The paper "SWOT Analysis and Its Purpose - Toyota Company " is a great example of a business case study. A SWOT analysis is an assessment of the internal and external environment of a business. It is a strategic planning method used in the evaluation of the strengths, weaknesses, opportunities and threats that are involved in a business venture. The SWOT analysis is useful in providing information that helps firms in matching their resources and capabilities to the competitive environment in which they operate. It is therefore important in the selection and formulation of a firm’ s strategy (Boone and Kurtz 263). The purpose of a SWOT analysis is to analyze, evaluate information and identifying strategic options facing a firm at any given time.
Carrying out a SWOT analysis helps in focusing on activities in areas where the greatest opportunities lie (Boone and Kurtz 263). Based on this, the big picture of the most influential factors that affect the prosperity and survival of a firm is developed and acted on. The strengths and weaknesses are internal while the opportunities and threats are external. The strengths and weaknesses are matched with the opportunities in the external environment to counter the threats in the external environment that may pose a danger to the strategic plans of a firm. The SWOT analysis helps a business organization to respond effectively to the changes in the environment.
An understanding of the internal and external contexts of an organization helps in developing a strategy that links these environments. SWOT analysis makes it easier to know which factors are controllable and which are uncontrollable and based on this they are able to know whether the venture will be successful or not (Boone and Kurtz 263). Components of a SWOT analysis A SWOT analysis is a strategic tool used to evaluate the strengths, weaknesses, opportunities and threats of a business venture.
It itemizes the external and internal factors that either help or act as hindrances a business from achieving its goals and objectives. Strengths The strengths are the internal factors that are favorable to the business. They are the competencies, areas that make the business the most money, assets, they can also be intangible assets such as good business relationships and reputation and the relevant experiences of the business.
The strengths reflect the current situation of the business which has been maintained to guarantee success for the business. The strengths are: Sales channels Financial resources Profitability Market position Customer base Products and services Weaknesses These are the internal factors that at present may harm the progress of the business. They are areas that need to be improved such as the areas where the business lacks resources, skills or experience. It is also the areas where the business is losing money caused by declining trust and loss of reputation.
The weaknesses are areas that need to be corrected by addressing them head-on. Weaknesses are: Staff turnover Sales channels Competitive vulnerability Low-profit margins Lack of new products and services Opportunities These are external factors that have the potential of helping the business to flourish. Opportunities evaluate elements of the external environment that may be exploited to the advantage of the business. They are future strengths that should be prioritized as the business progresses such as new technology that may help to make business easier such as the social media networks. The needs of the customers that are currently not being met by the competitors are an opportunity that can be exploited to the advantage of the business.
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