Question

Imagine you have your own business. What would be the tool that you would use to manage the strategic direction of your business. Discuss the tool and the reasoning of choosing it.

Answer 1

I would go with SWOT analysis.

SWOT ANALYSIS:

SWOT analysis is a strategic tool used for the organisation's strategic planning.

It is an acronym for Strengths, Weaknesses, Opputunities and Threats.

Strength and Weaknesses are considered as internal factors and Oppurtunities and Threats are considered as external factors.

STRENGTHS: Strengths are the internal factors of the entity representing its high performance areas. Some of the examples of strengths are good relationship with customers,good internal communication and good marketing strategies.

WEAKNESSES: Weaknesses are another internal factor representing the low performance areas of the organisation. Some of the examples are holding too much stock, high rental costs, poor record keeping and cash flow problems.

OPPURTUNITIES: Oppurtunities is the external factor showcasing the opputunities in the market that can be explored by the organisation. Some of the examples are, high demand, liberalisation of Govt. rules and exiting of any organisation from the industry.

THREATS: Threats are another external factor showcasing the hurdles in the market that are to faced by the organisation.Some of the examples of threats are Substitute products, new entrants into the industry and reduction in purchasing power of the customers.

The Reason why I choose SWOT Analysis Tool is,

For every businessman to start or continue the business, firstly he should be fully aware of the market conditions.

Secondly to take a decision regarding business, he should be aware of both internal and external environmental factors effecting business. This can be achieved by performing SWOT analysis.

SWOT analysis also helps in identifying key areas where the organisation was performing well, as well as areas needed work.Thus SWOT analysis is also a great way to improve business operations.