Beginning a Business Using SWOT Analysis

Beginning a Business Using SWOT Analysis

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Beginning a business using SWOT analysis is crucial for an organization to be successful. According to Bateman; author of M: Management (2013), planning begins with a situational analysis that focuses on the internal forces at work in the organization or work unit and is consistent with the open-systems approach; it examines influences from the external environment. SWOT analysis is a comparison of strengths, weaknesses, opportunities, and threats that helps executives formulate strategies within an organization. It allows strategists to diagnose with greater detail all factors what determine the situations of strategies, to categorize these factors into internal (strengths, weaknesses) and external (opportunities, threats) ones (Ding-Hong et. Al, (2014) & Weihrich (1982)).

In order to commit to a large-scale expansion of any beginning business organization, a SWOT analysis is needed to map out the strengths, weaknesses, opportunities, and threats of doing so. Bateman (2013), shares that for an organization to be fully effective, the organization’s strategic, tactical, and operational goals and pans must be aligned (they must be consistent, mutually supportive, and focused on achieving the common purpose and direction). The acquisition or development of new businesses that produce parts or components of the organizations product, or vertical integration; reduces the costs associated with suppliers or distributors.

According to Bateman (2013), typical strategic goals include growing, increasing market shares, improving customer service, boosting return on investments, fostering quantity and quantity of outputs, improving profitability, increasing productivity and contributing to society.

Being inexperience with operational planning (identifying the specific procedures and processes required of lower management), proposes as a weakness, since many business owners can easily get tied up on financial matters like budget preparation, leases, taxes, and overseeing the daily accounting process. Another weakness a business organization can have, is by having a decentralized organization; where lower level managers make important decisions. This allows each location manager to make the day-to-day decisions dealing with their unit budgets, employee matters, and customer service issues. Using an SWOT analysis for operational planning will weed out unnecessary medial problems for beginning businesses.

In conclusion, SWOT analysis is a comparison of strengths, weaknesses, opportunities, and threats that helps executives formulate strategies within an organization. Typical strategic goals include growing, increasing market shares, improving customer service, boosting return on investments, fostering quantity and quantity of outputs, improving profitability, increasing productivity and contributing to society. A competitive advantage typically results from a businesses use of SWOT analysis strategies based on either keeping costs low or offering products that are unique and highly valued.

Written by Jhayla Tyson

Sources:
Bateman. (2013). M: Management, 3rd Edition.
Ding-Hong, P., Tie-Dan, W., & Chang-Yuan, G. (2014). INTEGRATING
NONHOMOGENEOUS PREFERENCE STRUCTURES IN SWOT ANALYSIS TO
EVALUATE MULTIPLE ALTERNATIVES. Economic Computation & Economic
Cybernetics Studies & Research, 48(3), 40-63.
Weihrich, H. (1982), The TOWS Matrix―A Tool for Situational Analysis; Long Range
Planning, 15, 54–66.

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