Need for Flexibility in Business Management explanation

Need for Flexibility in Business Management explanation

Opportunities and Threats
When we look beyond the organisational boundary, we find that an organisation is exposed to environment and breathes in the environment. All its input such as men, material, money comes from outside and all its output are passed on to the environment, namely, customers. Each of these environment factors operates in their own interest. Many of these external agencies are themselves dynamic and as such vary their interest according to their environment.
Some of the changes that are favourable to your organisation create opportunities and some which are not favourable threats.

There are different types of changes:
• Technical changes: these largely comprise new innovations in products, materials, services.
• The economic changes- for example: levying new tax or removing one, business entering into a recessionary phase in a business cycle etc. thus affecting the demand for a product.
• Political changes: a country a declaring a war or opening or closing its border and thereby affecting demand or supply of products can be sited as example.
• The legal changes: comprise banning or encouraging particular products or services. The ban on bars influenced dancers in bars, and reduced the business of such bars.

Strength and weaknesses
So far we referred to external threats and opportunities in case of an organisation within the organisation too, we witness weaknesses and strengths. An organisation may have a very capable leader who dies in the accident and temporarily the organisation may become weak. An organisation may have good cash flow, and plan expansion. All of the sudden, one of the major buyers may be declared bankrupt and lot of receivables may get affected and cash availability may become a weakness. The internal strengths and weaknesses are within managerial control of the organisation compared to threats and opportunities which are beyond the organisation control.

SWOT Analysis
The analysis of such factors whether in the form of strengths, weaknesses, opportunities and threats to organisation is called as SWOT analysis? This word is a short form of strengths, weakness, opportunities and threats. The important implication of a SWOT analysis is accepting that during the life of an organisation and its business.