Embed Size (px)
Citation preview
SWOT Analysis
(Strengths, Weaknesses, Opportunities & Threats)
By: Atef Khayat, MD, MBA 2009
• It is a scanning for the internal and external environment of the business.
• Environmental factors internal to the firm (within your control) usually can be classified as strengths (S) or weaknesses (W), and
• Those external to the firm (you can’t control) can be
classified as opportunities (O) or threats (T).
What is a SWOT Analysis?
Purpose
• The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates.
• As a basic tool its mastery is a fundamental requirement
for the marketer, entrepreneur or business person.
• It is a very important and useful tool to use in marketing Management, strategy formulation and selection.
• Also in other business applications.
SWOT Analysis
Strengths Weaknesses
ThreatsOpportunities
Internal Origin(Attributes of the firm)S
TO
W
External Origin(Attributes of the environment)
Helpful(to achieve the objectives)
Harmful(to achieve the objectives)
Strengths• What do we do well?
• One’s strength is another’s weakness.
• A firm's strengths are its resources and capabilities that can be used for developing a competitive advantage.
• Examples of such strengths include:
1. Patents 2. Strong brand names 3. Good reputation among customers 4. Cost advantages from proprietary know-how 5. Exclusive access to natural resources 6. Good access to distribution networks7. skills, education or connections do you have that others don't have
Weaknesses• What is wrong now?
• What should you avoid?
• One’s strength is another’s weakness.
• Be truthful so that weaknesses may be overcome as quickly as possible.
• The absence of certain strengths are a weakness. For example, 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 best natural resources • Lack of access to key distribution channels
Weaknesses - Continued
• In some cases, a weakness may be the flip side of a strength.
• For example, 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 a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.
Opportunities
• The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include:
1. An unfulfilled customer need
2. Arrival of new technologies
3. Loosening of regulations
4. Removal of international trade barriers
Threats
• Changes in the external environment also may present threats to the firm. Some examples of such threats include:
1. shifts in consumer tastes away from the firm's products 2. emergence of substitute products 3. new regulations 4. increased trade barriers 5. other ongoing research or commercialization efforts6. a large existing competitor7. market volatility (because we are new market entrants)8. market access (for supplies or customers)9. a competitor has a new, innovative product or service10. competitors have superior access to channels of
distribution
The SWOT Matrix
• A firm should not necessarily pursue the more lucrative opportunities (overextending).
• Rather, it may have a better chance at developing a competitive advantage by identifying a fit between the firm's strengths and upcoming opportunities.
• In some cases, the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity.
SWOT / TOWS Matrix
• To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed.
• The SWOT matrix, can be changed into what is known as the TOWS Matrix that is shown on the next slide:
SWOT / TOWS Matrix
TOWS Analysis Strengths Weaknesses
Opportunities S-O Strategies W-O Strategies
Threats S-T StrategiesW-T
Strategies
SWOT / TOWS Matrix
• S-O strategies pursue opportunities that fit well the company's strengths.
• W-O strategies overcome weaknesses to pursue opportunities.
• S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats.
• W-T strategies make a defensive plan to prevent the firm's weaknesses from making it susceptible to external threats.
SWOT Interactions
Important Tips
• Be realistic about the strengths and weaknesses of your organization or group.
• Distinguish between where your organization is today, and where it could be in the future.
• Be specific: Avoid gray areas.
• Always analyze in relation to your core mission.
• Keep your SWOT short and simple. Avoid complexity and over analysis.
• Empower SWOT with a logical conceptual framework.
Common Mistakes• Failure to lay the analysis out as a grid.
• Not identifiable sources for external aspects (like a STEEP or Five Forces analysis).
• Confusing internal aspects with external aspects i.e, confusing strengths with opportunities and weaknesses with threats.
• Not using bullet points
• Too many bullet points
• Failure to make links (between strengths and opportunities and, weaknesses and threats)
Caution!
• SWOT analysis can be very subjective.. Two people rarely come-up with the same final version of SWOT. Do not rely on it too much.
• Use it as guide and not a prescription.
• SWOT analysis can be very subjective.
• Be realistic; no need to inflate strengths or be in denial about shortcomings.
• Be specific. Avoid grey areas.
• Always analyze in the context of your competitive environment.
