SWOT ANALYSIS

Definitions
Strengths:- A company strength is a successful application of a competency or exploitation of a
critical factor to develop company competitiveness.

Weaknesses:- A company weakness is an unsuccessful application of a competency or the non-

exploitation of a critical factor that diminishes company competitiveness.

Opportunities:- An opportunity is an external condition that could positively impact the

company’s critical performance parameters and improve competitive advantage provided
positive action is taken in time.

Threats:- A threat is an external condition that could negatively impact the company’s critical
performance parameters and diminish competitive advantage provided positive action is not
taken in time.
 Key to SWOT-Driven Strategic Planning

 Look beyond the organization’s products to assess its business

processes

 Offer customers “solutions” rather than specific products

 Match key strengths with opportunities to create capabilities that

can be developed into competitive advantages

 Invest strategically in key areas to convert weaknesses into

strengths and threats into opportunities

 Minimize the impact of limitations (unconverted weaknesses) and

liabilities (weaknesses paired with threats), especially those that
are obvious to customers or that put the organization at a major
competitive disadvantage
 Technological Influences on Strategy:

1. What is the current state?

2. How will it change?

3. What pertinent new products or services are likely to become

technically feasible in the foreseeable future?

4. What future impact can be expected from technological

breakthroughs in related product areas?

5. How will those breakthroughs interface with the other remote

considerations, such as economic issues, social values, public
safety, regulations etc.?
 Political and Legal Influences on Strategy

1. What changes in government policy can be expected with

regard to industry cooperation, antitrust activities, foreign
trade, taxation, depreciation, environmental protection,
deregulation, defense, foreign trade barriers, and other
important parameters.

2. What success will a new administration have in achieving its

stated goals?

3. What effect will that success have on the firm?

4. Will specific international climates be hostile or favorable?

5. Is there a tendency toward instability, corruption, or violence?

6. What is the level of political risk in each foreign market/

7. What other political or legal constraints or supports can be

expected in international business (e.g., trade barriers, equity
requirements, nationalism, patent protection)?
 SWOT Analysis Procedure

Step 1:
External Opportunities and Threats:
Brainstorm opportunities and threats using the definitions provided previously. Use the examples
given in the sample tables as a guide.
Prioritise this list.
On Table 1.2 Opportunities / Threats Analysis form supplied rate each factor from Major
Opportunity to Major Threat. Also give each factor a probability of occurrence / success rating.
Plot each factor on the Probability of Occurence - Attractiveness / Seriousness (Table 1.4).
Items in cell 1 should be adopted. Items in cell 2/3 should be monitored for change are ok. Items
in cell 3 are of low priority. Items in cell 4 point to potential mis-application of resources.

Step 2:
Internal Strengths and Weaknesses:
Concentrate on the current and past performance of your company in the market place. Review
marketing, financial, manufacturing, organisational and any other competencies that are relevant
to your company. Brainstorm factors that influence each competency.
Prioritise this list.
On Table 1.1 Strength / Weaknesses Analysis form supplied rate each factor from Major
Strength to Major Weakness. Also give each factor an importance rating.
Plot each factor on the Importance - Performance Matrix (Table 1.3).
Items in cell 1 should be strengthened. Items in cell 2 are ok. Items in cell 3 are of low priority.
Items in cell 4 point to potential mis-application of resources.

Step 3:
Once the SWOT review is complete, the future strategy may be readily apparent or, as is more
likely the case, a series of strategies or combinations of tactics will suggest themselves.
 Table 1.1: Strengths / Weaknesses Analysis

Factor Performance Importance

Major Minor Neutral Minor Major Hi Medium Low

Strength Strength Weakness Weakness

¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨

¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨

¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨

Table 1.2: Opportunities / Threats Analysis

Factor External Condition Probability of

Occurrence / Success

Major Minor Neutral Minor Major Hi Medium Low

Opportunity Opportunity Threat Threat

¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨

¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨

¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨

Table 1.3: Performance - Importance Matrix

Performance
Importance

Low High

1. 2.
High Concentrate here Keep up the good work

3. 4.
Low Low priority Possible overkill
 Table 1.4: External Condition - Probability Matrix

Probability of Occurrence / Success

Attractiveness / Seriousness High Low High
Probability
1. 2. of Success
High Major Opportunity Monitor for of
change Opportunity

High
Low 3. 4. Probability
Monitor for change Major Threat of
Occurrence
of Threat

Major Opportunity Major Threat

Examples of Evaluation Factors

Competencies and Factors External Conditions

Marketing Industry
Company Reputation Structural Changes
Market Share
Quality/Service Reputation
Promotion effectiveness
Sales-force effectiveness
Geographical Coverage
R & D and Innovation
Finance Market Place
Cost / Availability of capital Economic factors
Profitability Social Factors
Financial Stability
Operations Competition
Facilities / Capacity Rival Companies
Able Dedicated Workforce
Ability to Deliver on Time
Technical Manufacturing skill
Organisation Technology
Visionary Capable Leadership Core Technology changing
Dedicated Employees Process Technology
Entrepreneurial Orientation
Flexible / Responsive
 DRAWBACKS OF SWOT

SWOTs usually reflect a person's existing position and viewpoint, which can be
misused to justify a previously decided course of action rather than used as a
means to open up new possibilities. It is important to note that sometimes threats
can also be viewed as opportunities, depending on the people or groups involved.
There is a saying, "A pessimist is a person who sees a calamity in an
opportunity, and an optimist is one who sees an opportunity in a calamity."

SWOTs can allow institutions to take a lazy course and look for 'fit' rather than to
'stretch' they look for strengths that match opportunities yet ignore the
opportunities they do not feel they can use to their advantage. A more active
approach would be to involve identifying the most attractive opportunities and
then plan to stretch the college to meet these opportunities. This would make
strategy a challenge to the institution rather than a fit between its existing
strengths and the opportunities it chooses to develop