You can conduct a SWOT analysis of yourself to help determine your competitive advantage. Threats might include a bad economy, high interest rates that increase a firm’s borrowing costs, and an aging population that makes it hard for the business to find workers. Opportunities might entail the international demand for the type of products the firm makes, few competitors, and favorable social trends such as people living longer. Opportunities and threats are factors that are external to the firm and largely uncontrollable. A firm’s weaknesses might include lack of awareness of its products in the marketplace, a lack of human resources talent, and a poor location.
For example, an organization’s strengths might include its brand name, efficient distribution network, reputation for great service, and strong financial position. Strengths and weaknesses are internal factors and are somewhat controllable. While a business cannot control things such as the economy, changes in demographic trends, or what competitors do, it must decide what actions to take to remain competitive-actions that depend in part on their internal environment.īased on the situation analysis, organizations analyze their strengths, weaknesses, opportunities, and threats, or conduct what’s called a SWOT analysis.
ACTORS IN THE FIRM 2009 FREE
Firms also offered customers incentives (free shipping, free gift cards with purchase, rebates, etc.) to purchase their goods and services online, which allowed businesses to cut back on the personnel needed to staff their brick-and-mortar stores. Other companies reduced package sizes or the amount of product in packages. For example, during the economic downturn in 2008–2009, businesses found that many competitors cut the prices of their products drastically. The external environment significantly affects the decisions a firm makes, and thus must be continuously evaluated. It is also critical to examine the external macro and micro environments the firm faces, such as the economy and its competitors. The firm’s internal environment-such as its financial resources, technological resources, and the capabilities of its personnel and their performance-has to be examined. Figure 2.2 “The Strategic Planning Process” and Figure 2.3 “Elements of a SWOT Analysis” show examples of internal and external factors and in a SWOT analysis. A situation analysis involves analyzing both the external (macro and micro factors outside the organization) and the internal (company) environments. As part of the strategic planning process, a situation analysis must be conducted before a company can decide on specific actions.
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