Benefits of SWOT Analysis
SWOT analysis is one of the most popular tools in strategic planning that help to determine the strength, opportunities, threats, as well as weaknesses in a project. It identifies the external and internal factors that are either unfavorable or favorable to achieving the desired objective. The weaknesses and strength are usually internal, and the threats and opportunities come from external factors.
1. Cost savings
There are numerous strategic planning tools that you can use to attain the set objectives. As we all know, such decisions can affect the company’s productivity and hence they are beneficial in the growth of the business. SWOT analysis is very helpful because it can help you save a great deal of money, which can be spent on other development projects.
Another benefit of SWOT analysis is forecasting. In simple terms, forecasting is a strategic plan that companies use to predict how different decisions or scenarios can impact growth of the business. SWOT analysis play a big role in forecasting as it provides important information that might be required in making variables.
3. Identifying the competition
Companies and businesses alike use SWOT analysis to identify their competitors, which is the main external threat. By knowing their competitors, businesses can implement strategic plans to ensure they have an edge over their competition. Price wars, for instance is a popular competitive strategy used by most companies to stay ahead in the market.
4. Aids in decision making
SWOT analysis is an effective decision-making tool as it provides essential information that helps businesses, as well as companies to implement strategic plans. SWOT analysis provide an outline of a business’ threats, opportunities, weaknesses and strengths, decision makers therefore use this information to formulate new strategies in order to ensure their businesses remain profitable.
SWOT analysis also has its limitations as well. It may cause companies to overlook certain strategic plans, or circumstances for that matter.