Why You Need to Include a SWOT Analysis in Your Business Plan

A SWOT analysis is a method of strategic planning used in the first stages of the planning process in order to evaluate a companyΓÇÖs strengths, weaknesses, opportunities and threats. On one hand, the strengths and weaknesses are part of the internal assessment factors of a company, and on the other hand, the opportunities and threats are elements of the external environment of the business. Identifying these four elements of a SWOT analysis is a crucial aspect of any assessment because they will influence future processes and decisions of the management. Ignoring one of these analysis elements can end up to an inadequate planning.

The internal factors, namely the strengths and weaknesses, may include the 4 Ps (product or service, price, promotion and placement) and the marketing mix of those, according to the specifics of the company, its needs and overall goals. This must be done with care because the marketing mix can help you define your marketing elements for a successful position of your market offer. The 4 Ps model helps you if you are planning new ventures or if you evaluate your existing offer, in order to optimize impact with the targeted market. Also, you may want to include in the internal factors your personnel, manufacturing capabilities and finance.

The external factors, that are the opportunities and threats, can include the macroeconomic issues, legislation, cultural, cultural, technological changes and also the competitive position and the marketplace. The results should be presented as a matrix.

The SWOT analysis is not only useful if you look for profit, but it can be also used in any situations that require decision making. Furthermore, it can be used in crisis management and creating recommendations within a viability study.

Depending on where your company is going and what are your goals, you should concentrate on elaborating more on certain factors rather than the others. Begin with the ones that you consider to be relevant for each area of the four. Review your notes while elaborating your marketing plan. Identifying and assigning every significant factor, whether it is good or bad, is the main purpose of any SWOT analysis.

The SWOT analysis is a valuable tool for the development of your general objectives and to the market strategy that is a must in the development of the marketing plan and, thus concluding a good and investorsΓÇÖ attractive business plan. This tool helps you understand better your companyΓÇÖs strengths and weaknesses, while looking for new opportunities and facing threats on the market.

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