SWOT analysis is critical for firms that want to thrive in the market. It is the analysis of strengths, weaknesses, opportunities, and threats in a given organization. Often, marketing managers make use of this tool to formulate strategic marketing plans. The paper discusses the purpose of a SWOT analysis, its usefulness and how it can contribute to strategy formulation at the functional level.
SWOT analysis is significant to many firms. Firstly, it helps to explore whether there are possibilities of new efforts or whether there are solutions available to a specific problem. Another purpose of a SWOT analysis is to identify the opportunities available for success regarding the threats facing a firm. Firms will usually have threats like competition in the market. Hence a SWOT analysis helps to guide the direction to take from the choices available (Dayson, 2004). Also, determination of the possible changes in a firm is done through the help of a SWOT analysis. Sometimes companies may wish to make changes in their operations. In such a situation, they must consider the strengths and weaknesses that the facing is encountering. As a result, it reveals the priorities and the possibilities to be pursued. In addition, firms undertake adjustments in the middle of their course. Hence, a SWOT analysis becomes useful in refining the plans. Managers must remember that an opportunity opens up new avenues to a firm while a threat closes some of the existing paths. Therefore, the purpose of a SWOT analysis cannot be undermined.
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The tool is still useful. Previously, many companies made use of this tool during their strategic planning process. It was used to formulate strategies and make decisions on new business ideas and initiatives. Currently, many firms have moved beyond SWOT analysis for general planning in business. However, it remains a powerful resource tool for decision making in sales and marketing. Sale s and marketing decision making is invaluable for companies that want to expand across the borders into a new market. Hence managers in the sales and marketing department use SWOT analysis to decide the marketing channels to use. Furthermore, they use it for competitor research, optimizing operations, resource management, discovering growth opportunities and in risk assessment. Making use of the tool helps them to successfully penetrate a new market and sustainably remain competitive in this market.
SWOT analysis immensely contributes to strategy formulation at the functional level. Long run plans in an organization require strategy formulation so that they are realized. The plans include mission, objective, strategy, policies and the vision. Strategy formulation at the functional level can be divided into business and corporate strategy. Corporate strategy encompasses aspects like portfolio analysis and corporate parenting while business strategy relates to the market like business competition. SWOT analysis helps to make strategic choices at this levels. It helps to support the business and corporate strategy by ensuring that a company remains in the target direction (Hitt, Ireland and Hoskisson, 2012). In case of a deviation, it is easy to make corrections in the strategy. Hence, SWOT analysis is essential in strategy formulation at the functional level.
In summary, SWOT analysis is useful to a company. The tools are still relevant for businesses. Mostly, it is applied in the field of sales and marketing to make strategic marketing plans. Moreover, SWOT analysis applies to strategy formulation at the functional level as it helps in business and corporate strategic plans. Therefore, SWOT analysis is a powerful tool for businesses.
References
Dyson, R. G. (2004). Strategic development and SWOT analysis at the University of Warwick. European journal of operational research , 152 (3), 631-640.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization . Cengage Learning.
