Is there little or no competition for your business?
- Can I expand my product or service to another area where I know the market will consume it?
- Ideas for a business that nobody has thought of how to add an extra to the product or service?
Weakness of a company
There are also business weaknesses that give us a pessimistic strategy. One of them could be anything that your business has difficulties. If you are about to start a business, falling into this would be the worst thing that can happen to you.
Sometimes entrepreneurs, and even big businessmen cling to a strategy that is to their liking, the problem is that such nonsense may not produce results. The opposite: money is lost, time is badly invested, customers abandon us, etc.
You always have to be realistic with the strategies we have, and if one hurts us, you have to discard it, even if it seems like a good idea at some point. Open a restaurant and put a dish on your menu that you love but not customers. Then you should reconsider whether or not you leave that option in your menu, as much as you like to eat that dish, you should not impose it on people. Keep reading opening pet store step by step.
Let’s see briefly what the weaknesses of a company are:
- Lack of communication
- Bad money management
- Lack of receipts and invoices to control inventory (theft and loss)
- Misassigned charges
- Lack of adequate market research
- Inefficient or no employee training
- Apathy with the staff
- Lack of good leadership
- Inefficient advertising both physically and digitally (not having an official website)
- Use of inefficient tools or equipment (obsolete machines, very worn artifacts, etc.)
These are some aspects to assess to know the strengths and weaknesses of a company. It is not enough to only review one, you must be meticulous, analyze the pros and cons of your idea and recognize the external and internal factors that could help you.
It is not necessary that you get stuck in a single idea, you can analyze your tastes or what you can do to transform it into a business. Remember that there are several opportunities to start a business. You can even start a low investment business if what you Worry is the initial capital.
Threats of a company
The threats of a company, like the opportunities, are an external factor. In this case, both are harmful to our business. You have to analyze the market well to see what factors represent a danger.
A possible threat would be to have a very small business. Imagine that we have a mini-store in very small facilities and that together with a Walmart, obviously represents a huge disadvantage. So, we would have to reconsider our location since not doing so would only be a pessimistic strategy.
Some threats to a company are the following:
- Mainly competition (direct or indirect)
- New trends that would render our product or service obsolete
- Decrease in demand for our product or service thanks to new technologies
- Weather or seasonal issues that cause disinterest in our product or service
- Adjustments or insertions of government regulations that affect the way the company works or its costs
If you want to have the basic and indispensable knowledge to start or manage your business, always follow SWOT analysis. If you have answer of the following question, you can continue business as past. What does the market (the people) ask for? Do you have it accessible? Are you willing to pay for it? How much are you willing to pay? Is someone already taking advantage of this new market trend?