Best Guide Of Every Business Weakness

What is SWOT Analysis?

 

SWOT (strengths, weaknesses, opportunities and Threats) Analysis is a strategy to estimate a company’s competitive position and to develop effective techniques for the prospering of your business weakness. The SWOT analysis assesses both internal and external factors for both present and future planning. The company’s weaknesses are analyzed through this. This enables a realistic and data-driven look at the strengths and weaknesses of an organization. It avoids any preconceived notions and instead focuses upon real-life contexts.

The analysts present a SWOT analysis as a square segmented into four major quadrants each dedicated to an element of SWOT. Although all points under a heading may not be of equal importance, they provide an overview of the opportunities and threats, advantages and disadvantages. The weaknesses stop an organization from working at its optimum level. In these areas, the business weakness needs to improve so that it can have a competitive edge Weaknesses stop an organization from performing at its optimum level. They are areas where the business weakness needs to improve to remain competitive: a weak brand, higher-than-average turnover, high levels of debt, an inadequate supply chain, or lack of capital. It is quite understandable that some so-called weaknesses are natural and necessary trade-offs of your operational strategy. 

 

Some Business Weaknesses

 

• Financial

The high cost of carrying out business weakness and a limited cash flow is what poses a hurdle for businesses. You need expensive technology, equipment and services to operate so if your earnings are not sufficient to cover your costs then making profits can be a major problem for the business. Having limited access to loans or investors may be seen as a financial weakness. Owners must be aware of how much cash flow their business is generating per month by the daily operating, investing and financing activities of the company. This will help determine if the cash in their bank is increasing or decreasing and what areas need to be fixed.

Moreover, the financial statements are inaccurate so that your bank, investors or business partners may find it impossible to read them. There is a very high chance that your statements are not correct if your accounting staff has no proper training in preparing such documents in compliance with the Generally Accepted Accounting Principles (GAAP). This is why employing a certified public accountant will help you review your financial statements about what is not being done correctly. 

 

• Production Inefficiencies

Whether reselling or manufacturing goods, production efficiency is what helps generate profits. The equipment and production processes must be improved to deal with this weakness. The workforce morale is also equally important meaning that motivated employees will work to the best of their abilities. This is why providing incentives to them when certain company goals are achieved will help them stay satisfied with the work environment. Inefficiency will cost you a lot and this happens when you spend more money than you need to in order to arrive at the same results. These are defective equipment that needs to be discarded, excess inventory or long-distance phone calls charges that deplete your company’s bank accounts. Similarly, inefficiency wastes time that cannot be recovered, unlike money.

Time spent waiting for the manager to assign you a new task or waiting for a process. To end will prove disadvantageous for you in the long run. Additionally, time is not a measure of work hours but in the potential output of the organization. For instance, a frustrated, overworked and underappreciated employee won’t produce the same level of work as a well-rested, satisfied and well-appreciated employee in the same time span. The same case is with inefficiency decreasing the worker morale when they are continuously being given rote or error-prone tasks to perform for more than 8 hours a day. Employees can be replaced by a machine but it should be apparent that. Any job that can be substituted by technology was already not engaging enough. 

 

• Weak Brand Image

If your brand image is weak or considered unrecognizable in the market. Then generating profitable sales may seem a tedious task. A poor brand image is due to low standard products and services. Maybe you lack a marketing budget or your promotional strategies did not fare very well. Moreover, social media plays a very major role in upholding a positive brand image which should be regularly updated. A good brand is a perfect marketing tool however it requires time, effort, money and research to do so. If this struggle is compromised then a poor brand image can cause a loss of sales, customers and repeat business.

If a brand name is not identifiable with the products and services it represents. It can fade away from the customers’ memory. A good brand name is synonymous with the products themselves. If your marketing is not up-to-the-mark then your customers won’t stay attracted to what you have to offer. This may even drive them to other competitors who have a better brand name or consumer awareness. The lack of customer loyalty and trust can even lead to lower sales. And future opportunities for revenue may also be lost. 

 

• Diversification 

 

Considering the rewards and risks, a company must access whether diversification is needed or not. However, it is understood that diversification into unrelated business areas correlates with higher risk and poor performance. The rationale behind a diversified company is that related businesses can share resources. This means the cost of producing various products offered by the company collectively is lesser. Than that when these products are manufactured separately.

This phenomenon is ‘economies of scope’ and arises when separate products are generated. From a common process or the products share. The same equipment, distribution channels or other intangible assets. Benefits can be generated on the demand side of the equation, when. For example, firms use excess resources to diversify into other markets and, as a result, generate higher revenues. Diversification also allows the emergence of well-defined market niches. Inter-firm learning is likely to take place, due to exchanges of personnel across organisational boundaries.