Importance of Swot Analysis Essay

Why is the process of conducting an internal and immaterial analysis on a regular basis authorised for any size company? The process of an internal and external analysis on a regular basis is important for any size company because it allows the company to know where it stands at the moment and determines the development and forecasts of those factors that will influence the organizational success. This is also known as environmental scanning where the external and the internal environments are scanned for information like ongoing trends patterns, occasions and changes going around and the effect it has to both these environments.External analysis These analyses are performed alfresco the firm and depend on the following factors a, MACRO technological, demographic/economic, political/legal and social/cultural, national and global environment b. MICRO competitors, suppliers, customers, publics, take etc. Internal Analysis This analysis is performed within the firm that includes th e employees, management and the shareholders, resources, organisational structure etc.SWOT AnalysisThe most common way of analyzing this external and internal environment is by performing the SWOT analysis. SWOT is an acronym used that describes Strengths, Weaknesses, Opportunities, and Threats that are strategic elements for a firm. A SWOT analysis should non tho result in the identification of a corporations core competencies, but also in the identification of opportunities that the firm is not currently fitted to take advantage of due to a lack of appropriate resources. (Wheelen, Hunger pg 107)The External analysis comprises of the Opportunities and Threats that the company needs to identify or focus on for its profitability and development of defensive actions. * Opportunities This analyzes the area where the firm can identify its opportunities so as to have a competitive advantage over its competitors. at a time identified, the firm has to work on them to make it one of its strengths. Its main aim is to find an area where they need to develop to be profitable. * Threats These are the threats that the firm faces from outside the firm and can be from any of the external sources. The firm has to be prepared to tackle these threats by developing strategic decisions when required so that it does not affect their profitability or sales.The Internal analysis focuses on the internal environment of the organisation and analyzes the Strengths and Weaknesses of the company. * Strengths These are the core competencies of the firm that provides them the advantage of achieving their goals. These should be reorient in meeting the customer requirements because at the end of the day, it is the customer whom they serve. Therefore, it should be customer focussed and market oriented.* Weaknesses These refer to the firms limitations in fulfilling their strategic decisions or failure to implement them. It has to be analyzed from the customers point of view so as to get a clear idea. These step need to analyze the firms resources and the capabilities to meet their goals and identify events and trends that might impact the strategic plans and decisions of the company.