SWOT Analysis

Process involved in SWOT analysis

Oppurtunity
Threats
Strengths
Weakness
Acronym for Strengths, Weaknesses, Opportunities, and Threats.
Technique is created by Albert Humphrey who led a research project at Stanford University in the 1960s and 1970s.
Planning tool used to understand Strengths, Weaknesses, Opportunities, & Threats involved in a project / business.
Used as framework for organizing and using data and information gained from situation analysis of internal and external environment.
Technique that enables a group / individual to move from everyday problems / traditional strategies to a fresh perspective.
What is SWOT Analysis?

STRENGTHS
Characteristics of the business or a team that give it an advantage over others in the industry.
Positive tangible and intangible attributes, internal to an organization.
Beneficial aspects of the organization or the capabilities of an organization, which includes human competencies, process capabilities, financial resources, products and services, customer goodwill and brand loyalty.
Examples - Abundant financial resources, Well-known brand name, Economies of scale, Lower costs [raw materials or processes], Superior management talent, Better marketing skills, Good distribution skills, Committed employees.
What is SWOT Analysis?

WEAKNESSES
Characteristics that place the firm at a disadvantage relative to others.
Detract the organization from its ability to attain the core goal and influence its growth.
Weaknesses are the factors which do not meet the standards we feel they should meet. However, weaknesses are controllable. They must be minimized and eliminated.
Examples - Limited financial resources, Very narrow product line, Limited distribution, Higher costs, Out-of-date products / technology, Weak market image, Poor marketing skills, Limited management skills, Under-trained employees.
What is SWOT Analysis?

Evaluating the company’s weaknesses

OPPORTUNITIES
What is SWOT Analysis?
Chances to make greater profits in the environment - External attractive factors that represent the reason for an organization to exist & develop.
Arise when an organization can take benefit of conditions in its environment to plan and execute strategies that enable it to become more profitable.
Organization should be careful and recognize the opportunities and grasp them whenever they arise. Opportunities may arise from market, competition, industry/government and technology.
Examples - Rapid market growth, Rival firms are complacent, Changing customer needs/tastes, New uses for product discovered, Economic boom, Government deregulation, Sales decline for a substitute product .

SWOT ANALYSIS - THREAT
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THREATS
What is SWOT Analysis?
External elements in the environment that could cause trouble for the business - External factors, beyond an organization’s control, which could place the organization’s mission or operation at risk.
Arise when conditions in external environment jeopardize the reliability and profitability of the organization’s business.
Compound the vulnerability when they relate to the weaknesses. Threats are uncontrollable. When a threat comes, the stability and survival can be at stake.
Examples - Entry of foreign competitors, Introduction of new substitute products, Product life cycle in decline, Changing customer needs/tastes, Rival firms adopt new strategies, Increased government regulation, Economic downturn.

Recognizing the company’s opportunities and threats

HELPFUL
HARMFUL
To help decision makers share and compare ideas.
To bring a clearer common purpose and understanding of factors for success.
To organize the important factors linked to success and failure in the business world.
To analyze issues that have led to failure in the past.
Aim of SWOT Analysis?
To provide linearity to the decision making process allowing complex ideas to be presented systematically.

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
When the team has not met its targets
Customer service can be better
Launching a new business unit to pursue a new business
New team leader is appointed
When revenue, cost & expense targets are not being achieved
Market share is declining
Industry conditions are unfavorable
Launching a new business venture
Who needs SWOT Analysis?

Workshop Sessions
Brainstorming Meetings
Strategic Planning
Product Evaluation
Competitor Evaluation
Personal Development Planning
Decision Making
Product Launch
Changing Jobs
Who needs SWOT Analysis?
SWOT Analysis is also required for / during...

How to conduct SWOT Analysis?

How to conduct SWOT Analysis?
1. Analyse Internal & External Environment

How to conduct SWOT Analysis?

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Carry your findings forward - Make sure that the SWOT analysis is used in subsequent planning. Revisit your findings at suitable time intervals.
Create a workshop environment - Encourage an atmosphere conducive to the free flow of information.
3
Allocate research & information gathering tasks - Background preparation can be carried out in two stages – Exploratory and Detailed. Information on Strengths & Weaknesses should focus on the internal factors & information on Opportunities & Threats should focus on the external factors.
2
Select contributors - Expert opinion may be required for SWOT
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Establish the objectives - Purpose of conducting a SWOT may be wide / narrow, general / specific.
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Evaluate listed ideas against Objectives - With the lists compiled, sort and group facts and ideas in relation to the objectives.
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List Strengths, Weaknesses, Opportunities, & threats
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How to conduct SWOT Analysis?
2. Perform SWOT Analysis & Document

How to conduct SWOT Analysis?
3. Prepare Action Plan
Things that MUST be addressed immediately
Once the SWOT analysis has been completed, mark each point with:
Things that can be handled now
Things that should be researched further
Things that should be planned for the future

Benefits & Pitfalls of SWOT Analysis
Benefits of SWOT Analysis

Benefits & Pitfalls of SWOT Analysis
Benefits of SWOT Analysis
Helps in setting of objectives for strategic planning
Besides the broad benefits, here are few more benefits of conducting SWOT Analysis:
Provides a framework for identifying & analyzing strengths, weaknesses, opportunities & threats
Provides an impetus to analyze a situation & develop suitable strategies and tactics
Basis for assessing core capabilities & competencies
Evidence for, and cultural key to, change
Provides a stimulus to participation in a group experience

Benefits & Pitfalls of SWOT Analysis
Pitfalls of SWOT Analysis
Can be very subjective. Two people rarely come up with the same final version of a SWOT. Use it as a guide and not as a prescription.
May cause organizations to view circumstances as very simple due to which certain key strategic contact may be overlooked.
Categorizing aspects as strengths, weaknesses, opportunities & threats might be very subjective as there is great degree of uncertainty in market.
To be effective, SWOT needs to be conducted regularly. The pace of change makes it difficult to anticipate developments.
The data used in the analysis may be based on assumptions that subsequently prove to be unfounded [good and bad].
It lacks detailed structure, so key elements may get missed.

Brainstorming & Prioritization in SWOT Analysis
Brainstorming
Prioritization
Output from Brainstorming exercise is Prioritized
Begin brainstorming by asking the following questions:
What opportunities exist in our external environment?
What threats to the institution exist in our external environment?
What are the strengths of our institution?
What are the weaknesses of our institution?
At the end of the Brainstorming exercise:
Reduce the list of strengths & weaknesses to no more than five distinctive competencies and debilitating weaknesses
Strengths that are distinctive competencies
Weaknesses that are debilitating
Reduce threats and opportunities to the five most critically important of each.

Exercise
EXAMPLE
Mc Donald’s SWOT Analysis

INTERNAL
EXTERNAL
Exercise
Mc Donald’s
SWOT Analysis

Brainstorming

Types of brainstorming

Types of brainstorming

Pareto analysis – An introduction

Pareto analysis – Guidelines and challenges