The modern business world can be described as a highly competitive environment. It means that to achieve success, an organization should have a clear vision of how to evolve and what actions to perform to create the basis for future growth. However, it is impossible without the correct understanding of the current situation and factors influencing a company. At the same time, the organization should possess a clear vision of its resources, weaknesses, and strengths to develop a strategic plan and employ it to generate a competitive advantage. Under these conditions, analysis tools acquire the top priority as the instruments leading to enhanced vision and promoting success. SWOT framework is one such approach used by companies today.
SWOT is an acronym stating strengths, weaknesses, opportunities, and threats. As it comes to this definition, it is a tool allowing managers or investigators to analyze the current state of a selected organization (Sarsby, 2016).
Applying this tool, it is possible to determine available resources and advantageous practices and highlight the most problematic areas. At the same time, the investigation of opportunities and threats also demands an analysis of the environment or market where the firm operates (Sarsby, 2016). It means, that by using the SWOT, it is possible to collect relevant information necessary for enhanced decision making and use it for planning. There is a direct correlation between the accuracy of data used for creating a strategy and its effectiveness (Sarsby, 2016). It means that SWOT can increase the practical utility of such plans.
Another factor explaining the significance of SWOT analysis for organizations is the opportunity to consider acquired information to promote positive change. For instance, one of the most frequent reasons for firms’ failures is the wrong vision of their resources, strengths, and weaknesses (Gamble et al., 2020). It means that strategic plans become unrealistic and unfeasible, which leads to poor outcomes. Applying the SWOT tool, a specialist can outline the most problematic areas and consider them to plan the appropriate change and ensure such issues are eliminated (Gamble et al., 2020). It will help to boost the organization’s performance and ensure it can achieve the existing objectives.
Finally, using SWOT, it is possible to make the generation of a competitive advantage a part of strategic planning. As stated previously, the tool allows investigators to understand the peculiarities of the market and environment, which implies other companies’ functioning. For instance, the threats and opportunities sections presuppose an analysis of the company regarding its closest rivals and the current state of demand and target audience (Rothaermel, 2021).
These factors are vital for understanding how to generate a competitive advantage by offering products with unique qualities capable of meeting clients’ demands (Gamble et al., 2020). For this reason, SWOT analysis helps to improve strategic planning by including activities necessary for struggling against the closest rivals and promoting the organization’s enhanced performance.
Altogether, SWOT is one of the most effective tools available for modern managers. It helps to increase the accuracy of strategic planning by considering all factors affecting the company at the moment. Among its advantages is the opportunity to acquire the correct vision of the current company’s state, and use this information to create the basis for future growth. Moreover, using this method, investigators can realize existing weaknesses and strengths and the current state of the environment and employ it to generate a competitive advantage. For this reason, using SWOT organizations can create the basis for better planning and goal achievement.
References
Gamble, J., Peteraf, M., & Thompson, A. (2020). Essentials of strategic management. McGraw-Hill Education.
Rothaermel, F. (2021). ISE strategic management: Concepts (5th ed.). McGraw-Hill.
Sarsby, A. (2016). SWOT analysis. Spectaris Ltd.