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Production of poor quality products and continued production of commodities with a decreasing demand it’s a weakness to the organization. Consumers look out for high quality products and hence will buy more of such products. If an organization produces low quality products it means that consumers will stop buying these products and shift to high quality products. As a result an organization will experience a decrease in sales as well as the profits. A product might experience decrease in demand because of entry of a new product in the market that has advanced features, hence making the consumers shift to this new product.
There are major opportunities available to an organization and the management should always be alert and ready to take up this opportunities. The government may declare tax reduction for organization with high levels of production. As such, this can be an opportunity to the organization to increase its production levels and enjoy reduced tax liability. In addition, the government may create a total ban on import tax on certain equipments or supplies used by an organization. This is also an opportunity for the organization to increase its investment on such equipments or supplies. In many cases, government creates opportunities based on organization’s level of compliance with the rules and regulations.
Reduction in prices of supplies, raw materials and other inputs is an opportunity for an organization if it makes purchases in bulk. This however will depend on storage space required and the features of such inputs, supplies and raw materials. This is because an organization must have enough storage space and only non perishables can be preserved for a long time. This strength depends on an organization’s financial stability which is an internal factor; in particular an organization been financially stable is one of its major strengths. The organization can as well enjoy economies of scale if it increases its level of production.
The level of development in the business locality in terms of infrastructure it is an opportunity for the organization. It is easier for an organization to acquire labor in areas that are developed because people with the required experience and qualification move in such places to seek jobs. In addition, good infrastructure is an opportunity for an organization because the organization does not have to incur major costs in installation of the infrastructure.
Threats are external factors that an organization has no control over them and they do impact on an organization negatively. Decrease in supply of raw materials and other inputs it is a threat to an organization. The organization will fail to produce as per the production target which will be costly to the organization because it will have to produce less but at the same production levels (HBSP, 2009). On the other hand, the sales level will decrease which results into reduced profitability. An organization can counter this strength by buying supplies in bulk and preserving them to use when the supplies level reduce. In addition, price increase in supplies can be a threat to an organization because it will have to incur extra cost.
Technological development can be a threat to an organization if at all the organization has not established strategies that are up to date with the changes in technology. An organization has to review the amount allocated for capital investments because a new technology comes hand in hand with increase in costs. In addition, if the employees are not prepared to welcome these technological changes they may be resistant to them hence making organization’s progress plan unrealistic. If the competitors are technologically advanced than the organization this will pause to be a threat to the organization because the production level will go down because the organization’s processes are still of the old age.
Political instability in the country of operation or in other countries is a threat to an organization. This is because for an organization to operate efficiently there should be peace prevailing. The organization may have to close down its operations due to political instability. Changes in the world or nation economy can be a threat when there is inflation and increase in interest rates. This is because the organization has to operate in high costs due to increase in price for supplies, imports or local and increase in cost of finance.
As highlighted above, strengths are the advantages and weaknesses are disadvantages of an organization in relation to the business environment in which it is operating. Strengths and weaknesses are internal factors of the organization and it has the ability to control them. On the other hand, opportunities can impact positively on the organization if they are exploited according and threats can destroy the image of the organization and its performance. Opportunities and threats are external factors of the organization and these factors are uncontrollable by the organization. However, an organization can develop strategies to embrace opportunities and minimize the negative effect of the threats (Scott, 197-212).