SWOT Analysis

A powerful technique for

understanding your Strengths and
Weaknesses, and for looking at the
Opportunities and Threats you face.
 What is a SWOT?
 It is the organization of the info obtained in
the situation analysis:
– The company’s
 Strengths
 Weaknesses

– The environment’s
 Opportunities
 Threats

 SWOT offers professional managers an

effective evaluative technique to aid the
decision making process.
What’s it all about?

Success

Image

Your Company

SWOT

Situation analysis

Problem/Opp./Challenge

Real world
 Purpose of a SWOT Analysis
 Todefine the main issues that must
be addressed in the strategic plan
– Clarifies opportunities
– Identifies problems
 Issuesdiscovered in the SWOT will
be used to define Company’s
objectives, strategies and tactics
 Why SWOT technique?

A technique that enables a group or

individual to move from everyday
problems and traditional strategies to a
fresh perspective.
Framework for organizing and utilizing
the pieces of data and information
gathered from the situation analysis
 Purpose of a SWOT Analysis
 Structures the assessment of the fit
between
– what the firm can and cannot do
(Strength and Weaknesses)
– and the environmental conditions
working for and against the firm
(Opportunities and Threats)
 Can be used to uncover strategic
advantages that can be leveraged into
marketing strategy
 SWOT is an acronym for:

S – Strengths
Internal Environment
W – Weaknesses

O – Opportunities
External Environment
T – Threats
 A good SWOT
 Has a focus: Maybe more than one
analysis
 Searches extensively for competitors

 Does not forget other areas of the

company
 Thinks as the consumer
(internal/external)
 Separates clearly internal from external
sources
 How to use the Tool?
 To carry out a SWOT Analysis, answer the
following questions:
 Strengths:
What advantages does your company have?
What do you do better than anyone else?
What unique or lowest-cost resources do you have
access to?
What do people in your market see as your
strengths?
What factors mean that you "get the sale"?
 Strengths
 Strengths refer to what a company has done well or been
successful as on date. Or any existing or potential
resources or capability within the organisation that
provides a competitive advantage in the market.
 Consider this from an internal perspective, and from the
point of view of your customers and people in your
market. Be realistic.
 Looking at your strengths, think about them in relation to
your competitors - for example, if all your competitors
provide high quality products, then a high quality
production process is not a strength in the market, it is a
necessity.
 Examples
– Dell’s ability to sell directly (Phone/Web)
– Apple’s ability to come up with innovative designs
 STRENGTH
 A firm’s strengths are its resources and
capabilities that can be used as a basis for
developing a competitive advantage. Examples
of such strengths include:
• Patents
• Strong brand names
• Good reputation among customers
• Cost advantages from proprietary know-how
• Favourable access to distribution networks
Activity #1: Can you identify some of your
organisation’s strengths?
 Weaknesses
 Weaknesses refer to what a company
needs to correct or that has worked to
a company’s disadvantage to date. The
absence of certain strengths may be
viewed as a weakness.
 Examples
– Dell’s inability to create a mystique among
users.
– Apple’s relaxed culture made difficult to
make the company work as a one unit.
 Weaknesses
 For example, each of the following may be considered
weaknesses:
 Lack of patent protection
 A weak brand name
 Poor reputation among customers
 High cost structure
 Lack of access to key distribution channels
 In some cases, a weakness may be the flip side of a
strength. Take the case - a firm has a large amount of
manufacturing capacity. While this capacity may be
considered a strength that competitors do not share, it
also may be considered a weakness if the large investment
in manufacturing capacity prevents the firm from reacting
quickly to changes in the strategic environment.
 Weaknesses
 What could you improve?
 What should you avoid?
 What are people in your market likely to see as
weaknesses?
 What factors lose you sales?
 Again, consider this from an internal and external
basis: Do other people seem to perceive
weaknesses that you do not see? Are your
competitors doing any better than you? It is best
to be realistic now, and face any unpleasant truths
as soon as possible.
 Identify your Weaknesses
 Our company has no market presence or reputation.
 We have a small staff with a shallow skills base in many
areas.
 We are vulnerable to vital staff being sick, leaving.
 Our cash flow will be unreliable in the early stages.
 Be truthful so that weaknesses may be overcome as
quickly as possible
 One’s strength is another’s weakness
 Questions.
– What is done poorly?
– What can be improved?
– What should be avoided?
 Opportunities
 Opportunities refer to external factors that
may benefit the company if pursued.
 Any existing or potential force in the external
environment that, if properly leveraged, could
provide a competitive advantage.
 Examples

– Current generation’s waistlines are

expanding, so demand for baggy pant is
stronger.
– A weak economy might make business
people look for better airfares
(Priceline.com)
 Identifying Opportunities
 Our business sector is expanding, with many future
opportunities for success.
 Our government wants to encourage local businesses
investors.
 Our competitors may be slow to adopt new
technologies.
 The external environmental analysis may reveal
certain new opportunities for profit and growth.
 Some examples of such opportunities include:
 • An unfulfilled customer need
 • Arrival of new technologies
 • Loosening of regulations
 • Removal of international trade barriers
 Identifying Opportunities
 Where are the good opportunities facing you?
 What are the interesting trends you are aware of?
 Useful opportunities can come from such things as:
 Changes in technology and markets on both a
broad and narrow scale.
 Changes in government policy related to your field.
 Changes in social patterns, population profiles,
lifestyle changes.
 Local events.
 A useful approach for looking at opportunities is to
look at your strengths and ask yourself whether
these open up any opportunities.
 Threats
 Threats refer to external variables that
may negatively affect the company if
ignored
 Any existing or potential force in the
external environment that could erode
a competitive advantage.
 Examples:
– A negative legal environment for tobacco
companies.
– A weak economy might force business
people to look for cheaper airfares.
 Questions on threats
Changes in the external environmental also may
present threats to the firm. Some examples of
such threats include:
• Shifts in consumer tastes away from the firm’s
products
• Emergence of substitute products
• New regulations
– Are your competitors becoming stronger?
– Are there emerging trends that amplify one of
your weaknesses?
– Will developments in technology change this
market beyond our ability to adapt?
Carrying out this analysis will often be illuminating
– both in terms of pointing out what needs to be
done, and in putting problems into perspective.
 SWOT - Strategic Planning
STRENGTH OPPORTUNITY

Match

Convert Convert

WEAKNESS THREAT

Minimize/Avoid Minimize/Avoid
 Aim of SWOT Analysis
1. Take advantage of strengths and
opportunities.
2. Minimise weaknesses and eliminate threats

What makes SWOT particularly powerful is

that, with a little thought, it can help you
uncover opportunities that you are well
placed to exploit. And by understanding the
weaknesses of your business, you can
manage and eliminate threats that would
otherwise catch you unaware.
 Who Needs SWOT Analysis?
A Company
 When revenue, cost and expense
targets are not being achieved;
 Market share is dropping;
 Industry conditions are
unfavourable;
 Want to launch a new business
venture; etc
 Who Needs SWOT Analysis?
A Department/Business Unit
 When the team has not met its
targets;
 Customer service can be better; thru
customer complaints!
 A new business unit to pursue a new
business;
 A new team leader is appointed; etc
 Who Needs SWOT Analysis?
Job Holder
 When supervisor has issues with
work output;
 Assigned to a new job;

 New financial year – fresh targets;

 Job holder seeks to improve

performance on the job; etc.
 How to do SWOT Analysis?

Step 1 Step 2 Step 3

Analyse Internal Perform SWOT

Prepare
& External Analysis and
Action Plans
Environment Document

A SWOT analysis is useful only when

action plans and strategies are
developed from the results
 Benefits of SWOT Analysis
 Solving problems
 Implementing change
 Developing strategies for achieving
the organisation’s objectives and
mission
 During depressed economic times,
there are still lots of winners!!
 Most strategies fail because there
are no clear directions!
Brainstorming – key ingredient for SWOT
SWOT analysis will be useful if:

 You are thinking outside the box

 Availability of varied perspectives – group
discussion
 Liberty to say your mind
 Willingness to break away from traditional
methods
 Appetite for change
Some Brainstorming Rules
Everyone must No idea is stupid, Build on the ideas of others-
participate everyone’s contribution You don’t have to use initial ideas as a jumping
is valid and important agree with anyone else -off point for more ideas

Always ask questions Seek first to understand


Be open-minded before being understood Have fun!!!
 Sample Questions
Strength Weakness
Which strengths are  What should be done
unique to the team? better in the future?

 What are we good at  What knowledge do we

doing? lack?

What are the things that  Which skills do we lack?

had gone well?
 What system do we
need to change?
 SWOT GRID
Opportunities Threats
 What are the key  Barriers to progress
success enablers?
 What are the possible
 Which additional impacts of what
services can we offer? competitors are doing?

 What new market  Which regulatory issue

should we investigate? might cause us
concern?
 Where do we go from here?
 Strategic planners should understand
what the company’s alternatives are
for solving the market challenge.
 It is a session of participatory group
process, which produces output
valuable for annual planning.
 Purpose of Strategy is to be really
clear before you take the direction.
SWOT is the best shot to have the
ground plan