How to Identify Opportunities and Threats in Business Planning
After you have assessed your company’s strengths and weaknesses as part of the business planning process, look for external forces that can affect the destiny of your business. These changes include
The appearance of new or stronger competitors
The emergence of unique technologies
Shifts in the size or demographic composition of your market area
Changes in the economy that affect customer buying habits
Changes that alter the way customers access your business
Changes in politics, policies, and regulations
Fads and fashion crazes
Using a form similar to the one in the following figure, list the threats and opportunities facing your business, and follow these guidelines:
When listing opportunities, think about emerging technologies, availability of new materials, new customer categories, market growth, new uses for old products (think about how cellphones now double as cameras and even computers), new rules and regulations, new distribution or location opportunities, positive changes in your competitive environment, and other forces that can contribute to your success.
When listing threats, consider the impact of shrinking markets, changing consumer trends, raw material shortages, economic downturns, new regulations, and threatening changes in your competitive environment, including new competitors and competitive mergers and alliances. Also think about the impact of expiring patents, labor issues, global issues, and new products that may make your offering outdated or unnecessary.
If you’re having a tough time getting specific, go back to your strengths and weaknesses survey, but this time use it to list strengths and weaknesses of your leading competitor. You won’t know as much about your competitor’s capabilities as you know about your own, but you probably know enough to flag areas of strength and weakness. Your competitor’s strengths are potential threats to your business, and its weaknesses present potential opportunities.
When a catering company began planning to expand into a small chain, the owners held a retreat to consider potential threats and opportunities. The figure shows their findings.
Looking over the list, the caterers were encouraged. Their opportunities outnumbered their threats. What’s more, they were convinced that they had the capabilities to capitalize on the pluses and counter the negatives.