SWOT analysis refers to a method used in strategic planning that involves the evaluation of strengths, weaknesses, opportunities and threats in a venture being undertaken (Scholes and Johnson, 1999, p.35). Generally, it involves identification of the internal and external factors that may hinder or support the achievement of goals and objectives. SWOT analysis is necessary in the strategic planning because it enables an organization to achieve its goals effectively with the knowledge of its strong and weak areas. In addition, it enables organizations explore available opportunities while avoiding threats that present obstacles that hinder achievement of their goals. It is necessary to conduct a SWOT analysis in order to have an effective strategic plan because it reveals the internal and external factors that determine the success or failure of the strategic plan (Scholes and Johnson, 1999, p.36).
Organizations should consider several primary internal factors in developing a strategic plan. These factors include organizational culture, financial status of the organization and the competency of employees (Anderson and Media, 2011, par1). Organizational culture determines the ability of an organization to adjust and adapt to a changing environment while financial status determines the sustainability of the organization. It is important to consider the strengths and weaknesses of the workforce before developing a strategic plan. This is because a highly competent workforce will be able to face and deal with tough situations better than a workforce that is not competent (Anderson and Media, 2011, par3). In addition, strengths such as ability to innovate and be creative will enable an organization develop a plan that will benefit from these skills. The most important consideration is the strengths and weaknesses of the workforce. All other considerations depend on the abilities of the workforce to execute the plan and achieve the goals and objectives of the organization.
Organizations should consider certain external organization factors in developing a strategic plan. These include the market environment, the organization’s operating environment and the remote environment (Abraham, 2012, p.62). The components of the operating environment include the organization’s competitors, suppliers and anything that is directly linked to the effective operation of the organization. Remote environment includes factors such as economic, political and social issues. Market environment includes factors such as barriers to market entry and the influence of consumers and suppliers. Remote environment is the most important consideration because it determines how the organization operates based on political regulation and the economic needs of consumers (Abraham, 2012, p.66).
The key planning factors for competitive process include product quality, customer service, market share and emphasis on key of strength (Abraham, 2012, p.73). These factors enable an organization to stay ahead of their competitors in the production and sale of their products and services. Many companies have achieved competitive success through planning. For example, Toyota has been able to achieve competitive advantage by introducing high quality vehicles that are affordable (Abraham, 2012, p.79). Toyota was the first automobile company to introduce a brand that was affordable by the e income middle earners who constitute a great portion of the world’s population. In addition, Toyota has dealers in all parts of the world, and manufactures vehicles that serve people in all economic classes. This is as a result of effective strategic planning.
Other companies have failed to achieve competitive success because of failed planning. For example, McDonalds failed to achieve competitive success in India because it lacked effective strategies to roll out their services in a new market (Abraham, 2012, p.81). It did not evaluate the new market extensively for such factors as its competitors and entry strategies. Therefore, when it opened its stores in India, it failed in attracting consumers and staying ahead of its competitors.
Abraham, S. (2012). Strategic Planning: A Practical Guide for Competitive Success. New York: Emerald Group Publishing.
Anderson, A. and Media, D. (2011). What are the Key Planning Factors for Competitive Success in Business? Web.
Scholes, K. and Johnson, G. (1999). Exploring Corporate Strategy, 5th Ed. London: Prentice Hall.