A business administration anagram, SWOT stands for:
Strengths
Weaknesses
Opportunities
Threats
It entails carrying out a comprehensive external and internal audit of the firm.
This helps formulate future strategies and analyzes the “as-is” state of the company. It presents a clear picture of where the company stands, the prospective areas for improvement, and how to combat competition.
It is one of the most practical approaches to evaluating your business standing.
The Purpose of Conducting A SWOT Analysis
The management of a company employs the SWOT analysis to holistically understand his or her own business from a different viewpoint.
Small businesses struggling to create an identity can benefit from the critical analysis to help in the planning process.
The strengths and weaknesses of a company are classified as internal factors; whereas, the opportunities and threats exist in the external environment.
By encompassing a 360 degree view of the business scenario, an overall corporate plan can be put in place. This includes the operational and financial goals according to the market trends and strategies to mitigate risk and successfully accomplish those goals.
Why Perform A SWOT Analysis?
- Makes Allocation of Resources Efficient
Every company, either small or big needs to balance the forces of demand and supply. Careful and thoughtful allocation of 
manpower, capital and production capacity is essential to ensure the continuity of the business.
It aims to dedicate resources to their core competencies rather than wasting them on secondary activities, which can be outsourced for maximum efficiency and productivity.
- Increasing Operational Efficiencies
When analyzing the shortfalls of a company, it is imperative that the company think of devising strategies to overcome them.
Knowing where the company went wrong in the past can help correct them in the future. A realistic assessment also helps guide expansion and penetration strategies. This continuous effort towards constant improvement is the cornerstone for a company’s success.
- Mitigating Risks
Any risk factor present in the company’s environment can automatically affect the performance of the company. To name a few, risks in the environment include direct competition, government regulations, or a change in consumer tastes and preferences. Anticipating these risks well in advance can help steer the company in the right direction. And be prepared to combat them.
The SWOT analysis helps bring to limelight the resources available. It gives small businesses management and development tips that they need to survive and thrive. Take a closer look into the resources available on my website.
