Purpose of a SWOT Analysis Essay

Every assembly cables length to include the largest ones that control their atomic number 18as of industryhas a limited supply of manpower, production capacity and capital. Evaluating the c on the wholeer-ups strengths, weaknesses, opportunities, and threats helps it bushel how to allocate these resources in a style that result result in the highest possible potential for revenue growth and profitability. The management team examines where the conjunction can compete almost effectively.The company more times than non disc everyplaces competitive strengths that take away not been fully utilized in the sometime(prenominal) in addition to critical areas that needs to be improved in order for the business to more effectively compete. A realistic mind also prevents strategic blunders like entering a market with products that are clearly inferior to what well-entrenched competitors are bump offering. Continuous improvement in all areas of a companys operations is an important aspect of staying fore of competitors.Weaknesses and opportunities canand mustbe turned into future strengths. PURPOSE OF A rig out ANALYSIS 3 Strengths, weaknesses, opportunities, and threats ( swot up) analysis is a necessary, straightforward old-hat that assists in direction and serves as a foundation for the development of businesss marketing strategy. It brings somewhat this bring through assessment of the goernances strengths (what it can do) and weaknesses (what it cannot do) in addition to opportunities (potentialfavorable conditions for the company) and threats (potential unfavorable conditions for it). SWOT analysis is also an important step in the planning process but sometimes its value is often minimized in malignity of how simple it is in creating it. The role of SWOT analysis is to take the development from the environmental analysis and separate it into internal issues (strengths and weaknesses) and external issues (opportunities and threats).Once this is co mpleted, SWOT analysis determines if the information indicates some amour that will assist a business in meeting its objectives (a strength or opportunity), or if it identifies an obstacle that must be overcome or minimized to achieve desired results (weakness or threat). The tendency of a SWOT analysis is to get managers into the mindset and thinking about everything that could possibly be an impact to the success and failure of a naked as a jaybird project. Failing to acknowledge an essential strength, weakness, opportunity or threat could and commonly does lead to terrible management decisions.Take for example, a software company that efficiency hold a patent for a new estimator processor failed to recognize a threat from its competitors who were also developing comparable with(predicate) products, it might overestimate conceivable sales of its new processor and sop up debt to finance the growth of its project only to notice flock the line that the companys promising prod uct will not get along enough money to make a profit or even pay off the assumed debt. A SWOT analysis could have helped this companys management avoid expensive mistakes early on and alerted them to which products were more likely to succeed.PURPOSE OF A SWOT ANALYSIS 4 With SWOTs origins dating back to the 1960s with Albert Humphrey, it is as reusable now as it was back then. Businesses utilize the process in cardinal different ways-as an easy icebreaker assisting individuals come together to kick off strategy development or as a more sedate strategy tool. A great SWOT analysis case call for is Starbucks Coffee. By 2010, the company was losing money and had a major muster out in its communication channel worth. Its stock wrong had dropped to around $10 in 2009 from its high of $35 a few years earlier.The economic crisis passim 2008 and 2009 really hit Starbucks stock worth hard (SBUX Basic map Starbucks Corporation Stock Yahoo Finance, 2011). Even though Starbucks st ock price took a huge hit, its net revenues did not. Starbucks profits went from $7. 8 billion in 2006, to $10. 4 billion in 2008, down to $9. 8 billion in 2009, and back up to $10. 7 billion in 2011 (Starbucks Corporation, 2010). The amazing thing here is that the company endured an economic crisis and still come out strongerthan when its stock price was at its highest. Lauren Roby (2011) performed a well researched SWOT analysis of Starbucks masking piece this time frame and identified the following strengths, weaknesses, opportunities, and threats. Strengths 1 Market attraction in the coffee industry including almost 17,000 stores as of the end of the 2010 (Starbucks Corporation, 2010). 2. Starbucks is acknowledge by customers adult malewide due in part to its high character reference products and consumer friendly environment. 3. Starbucks is on good footing financially.Its stock price might have fallen in the late 2000s, but its profits besides took a hit (Starbucks Corpo ration, 2010). Weaknesses PURPOSE OF A SWOT ANALYSIS 5 1 One of Starbucks biggest weaknesses is what its customers have to pay for the product. McDonalds uses Starbucks high price directly against the company in their attempts to lure customers away from the company and into the arches. 2 75% of the companys profits come from its coffee products and other(a) specialty drinks (Starbucks Corporation, 2010).This means that when global coffee bean prices fluctuate, the company will take a direct hit every time the price of coffee rises. Opportunities 1. International Markets. With Brazil being one if not the worlds largest coffee consumer in the world, it offers a huge market for Starbucks to sky-high enter and develop (Murphy, 2011). 2. Starbucks has joined forces with Tata coffee in India, which is the fifth largest exporter of coffee, to drive selling their coffee worldwide (Bose, 2011). This gives Starbucks moreaccess to coffee. Threats 1. Competition. One of Starbucks biggest com petitors, McDonalds, can open their McCafe brand beverages in current franchise stores globally to include atomic number 63. This gives McDonalds an upper hand on Starbucks who has to invest over $300,000 to open a brand new store in Europe while McDonalds investment would run around $100,000 (Liu, 2009). If McDonalds continues down this path, it could greatly reduce the geographic scope advantage that Starbucks currently has over McDonalds.These days, It is not enough to just recognize the strengths, weaknesses, opportunities, and threats of a business. In drill a SWOT analysis it is essential to reduce or turn away both PURPOSE OF A SWOT ANALYSIS 6 weaknesses and threats. Weaknesses should be viewed as something to be turned into strengths as threats should be turned into opportunities. Strengths and opportunities should be allied to optimize the businesss potential. Utilizing SWOT in this manner can help a company gain the leverage most so desperately need these days. (Ferrell, Hartline, Lucas, Luck, 1998).