Mod 5

MOD
SWOT Analysis
Strategic Management
A way of approaching business

opportunities and challenges.
A comprehensive and ongoing

management process aimed at
formulating and implementing
effective strategies which align
the organization with its
environment to achieve major
organizational goals.
Process
Environmental
Analysis
Formulate
Conduct SWOT Strategy Strategy Strategic
Mission &
Analysis Formulation Implementation Control
Strategic Goals
Internal
Organizational
Assessment
Competitive analysis in
strategy formulation
SWOT analysis:
Method of analysing an
organisation’s competitive
situation involving assessing
organisational strengths (S),
weaknesses (W), environmental
opportunities (O) and threats (T).
Situational Analysis
S Strengths
Internal
W Weaknesses
O Opportunities
External
T Threats
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.
Strengths are positive internal

characteristics that the organization
can exploit to achieve its strategic
performance goals..
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.
WEAKNESSES
Weaknesses are internal characteristics
that might inhibit or restrict the
organization’s performance
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,

Weak spending on R & D, 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costs, Out-of-date products / technology,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.
OPPORTUNITIES
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 .
THREATS
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.
Threats are characteristics of the external
environment that may prevent the
organization from achieving its strategic
goals.
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.
Identify the SWOT
Inventory turnover up 5.8 to 6.7

Software revenues in store down 12%
Population of city growing 10%
Location of store hurt by new up $97 to $128 Hwy 34
Employee morale is excellent
Best Buy opening new store in 1year nearby
Bathroom in store needs increase in sales refurbishing
Newspaper advertising
Local university offers computer repair
Revenues from repair/service
Store has no Web site in-store up 16%
Identify the SWOT
Small business growth in area up 10%

Location of store hurt by new up $97 to $128 Hwy 34
Employee morale is excellent
Carpet and paint in store in disrepair
In-store promotions = 20%
Desire for Web sites up 18% by Realtors
Total store revenues down 8% expenditures down 10%
Desire for Web sites up 12% by small firms
In-store technical support
New mall being built nearby
Steps Involved in SWOT Matrix
1. List the firm’s key external opportunities.
2. List the firm’s key external threats.
3. List the firm’s key internal strengths.
4. List the firm’s key internal weaknesses.
5. Match internal strengths with external opportunities, and record the resultant SO
Strategies in the appropriate cell.
6. Match internal weaknesses with external opportunities, and record the resultant WO
Strategies.
7. Match internal strengths with external threats, and record the resultant ST
Strategies.
8. Match internal weaknesses with external threats, and record the resultant WT
Strategies.
SWOT Matrix
Benefits & Pitfalls of SWOT Analysis
Benefits of SWOT Analysis
Besides the broad benefits, here are few more benefits of conducting SWOT
Analysis:
Helps in setting of objectives for strategic planning
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.

When to Use It?
• At least once per year

• When individual issues need to be
addressed:
• staffing issues
• business culture and image
• organizational structure
• advertising
• financial resources
• operational efficiency
Simple Rules for a Successful SWOT
Analysis
• Be realistic about the strengths and weaknesses of your organization.
• It should distinguish between where your organization is today, and
where it could be in the future.
• Be specific--avoid grey areas.
• Always apply SWOT in relation to your competition (i.e. better than or
worse than your competition).
• KISS! Keep it short and simple
• avoid complexity and over analysis
• SWOT analysis is subjective.

Mod 5

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Mod 5

Uploaded by

Copyright:

Available Formats

MOD

A way of approaching business

A comprehensive and ongoing

Characteristics of the business or a team

Positive tangible and intangible

Strengths are positive internal

Examples - Abundant financial resources,

Detract the organization from its

Examples - Limited financial resources,

External elements in the environment that

Inventory turnover up 5.8 to 6.7

Small business growth in area up 10%

Benefits of SWOT Analysis

Helps in setting of objectives for strategic planning

Provides a framework for identifying & analyzing strengths,

Provides an impetus to analyze a situation & develop suitable

Basis for assessing core capabilities & competencies

Evidence for, and cultural key to, change

Provides a stimulus to participation in a group experience

Pitfalls of SWOT Analysis

May cause organizations to view circumstances as very simple due

Categorizing aspects as strengths, weaknesses, opportunities &

The data used in the analysis may be based on assumptions that

It lacks detailed structure, so key elements may get missed.

• At least once per year

You might also like