Corporate Planning and SWOT Analysis
Planning is essential for the growth of every company, because every company has an environment in which it carries out its operations. The business environment falls into two categories: the internal and the external environment. Internal factors are within the control of a company. On the other hand, external factors are those that a company cannot control.
The external environment operates independent of the company and as such, a company cannot influence it. The external environment includes political, environmental, social, and technological factors. A thorough understanding of these factors helps the company to better position its products in the market. The PEST analysis is an incredible tool in avoiding discontinuities in a company’s strategic focus. In addressing each factor, the managers are better placed to understand how future developments might influence the company’s competitiveness. A company must plan for its external environment, to shape its strategic orientation. Therefore, within the competitive marketing arena, a company must plan its short-term and long-term goals based on the environment in which it operates. Several analytical frameworks guide companies to conduct their strategic plans. One such tool is the SWOT analysis.
SWOT analysis is an analytical tool for gauging a company’s strengths, weakness, opportunities as well as threats in the market. Strengths reflect the company’s areas of competitive advantage such as advanced technology, a strong brand or a skilled workforce. Weaknesses are those areas or characteristics that put a company at a disadvantage compared to competitors. A company should exploit the opportunities in the market to achieve its mission. For instance, if a company has a long learning curve, it can use this as an opportunity to continue adding value and increasing customers along the product lifecycle. In doing so, the company must be vigilant of the threats it will encounter in the market. The recent slump in economic activities caused by the global financial crisis means that most companies must provide products that match the limited budgets of consumers. If the company fails to do so, then competitors might well snatch a good proportion of customers from the company.
In summary, corporate planning is indispensable in achieving set goals. A company must scan both the internal and external environment to gauge its strength, and weaknesses as well as to evaluate opportunities and threats. Without such an approach, it would be impossible to compete effectively.