MODULE IN CBME 2 (Strategic Management)

Credits: 3 units

Pre-Requisite: None

I. Lesson Title: SWOT Analysis

II. Learning Outcomes:

At the end of this lesson, the students will be able to:

Perform the SWOT Analysis analytical model.

III. Lecture

What Is a SWOT Analysis?

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT Analysis is a
technique for assessing these four aspects of your business.

You can use SWOT Analysis to make the most of what you've got, to your organization's best
advantage. And you can reduce the chances of failure, by understanding what you're lacking, and
eliminating hazards that would otherwise catch you unawares.

Better still, you can start to craft a strategy that distinguishes you from your competitors, and so
compete successfully in your market.

How to Do a SWOT Analysis

You can approach a SWOT Analysis in two ways: to get people together to "kick off" strategy
formulation informally, or as a more sophisticated and formal tool.

In either case, gather a team from a range of functions and levels in your organization.
Use Brainstorming  techniques to build a list of ideas about where your organization currently stands.
Every time you identify a Strength, Weakness, Opportunity, or Threat, write it down in the relevant
part of the grid.

To clarify which section an idea belongs to, it may be useful to think of Strengths and Weaknesses as
internal factors – that is, to do with the organization, its assets, processes, and people. Think of
Opportunities and Threats as external factors, arising from your market, your competition, and the
wider economy.

Let's look at each area in more detail and consider what questions you could ask as part of your
analysis.
Strengths

Strengths are things that your organization does particularly well, or in a way that distinguishes you
from your competitors. Think about the advantages your organization has over other organizations.
These might be the motivation of your staff, access to certain materials, or a strong set of
manufacturing processes.

Your strengths are an integral part of your organization, so think about what makes it "tick." What do
you do better than anyone else? What values drive your business? What unique or lowest-cost
resources can you draw upon that others can't? Identify and analyze your organization's Unique Selling
Proposition  (USP), and add this to the Strengths section.

Then turn your perspective around and ask yourself what your competitors might see as your
strengths. What factors mean that you get the sale ahead of them?

Remember, any aspect of your organization is only strength if it brings you a clear advantage.

For example, if all of your competitors provide high-quality products, then a high-quality production
process is not strength in your market: it's a necessity.

Weaknesses

Now it's time to consider your organization's weaknesses. Be honest! A SWOT Analysis will only be
valuable if you gather all the information you need. So, it's best to be realistic now, and face any
unpleasant truths as soon as possible.

Weaknesses, like strengths, are inherent features of your organization, so focus on your people,
resources, systems, and procedures. Think about what you could improve, and the sorts of practices
you should avoid.

Once again, imagine (or find out) how other people in your market see you. Do they notice
weaknesses that you tend to be blind to? Take time to examine how and why your competitors are
doing better than you. What are you lacking?

Opportunities

Opportunities are openings or chances for something positive to happen, but you'll need to claim them
for yourself!
They usually arise from situations outside your organization, and require an eye to what might happen
in the future. They might arise as developments in the market you serve, or in the technology you use.
Being able to spot and exploit opportunities can make a huge difference to your organization's ability
to compete and take the lead in your market.

Think about good opportunities you can spot immediately. These don't need to be game-changers:
even small advantages can increase your organization's competitiveness. What interesting market
trends are you aware of, large or small, which could have an impact?

You should also watch out for changes in government policy related to your field. And changes in
social patterns, population profiles, and lifestyles can all throw up interesting opportunities.

Threats

Threats include anything that can negatively affect your business from the outside, such as supply
chain problems, shifts in market requirements, or a shortage of recruits. It's vital to anticipate threats
and to take action against them before you become a victim of them and your growth stalls.

Think about the obstacles you face in getting your product to market and selling. You may notice that
quality standards or specifications for your products are changing, and that you'll need to change those
products if you're to stay in the lead. Evolving technology is an ever-present threat, as well as an
opportunity!

Always consider what your competitors are doing, and whether you should be changing your
organization's emphasis to meet the challenge. But remember that what they're doing might not be the
right thing for you to do, and avoid copying them without knowing how it will improve your position.

Be sure to explore whether your organization is especially exposed to external challenges. Do you
have bad debt or cash-flow problems, for example, that could make you vulnerable to even small
changes in your market? This is the kind of threat that can seriously damage your business, so be alert.
 Figure 15. SWOT Matrix (www.business.docs.co.uk, 2011)

HOW TO CONDUCT A SWOT ANALYSIS

(articles.www.Bplans.com)

To get the most complete, objective results, a SWOT analysis is best conducted by a group of people
with different perspectives and stakes in the company. Management, sales, customer service, and even
customers can all contribute valid insight. Moreover, the SWOT analysis process is an opportunity to
bring your team together and encourage their participation in and adherence to your company’s
resulting strategy.

A SWOT analysis is typically conducted using a four-square SWOT analysis template, but you could
also just make lists for each category. Use the method that makes it easiest for you to organize and
understand the results.

It is recommended holding a brainstorming session to identify the factors in each of the four
categories. Alternatively, you could ask team members to individually complete our SWOT analysis
template, and then meet to discuss and compile the results. As you work through each category, don’t
be too concerned about elaborating at first; bullet points may be the best way to begin. Just capture the
factors you believe are relevant in each of the four areas.

Once you are finished brainstorming, create a final, prioritized version of your SWOT analysis, listing
the factors in each category in order of highest priority at the top to lowest priority at the bottom.

Questions to ask during a SWOT analysis

Below are some questions to help you develop each section of your SWOT analysis. There are
certainly other questions you could ask; these are just meant to get you started.

Strengths (internal, positive factors)

Strengths describe the positive attributes, tangible and intangible, internal to your organization. They
are within your control.

1. What do you do well?

2. What internal resources do you have? Think about the following:
 Positive attributes of people, such as knowledge, background, education, credentials,
network, reputation, or skills.
 Tangible assets of the company, such as capital, credit, existing customers or distribution
channels, patents, or technology.
3. What advantages do you have over your competition?
4. Do you have strong research and development capabilities? Manufacturing facilities?
5. What other positive aspects, internal to your business, add value or offer you a competitive
advantage?
Weaknesses (internal, negative factors)

Weaknesses are aspects of your business that detract from the value you offer or place you at a
competitive disadvantage. You need to enhance these areas in order to compete with your best
competitor.

1. What factors that are within your control detract from your ability to obtain or maintain a
competitive edge?
2. What areas need improvement to accomplish your objectives or compete with your strongest
competitor?
3. What does your business lack (for example, expertise or access to skills or technology)?
4. Does your business have limited resources?
5. Is your business in a poor location?

Opportunities (external, positive factors)

Opportunities are external attractive factors that represent reasons your business is likely to prosper.
1. What opportunities exist in your market or the environment that you can benefit from?
2. Is the perception of your business positive?
3. Has there been recent market growth or have there been other changes in the market that create
an opportunity?
4. Is the opportunity ongoing, or is there just a window for it? In other words, how critical is your
timing?

Threats (external, negative factors)

Threats include external factors beyond your control that could place your strategy, or the business
itself, at risk. You have no control over these, but you may benefit by having contingency plans to
address them if they should occur.

1. Who are your existing or potential competitors?

2. What factors beyond your control could place your business at risk?
3. Are there challenges created by an unfavorable trend or development that may lead to
deteriorating revenues or profits?
4. What situations might threaten your marketing efforts?
5. Has there been a significant change in supplier prices or the availability of raw materials?
6. What about shifts in consumer behavior, the economy, or government regulations that could
reduce your sales?
7. Has a new product or technology been introduced that makes your products, equipment, or services
obsolete?

Examples of a SWOT analysis

Below is an example SWOT analysis of a market position of a bakery business:

Weaknesses
Strengths Opportunities Threats
(Resolve,
(Build, Enhance) (Exploit, Expand) (Avoid, Thwart)
Reduce)
1. Talented baker 1. New in the 1.New bakery products 1.Low prices of
 market in the area competition
2. Experience of
2. High capital 2.High quality products
2. Competitive price requirements with reasonable prices
competitors in the
market
3. New and 3. Limited
3.Educated/degree 3. Best advertisement
aggressive financial
holder bakers strategies
marketing campaign resources
4. Lack of 4.Working families with
4. Location reputation children
4.Supplier dependent
5. Expertise/Strong 5. New in the
5.Customers’ loyalty 5.High inflation rate
Management market
6.Establishing
6.Products easy 6.Increasing cost of
6. Good reputation to expire
relationship with the
baking supplies
public
7.Lack of skilled 7.Intense competition
7. Arrival of new
7. High barrier to entry and trained
technology
with other bakery
manpower shops in the area

References:
Davis, B. (2019). 5 Principles of Great Management. The University of Arizona Global Campus.
Retrieved from https://www.uagc.edu/blog/5-principles-of-great-management
Flores, A. (2020). Module in CBME 2 (Strategic Management). Dalubhasaan ng Lungsod ng San
Pablo.
Ilano, A.B., Business Policy and Strategy. First Edition. Manila, Philippines: Rex Bookstore, 2017
Managementstudyguide.com/strategic-management-articles,htm (n.d.).
Retrieved from http://www.managementstudyguide.com.