SWOT is a very effective tool for analyzing business organizations and drawing conclusions about the overall condition of the organization. There are mainly four parts in a SWOT analysis; Strengths, Weaknesses, Opportunities, and Threats. But very often, we get confused and fail to distinguish between weakness and threats. As a result, we use these terms interchangeably, resulting in a wrong analysis of the organization. Here in this article, I will discuss the key aspects of both of these terms with appropriate examples that will clear all your confusion for once & all and help you to use them properly.
What is Weakness?
Weaknesses are the factors that hinder an organization from performing optimally and achieving its goals properly. These are the internal factors of the organization that create disadvantages and are not avoidable by the organization. They must be dealt with to solve the issues created by them.
Examples of Weaknesses
One of the biggest global beverage companies, Coca-Cola, uses sugar as one of the main ingredients in making their signature product, coke. As we know, sugar is hazardous for health. [1] So, drinking coke regularly for a long time can damage human organs. This problem can be regarded as a big weakness of the company. Consumers are now well-aware of the hazards of such ingredients. Due to this weakness, Coca-Cola cannot make these health-conscious consumers their loyal customers. This internal factor/ weakness works as a barrier to converting consumers as loyal customer-base for their brand. Avoiding this factor will hinder the growth of this company. This weakness needs to be tackled.
Similarly, the premium pricing policy of Netflix, the replicable business model of Walmart, the lack of innovation by Nokia, the inefficient self-contained web traffic of Instagram, etc., are some more examples of weaknesses.
What is Threat?
Threats are the factors that have potential harm to the organization. These external factors may make the company face loss or put it under some kinds of risks. The organization itself cannot tackle threats; they can be avoided or faced with proper preparation.
Examples of Threats
Amazon is the most well-known e-commerce company in the world. Despite being financially and having this much strength strategically, the company has the threat of being prevailed over by the local retailers. Social media-based online shops and local e-commerce companies are more agile and can provide more personalized services to customers. The rise of these entities puts amazon at risk of losing the local market to them. The company cannot resolve this external factor as it does not have any direct power over these entities. Rather they can be faced and tackled strategically with proper preparation.
Similarly, global recession for premium brands like Lamborghini, price hike in the petroleum market for manufacturing companies, global lockdown for Airbnb, etc., are other examples of threats.
Differences Between Weakness and Threats
- Weaknesses are the internal factors of the company These are the part of the internal environment that the organization itself possesses. But Threats are external dangers. They are part of the external environment that influences the company.
- Weaknesses are the existing problems inside the company. The factors that are already hampering your business and have a bad impact on the organization at present. On the contrary, threats have the potentiality of endangering your company. Mostly, threats are the factors that may be detrimental in the future.
- Companies need to reduce their weaknesses, and they cannot avoid such issues as they’re already part of it. Steps should be taken to resolve such issues. On the other hand, threats are avoidable. Companies can avoid facing the threats by not taking the route where these threats may arise. They can be ignored and avoided by organizations.
- Competitors do not have the power to influence or aggravate your organization’s weaknesses. Weaknesses can be worsened only by the organization itself and other internal factors. Dissimilarly, competitors or other external organizations often use threats against the organization. Competitors have the power to manipulate these threats for competitive advantage.
Related Reading: Competitive Advantages of Samsung
- Weaknesses Do not hinder other players in the market. The organization that possesses the weaknesses suffer from them. Oppositely, threats are more or less detrimental for all the market players in the same industry.
Are There any Similarities Between them?
The only similarity weaknesses and threats have in them are that the factors involved are harmful for the organization. Be it a weakness or a threat, both of them have a negative impact on the organization. Companies need to be well aware of such factors for smoother business operations and efficiency.
How to Recover Weaknesses?
Weaknesses can be recovered through improving strategically. Businesses need to find the core issues behind these weaknesses and solve that for operating at an optimum level. Weaknesses are easier to solve since the company has direct control over them.
The previous example of Coca-Cola’s example can be the case again. So, Coca-Cola invested in their R&D and developed a new product called Coke Zero that tastes the same but does not contain any sugar. The company also implemented aggressive marketing strategies to create awareness about its new product. Thus, they have recovered the weakness of their business.
How Can You Protect a Business from Threats?
Business organizations need to take precautions in order to protect themselves from threats. As we said earlier, threats can be ignored and avoided too.
If we drag our previous example of Amazon’s threat, we can illustrate it better. So, Amazon tackles the threats of these local small market players through its cost-leadership strategy and marketing campaigns. Amazon is mainly facing threats rather than avoiding them. Neither can Those small companies buy in such large amounts, nor do they have the financial capacity to tackle Amazon’s marketing campaigns. So, businesses must find the appropriate method and take precautions to mitigate the risks of threats.
Bottom Line
It’s necessary to understand the differences properly, as the actions by the company may depend on the analysis. If we mix up these two terms, there’s a chance that the company goes on the wrong path or considers a negative factor wrongly. I hope the article has been very specific about the differences and clarified all your confusions properly. Happy analyzing!
References
- https://timesofindia.indiatimes.com/life-style/food-news/side-effects-of-drinking-soft-drinks/photostory/85330103.cms
I am a finance enthusiast who writes well-researched articles and blogs on business analysis, the financial service industry, and marketing analytics. My writings result from accurate market data and the application of my profound theoretical knowledge about business.