Nowadays, businesses must operate in a highly competitive environment where only the strongest survive. Therefore, it is critical to understand the firm’s strongest points, where it can make a profit, and its weakest points, which it has to improve on in order to stay in business. In this situation, one of the ways to determine weak and strong areas is through a SWOT analysis that covers strengths, weaknesses, opportunities, and threats. By analyzing these points, a firm will be able to benefit from the strong areas, improve the weak spots, be mindful of areas of opportunity, and plan for market threats. Thus, a SWOT analysis should highlight a firm’s fundamentals while also recognizing possibilities it cannot currently employ to its maximum owing to a deficiency in resources.
As a result, managers must thoroughly evaluate the firm’s strong and weak points in order to develop competencies that provide potential. Managers should have a comprehensive grasp of their own strengths and shortcomings in order to ensure they have the correct resources rather than just a vast amount of resources. Subsequently, if the given resources are deemed appropriate, they might be shaped into core competencies.
A firm’s internal organization is its overall structure that is used to perform its core operations. The organization must be decided by the firm’s general strategy as well as the network infrastructure that must be established both internally and externally. By analyzing the internal organization, firms identify what they can do to improve the given circumstances or avoid failures. For example, they can identify unique resources that the firm possesses or the unique resources they can acquire. Moreover, the firms can develop their capabilities or intensify the already existing capabilities and profit from them greatly. Lastly, the strengthened capabilities can become the competencies of a firm that are required for a long-term competitive advantage.