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SWOT Analysis


SWOT Strengths – identifying existing organisational strengths Weaknesses – identifying existing organisational weaknesses Opportunities – what market opportunities might there be for the organisation to exploit? Threats – where might the threats to the future success come from?

What Are the Firm’s Strengths, Weaknesses, Opportunities and Threats :

What Are the Firm’s Strengths, Weaknesses, Opportunities and Threats Strategy-making must be well-matched to both A firm’s resource strengths and weaknesses A firm’s best market opportunities and external threats to its well-being S W O T


Strengths What is a company Strength? Something a company is good at doing or a characteristic that gives it an important capability.

Identifying Resource Strengths and Competitive Capabilities:

Identifying Resource Strengths and Competitive Capabilities A strength is something a firm does well or a characteristic that enhances its competitiveness Valuable competencies or know-how Valuable physical assets Valuable human assets Valuable organizational assets Valuable intangible assets Important competitive capabilities An attribute that places a company in a position of market advantage Alliances or cooperative ventures


Weaknesses What are company weaknesses? Something a company lacks or does poorly (in comparison to others) or a condition that puts it at a disadvantage.

Identifying Resource Weaknesses and Competitive Deficiencies:

Identifying Resource Weaknesses and Competitive Deficiencies A weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage Resource weaknesses relate to Deficiencies in know-how or expertise or competencies Lack of important physical, organizational, or intangible assets Missing capabilities in key areas


Opportunities An OPPORTUNITY is a chance for firm growth or progress due to a favorable juncture of circumstances in the business environment. Those that offer important avenues for profitable growth, those where a company has the most potential for competitive advantage, and those which the company has the financial resources to pursue. Possible Opportunities: Emerging customer needs Quality Improvements Expanding global markets Vertical Integration


Threats A THREAT is a factor in your company’s external environment that poses a danger to its well-being. Possible Threats: New entry by competitors Changing demographics/shifting demand Emergence of cheaper technologies Regulatory requirements

Identifying External Threats:

Identifying External Threats Emergence of cheaper/better technologies Introduction of better products by rivals Intensifying competitive pressures Onerous regulations A rise in interest rates Potential of a hostile takeover Unfavorable demographic shifts Adverse shifts in foreign exchange rates Political upheaval in a country

SWOT Analysis -- What to Look For:

SWOT Analysis -- What to Look For Potential Resource Strengths Potential Resource Weaknesses Potential Company Opportunities Potential External Threats Powerful strategy Strong financial condition Strong brand name image/reputation Widely recognized market leader Proprietary technology Cost advantages Strong advertising Product innovation skills Good customer service Better product quality Alliances or JVs No clear strategic direction Obsolete facilities Weak balance sheet; excess debt Higher overall costs than rivals Missing some key skills/competencies Subpar profits . . . Internal operating problems . . . Falling behind in R&D Too narrow product line Weak marketing skills Serving additional customer groups Expanding to new geographic areas Expanding product line Transferring skills to new products Vertical integration Openings to take MS from rivals Acquisition of rivals Alliances or JVs to expand coverage Openings to exploit new technologies Openings to extend brand name/image Entry of potent new competitors Loss of sales to substitutes Slowing market growth Adverse shifts in exchange rates & trade policies Costly new regulations Vulnerability to business cycle Growing leverage of customers or suppliers Shift in buyer needs for product Demographic changes

SWOT Analysis:

SWOT Analysis SWOT analysis Involves sizing-up a company’s INTERNAL strengths and weaknesses and its EXTERNAL opportunities and threats Is an easy to use tool for getting a quick overview of a company’s strategic situation

Why SWOT Analysis is Important:

Why SWOT Analysis is Important It is the basis for matching strategy to the company’s situation – To its internal strengths and weaknesses To its external threats and opportunities A winning strategy must always fit the company’s situation.

Some questions to consider once the SWOT listings have been compiled are::

Some questions to consider once the SWOT listings have been compiled are: Does the company have internal strengths or core competencies an attractive strategy can be built around? Do company weaknesses make a company vulnerable and does it disqualify a company from pursuing industry opportunities? Which weaknesses does a company need to correct?

Some questions to consider once the SWOT listings have been compiled are::

Which opportunities does the company have the skills and resources to pursue with a real chance for success? Which opportunities are the best from the company’s standpoint? (Remember: Opportunity without the means to capture is only an illusion.) What external threats should management be worried most about and what strategic moves need to be made to craft a good defense? Some questions to consider once the SWOT listings have been compiled are:

Role of SWOT Analysis in Crafting a Better Strategy:

Role of SWOT Analysis in Crafting a Better Strategy Developing a clear understanding of a company’s Resource strengths Resource weaknesses Best opportunities External threats Drawing conclusions about how best to deploy resources in light of the company’s internal and external situation Thinking strategically about how to strengthen the company’s resource base for the future

The purpose of SWOT Analysis:

The purpose of SWOT Analysis It is an easy-to-use tool for developing an overview of a company’s strategic situation It forms a basis for matching your company’s strategy to its situation

SWOT is the starting point:

SWOT is the starting point It provides an overview of the strategic situation. It provides the “raw material” to do more extensive internal and external analysis.

SWOT Analysis:

SWOT Analysis You examine the firm’s internal S trengths and W eaknesses to see what it is capable of? You then look at the firm’s external environment – what are the O pportunities available and potential T hreats? A good strategy avoids the threats, while using its strengths to capitalize on the opportunities Achieves a sustainable low cost or differentiation strategy

Opportunities and Threats form a basis for EXTERNAL analysis:

Opportunities and Threats form a basis for EXTERNAL analysis By examining opportunities, you can discover untapped markets, and new products or technologies, or identify potential avenues for diversification. By examining threats, you can identify unfavorable market shifts or changes in technology, and create a defensive posture aimed at preserving your competitive position.

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