Introduction to Business: Purpose of SWOT Analysis (Essay Sample)

Introduction to Business
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Purpose of SWOT Analysis
SWOT analysis is a structured model whose purpose is to evaluate the four elements of a business venture that determine the chances of the business’ success. The acronym stands for Strengths Weakness Opportunities and Threats. SWOT analysis involves identifying the objective of a business venture then assessing the internal and external environment to determine the extent to which it is favorable or unfavorable. The strengths of the business are the characteristics that afford the business an advantage over other businesses especially its competitors. Weaknesses are the characteristics of a business that put the business in a disadvantaged position in comparison to its competitors. Business' opportunities refer to the elements of the market that the business can exploit to gain a competitive advantage over its rivals. Finally, threats are elements of the business environment that could turn out to be bad for the business because they might limit the business’ ability to grow (Bovée and Thill 2014, p.57)
Conducting SWOT analysis informs the steps that the business needs to take in planning. It is through SWOT analysis that decision makers assess how attainable the business’ objectives are and if there is an obligation to change the plan designed to achieve the objectives. Where the objectives are deemed unachievable decision makers need to change the objective and restart the planning process. In analyzing the business environment, one needs to assess both the internal and external environments which are two main categories that divide the elements of SWOT analysis (Hill and Westbrook 1997, p.108).
When analyzing the business’ strengths, there are some fundamental questions that the analysis team needs to answer. The team should identify the advantages that the business has over its competitors. For some businesses, this could be the availability of skilled manpower because the business has the best personnel in the field or it could be that the business’ brand is more popular as compared to that of other business rivals. The analysis team also needs to identify what the business does best and capitalize on it. If what the business does better than everyone else is to treat its employees well then the business should maintain the trend because it might be the source of competitive advantage through maintaining low employee turnover. The analysis team should also identify the low-cost resource that the business can draw upon that are not available to other business rivals (Boddy 2009, bp.95).
If the weaknesses of business are not addressed, they could lead to the downfall of the business. When analyzing the business’ weaknesses the team can start by identifying areas that the business could improve on. If the business’ customer service delivery is wanting then, the business should improve on this to bridge the gap between the business and its rivals. The business should also identify specific factors that cost the business losses. Unethical conduct can, for example, cost the business its customers and it can even cause the business to incur expenses in the form of legal fees.
Being able to spot opportunities is the difference between a successful and a failed business. If the analysis team can identify a need in the market that is not served adequately, it can be a big win for the business because it will have the chance to capture a new market niche. The business needs to be in touch with the market trends so that it can identify opportunities that it can exploit. There are several sources of opportunities including a change in technology in the businesses field. Change in government policies can also afford the business numerous opportunities.
Being aware of the threats that business faces puts the business in a good position because it stands a decent chance of preventing them from hurting the business. Threats to the business can come from the moves by competitors. Where competitors begin price wars, for example, it can be detrimental to the business if it cannot maintain the pressure. The business’ weaknesses can also be a source of threat to the business. If the business does not offer excellent customer service, for example, it is under threat of losing its customers to competitors (Pickton and Wright 1998, p.48).
Four Major Functions of Management
Management is a social process that evolves planning and regulation of business operation to achieve set goals. Management is dynamic, and it involves activities that are universal to all managers regardless of the level. Management has four major functions including; Planning, organizing, directing and controlling. These functions are not separate from each other but for analysis, they are discussed as separate. Each function blends into others to produce a synergistic effect on the business.
In planning, the manager decides the direction in which to take the business and the steps that it needs to achieve its goals. Planning requires that the manager is aware of the business’ challenges and opportunities and have the ability to forecast future economic conditions. Setting the deadlines that need to beat is part of management, and the manager is responsible for ensuring that the mechanisms necessary for achieving the objectives are in place(Boddy 2009, p.205). Managers re-evaluate their plans with time so that they can make adjustments when necessary. If a business intends to penetrate the global market in the next five years, for example, it is the manager’s prerogative to ensure that the business is taking all necessary plans towards the achievement of this goal.
In organizing, the manager brings together financial, physical and human resources and synchronizes them so that they are geared towards the attainment of the business’ goals (BovéeAnd Thill 2014, p.59). Managers pinpoint tasks that need to be completed and the order of priority with which they should be completed then they categorize them so that they fall under the dockets of various departments. It is the manager’s role to create responsibility and delegate authority within the business so that several people can be responsible for handling the finer details of the business’ operations (Stevenson and Sum 2009, p.54). Management also involves the coordination of authority within the business so that all efforts are channeled towards the achievement of the business’ goals. It is the role of the manager, for example, to organize the running of the sales and promotion departments to ensure that the strategies that they have in place are sufficient for the achievement of the economic growth of the business.
In directing, the manager gives instructions and guidance on how employees need to carry out different tasks then oversees the completion of these tasks to ensure that they help the business achieve its goals. Directing is at the heart of management because planning, organizing, and control are of little significance if the manager fails to direct them. Through directing action is initiated so this is where actual work starts. If a business decides to penetrate a new market, for example, the manager will be responsible for directing the functions of various departments so that their actions are designed to aid the achievement of the set goals. If it is the recruitment of new staff, for example, the manager directs this exercise so that the right people are on board.
Controlling involves evaluating already achieved goals and gauging them against set goals. Controlling requires managers to have an eye for deviation. The manager should be able to recognize the extent to which a business has deviated from its course in the achievement of goals then provide corrective measures to set the business back on course. In controlling the manager establishes the business’ goals and lays out plans to achieve them then identifies factors preventing the achievement of these goals and provides ways of dealing with such impediments. Controlling does not only involve the achievement of the business’ financial goals but also other goals such as reaching a certain production quota (Taylor Bector, Bhatt and Rosenbloom 2004, p.68). If strategic decisions are preventing the business from achieving its goals, it is the role of the manager to guide the change of strategy.
Management should oversee goal setting because it confers several benefits to the business. Goals provide the focus for the business. When employees have an idea of what the target of the business is then they are well informed of what is expected of them and how their work impacts the goals of the business. Goals also increase the employees’ motivation because they have something to strive towards and when they aid the business in achieving set goals they get a sense of achievement which also acts as motivation to strive towards excellence. Goal setting also increases group cohesion among employees. In turn, group cohesion increases the chances that the business will realize its goals. Also, since goal setting offers a metric for measuring the business’ progress, it prompts the management when there is the need to employ corrective measure so that the business can get back on course.
Four Main Components of the market Mix
A marketing mix is a business tool that is used by marketers to influence customers to form a preference for the product or brand. There are four main components of the marketing mix; Product, price, promotion and place (Bovée and Thill 2014, p.165)..
In determining how to market a product, there are some factors that the marketer needs to put into consideration that fall under the product category of the product mix. This category puts into consideration the needs ...