Importance of SWOT and PEST Analyses on Strategic Sourcing

Strategic Sourcing
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Strategic Sourcing
For the business to grow and achieve its missions and vision, there is a need to identify viable and productive strategies. Both SWOT and PEST analyses are significant and help the company formulate strategies. Strategic sourcing refers to procurement operations connecting consumption analysis, market research, and business contracts. Therefore, understanding SWOT analysis will help the company understand these key areas relating to procurement and how to address them.
Firstly, SWOT analysis is essential in formulating business strategies. SWOT refers to strengths, weaknesses, opportunities, and threats affecting business activities. By analyzing its strength, the company can tell its position and what it does best to gain a competitive advantage. Understanding the weaknesses is essential since it helps the business identify critical areas that need improvement and actions to be done and achieved on the set time. Opportunities highlighted the advantages that the company is exposed to and how to utilize them to gain competitive advantages (Falcone et al., 2020). Lastly, the threats refer to throwbacks that undermine the business performance and procurement process. Understanding SWOT is significant as it will help increase productivity, reduce wastage, and access an e...