If you are looking for a planning tool that will help you to determine the future direction of your business, a SWOT Analysis would be a good choice.
This model or planning tool enables you to examine the strengths, weaknesses, opportunities or threats, and to develop business strategies that utilise any business strengths identified in the analysis, minimise or fix weaknesses to avoid any potential threats and to take advantage of any opportunities in the commercial environment.
Strengths
An internal strength is something that the business is good at or a characteristic that gives it an important capability.
It might be an important expertise, a valuable or scarce resource, a skill or a capability that gives the business a competitive advantage.
The internal strengths represent competitive assets and might include:
- core competencies,
- adequate financial support,
- economies of scale,
- cost advantages,
- proven management,
- manufacturing capability,
- innovative product design,
- innovative delivery systems, etc.
Weaknesses
An internal weakness is any problem, deficiency, or limitation that puts the business at a disadvantage and causes it to perform poorly. It may or may not make the business vulnerable, depending on how attractive the missing skill, capability or resource is in the market.
The internal weaknesses represent competitive liabilities, and might include:
- no clear direction,
- old or obsolete equipment,
- missing skills or core competencies,
- internal operating problems,
- shortage of working capital or under-financed operations,
- high costs, etc.
Opportunities
Opportunities are conditions (or emerging conditions) within the market that could enable the business to generate profitable business growth, give the business an advantage over its competitors, or enable the company to cover an external threat.
Opportunities might include:
- an opening in a new market segment,
- ways to improve or expand the product line,
- falling trade barriers,
- new technology, etc.
Threats
External threats are market conditions that, if unaddressed, are likely to make the business vulnerable to loss of market share or a reduction in profitability. Threats might include:
- entry of new competitors into the market,
- a stagnant or declining market,
- government intervention into the market,
- recession,
- changes to customer needs, etc