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When your organization created its first strategic plan, did you work through a SWOT analysis?
If so, when was the last time you actually looked back at this plan?
Your organization is likely aware of its strengths and weaknesses, but your opportunities and threats may change more frequently. When updating your strategic plan, it is important to include an opportunity and risk analysis (or threat analysis) as an integral part of the process. This will help your team answer questions like:
What situations and trends can we take advantage of to improve our business in the short, medium and long term?What risks might be coming around the corner and what effect will it have on our business?What's the likelihood of it happening, and what is the impact going to be?How can we plan for contingencies to manage the risks and the impacts?
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When taking stock of these external factors that could affect your business (positively or negatively), there are six areas that you should take into consideration:
Political - How does governmental change and intervention affect your business? (Ex: public contracts being awarded, infrastructure developments, policy changes, etc.)Local politics heavily impact your business. Bus lanes, bike lanes, and local traffic laws may either generate or restrict access to your street front business. International politics and trade regulations can impact your organization, or potentially affect the supply chain of your customers, suppliers, or competitors.
Economic - Things like economic growth and interest rates top the list. As I'm sure you're aware, the past few years have been a volatile economic climate and that has impacted and changed many industries. As the local or global economies change or evolve, what impacts might that have on your organization?
Social - Social factors are driven by people and their preferences. Current issues like Gay and lesbian rights, gender equality, food quality and GMO labeling, climate change, and business transparency are frequently found in the news. These are hot buttons for consumers and should be taken into consideration when making business decisions.
Technological - A decrease in price for a technology you use could be good for you, but it could also lower the barrier to entry for prospective competitors.Additional competitors also decrease margins and take market share. Technology and innovation can be great for business, but if you're not paying attention it can be your ultimate demise as well. Technology often enables industry disruption. The taxi industry (Uber), hotel industry (Airbnb), and many others have been affected by technological advances.
Legal - Laws change often. While they are a result of government intervention, they do have an impact on how you do business. If you're doing business in another country, you certainly have to take stock of the different laws and your rights within them For example, Canada has the CASL policy to decrease email SPAM, while internationally, the EU has developed GDPR regulations for storing and utilizing citizen information that is captured online. Both of these initiatives caused a flurry of marketers to make sure that they had expressed consent to send their electronic communications, and store contact information, for risk million dollar fines.
Environmental - How do changes in the environment affect your business or industry?If you're in the commodities business it's extremely important, because of the effects of supply and demand on price. If you're in the tourism business, how will changes in weather affect your business, and is there anything you can do to mitigate that risk?Environmental change (climate change) is also creating new industries and can create opportunities for you as well.
When creating your strategic plan be sure to take these six areas into consideration. How well you react and adapt to these types of changes will determine if you're faced with an opportunity or a threat.
If you are looking for help developing your next strategic plan, learn about how working with a facilitator can help you maximize the benefits:
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