Weaknesses of the enterprise - what do they result from?

Effective functioning on the market is a real art. Entrepreneurs face many challenges every day, which often hinder the achievement of set business goals. Among them are the weaknesses of the enterprise. Where do they come from? How to fight them? We advise!

Weaknesses of the enterprise - the bane of every entrepreneur

Efficient performance of everyday tasks, implementation of all business assumptions, profit and a stable position on the market are the main goals of every entrepreneur. Ultimate success is not a coincidence. It is a consequence of commitment, workload and wide-ranging, well-thought-out activities. The company's success in the market depends on many factors - internal and external. What effectively hinders the achievement of goals are the weaknesses of the company.

Weaknesses are all features, resources and internal processes that negatively affect the functioning of the company, hinder the performance of business tasks and complicate management at the operational and strategic levels. Weaknesses clearly reduce the company's chances of success on the market. 

Recognizing the weaknesses of a company is critical to running a successful business. The basic tool used for this purpose is the SWOT analysis. What is it about? 

SWOT analysis - an indispensable tool in business

SWOT analysis, created by Albert S. Humphrey in the 1960s, is one of the most frequently used techniques for organizing and verifying information about the company and its environment. It is a tool for researching the company in order to optimize the company's management strategy or to build a completely new one strategic plan. The essence of the analysis is to determine the company's current position on the market and its prospects for the near future. 

The name of the SWOT analysis is an acronym for 4 English words:

• strengths - strengths of the enterprise, which can foster development, distinguish the company on the market, give it an advantage over the competition,
• weaknesses - weaknesses of the enterprise that may inhibit its growth,
• opportunities - opportunities arising from the environment that may facilitate the company's development,
• threats - threats from the environment that can make it difficult for it.

The SWOT analysis consists in identifying the above groups of factors and describing their impact on the functioning of i enterprise growth. The test can be conducted against one of three reference points:

1. historical - comparison of the current state with the past one (e.g. from a year ago),
2. normative - reference of the current state to the preferred one,
3. cross-subject - comparison with the average level of competition in the market. 

The analysis determines the company's strength in the market. It indicates which elements should be improved and which should be highlighted. It is a great support in building strategic plans and developing a priority course of action. It can also be the basis for reorienting the direction of activities so far or the starting point for creating a business plan.

In the SWOT analysis, it is worth focusing on the company's weaknesses. What can they result from?

Weaknesses of the enterprise - areas

1. Human Resources

The first group of weaknesses of the company stems from human resources. One of the most common problems of organizations is the low level of employees' competences or insufficient knowledge in specific areas. Poor qualifications may translate into average quality of services / products or low work efficiency. Another problem may be an inadequate work system, which makes it difficult for employees to freely share knowledge and competences. Employees cannot take advantage of the synergy effect, and therefore do not achieve maximum effects in their activities.

Among the company's weaknesses resulting from human resources, we will also mention:

• no conditions for development, no training, etc.,
• lack of motivation to act and acquire knowledge, insufficient commitment to daily duties,
• high level staff turnover,
• fear of failure and, consequently, not taking risks,
• bad workplace atmosphere, conflicts, unfair treatment.

2. Logistics, production, technology

The company's weaknesses may be the result of poor logistics, ill-considered production or not using modern technologies. In many cases, the problem is the inability to adjust the production process to changing customer requirements and fluctuations in demand. The rotation of suppliers and the instability of prices of delivered goods or components are other difficulties that affect the efficient and effective functioning of the company. Next, we will mention: depleted machinery, lack of innovation in production, bad location of the company, problems with timely orders, as well as frequent shortages of stocks in warehouses. 

3. Finance

Specialists mention bad financial management as the third area of the company's weaknesses. The problem is in particular:

• no control over expenses,
• difficult access to internal sources of financing,
• unsatisfactory financial results of the enterprise, making it impossible to maintain financial liquidity,
• no financial reserves.

4. Sales and customer service

The weaknesses of the company are also the limited number of sales representatives, poor quality of customer service, ignorance of customer needs, low reputation of the company, as well as ineffectiveness of marketing activities resulting from inadequate preparation, lack of appropriate knowledge or limited budget. Unfortunately, such problems can lead to a lowering sales efficiency. This raises further complications - incl. difficulty in maintaining financial liquidity, low position on the market, and in the worst case even the collapse of the enterprise.

5. Management

The management has an influence on the condition of the enterprise. If the superiors do not care about the development of employees, the management is dominated by an autocratic style, and the organizational structure leaves much to be desired, the company will never achieve its maximum efficiency. The lack of access to the most modern tools in one or more areas of company management can also be considered a weakness of the company. 

How to act to avoid failure?

The company's weaknesses do not yet decide its ultimate failure. If detected early, you can combat it without exposing the company to large losses. The key is to implement appropriate solutions that will improve the functioning of the company and allow it to use the market potential to the maximum.

If the SWOT analysis showed that the company is dominated by weaknesses and at the same time there are more opportunities than threats from the environment, it is recommended to use competitive strategy mini maxi. It is about taking advantage of opportunities while eliminating weaknesses. The advantage in such a situation is undoubtedly a friendly environment, thanks to which the company can maintain its stable position.

Elimination of weaknesses must correspond to their characteristics. The company should:

• look for effective ones employee development methods,
• take care of the atmosphere in the team, organize it integration trips for employees,
• adjust your business to changing market trends and technological progress,
• continually analyze the competition,
• get to know your customers all the time, listen to their needs and build long-term relationships with them,
• act according to a well-thought-out financial strategy, optimize costs,
• take care of the high quality of customer service,
• monitor the market and draw conclusions.

In the case of dominant weaknesses and threats, the best solution is to adopt a defensive strategy. In such a situation, there is a high risk of the enterprise's collapse. The company should therefore focus its activities on those areas that will allow it to survive on the market. Often the solution is to join forces with another company.