Purpose of a SWOT Analysis Essay

Every cable to include the largest ones that control their areas of industryhas a restrict supply of manpower, production capacity and capital. Evaluating the political partys strengths, weaknesses, opportunities, and threats helps it determine how to allocate these resources in a manner that volition result in the highest possible potency for revenue growth and profitability. The management team examines where the company bear compete most in effect.The company more times than non discovers competitive strengths that have not been fully habituated in the past in addition to critical areas that needs to be improved in order for the business to more effectively compete. A realistic assessment also prevents strategic blunders like entering a market with products that are clearly inferior to what well-entrenched competitors are mutilateering. Continuous expediency in all areas of a companys operations is an important aspect of staying ahead of competitors.Weaknesses and opport unities canand mustbe turned into future strengths. calculate OF A SWOT analysis 3 Strengths, weaknesses, opportunities, and threats (SWOT) analysis is a necessary, straightforward standard that assists in direction and serves as a foundation for the development of businesss marketing strategy. It brings about this process through assessment of the organizations 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 spite of how simple it is in creating it. The role of SWOT analysis is to withstand the information from the environmental analysis and separate it into internal issues (strengths and weaknesses) and external issues (opportunities and threats).Once this is completed, SWOT analysis determines if the information indicates so mething 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 get desired results (weakness or threat). The purpose 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 tribulation of a new project. Failing to acknowledge an essential strength, weakness, opportunity or threat could and usually does lead to terrible management decisions.Take for example, a packet company that might hold a patent for a new computer processor failed to recognize a threat from its competitors who were also developing alike(p) products, it might overestimate conceivable sales of its new processor and assume debt to finance the growth of its project only to notice down the line that the companys promising product will not make enough money to make a profit or even pay off the assumed debt. A SWOT analysis could have helpe d this companys management avoid expensive mistakes early on and alerted them to which products were more likely to succeed. determination OF A SWOT ANALYSIS 4 With SWOTs origins dating back to the 1960s with Albert Humphrey, it is as useful now as it was back then. Businesses utilize the process in two different ways-as an easy icebreaker assisting individuals come together to kick off strategy development or as a more serious strategy tool. A great SWOT analysis case study is Starbucks Coffee. By 2010, the company was losing money and had a study drop in its descent price. Its stock price had dropped to or so $10 in 2009 from its high of $35 a few years earlier.The economic crisis passim 2008 and 2009 really hit Starbucks stock price hard (SBUX Basic Chart Starbucks Corporation Stock Yahoo Finance, 2011). Even though Starbucks stock 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 bil lion 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 covering this time frame and identified the following strengths, weaknesses, opportunities, and threats. Strengths 1 Market leader in the coffee berry industry including approximately 17,000 stores as of the end of the 2010 (Starbucks Corporation, 2010). 2. Starbucks is recognized by customers world-wide due in part to its high quality 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 barely took a hit (Starbucks Corporation, 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 Starbu cks 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 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 enthusiastically enter and develop (Murphy, 2011). 2. Starbucks has joined forces with Tata coffee in India, which is the fifth largest exporter of coffee, to begin selling their coffee worldwide (Bose, 2011). This gives Starbucks moreaccess to coffee. Threats 1. Competition. One of Starbucks biggest competitors, McDonalds, can open their McCafe brand beverages in current franchise stores globally to include Europe. This gives McDonalds an upper peck on Starbuck s 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 exercising a SWOT analysis it is essential to reduce or avert 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).