SWOT analysis

SWOT Analysis, is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. The technique is credited to Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from the Fortune 500 companies.

Strategic and Creative Use of SWOT Analysis
Strategic Use: Orienting SWOTs to An Objective. --- If SWOT analysis does not start with defining a desired end state or objective, it runs the risk of being useless. A SWOT analysis may be incorporated into the strategic planning model. An example of a strategic planning technique that incorporates an objective-driven SWOT analysis is SCAN analysis. Strategic Planning, including SWOT and SCAN analysis, has been the subject of much research. If a clear objective has been identified, SWOT analysis can be used to help in the pursuit of that objective. In this case, SWOTs are: Strengths: attributes of the organization that are helpful to achieving the objective. Weaknesses: attributes of the organization that are harmful to achieving the objective. Opportunities: external conditions that are helpful to achieving the objective. Threats: external conditions that are harmful to achieving the objective. See the SWOT diagram at the end of topic. Correct identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective are to be derived from the SWOTs. First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated. Creative Use of SWOTs.--- If, on the other hand, the objective seems attainable, the SWOTs are used as inputs to the creative generation of possible strategies, by asking and answering each of the following four questions, many times: 1. How can we Use each Strength? 2. How can we Stop each Weakness?

finance. The importance of individual SWOTs will be revealed by the value of the strategies it generates. manufacturing capabilities. weak opportunities may appear to balance strong threats. an engineer.The strengths and weaknesses internal to the organization. a SWOT team may include an accountant. for example.The opportunities and threats presented by the external environment. and so on.3. technological change. and sociocultural changes. For example. It is prudent not to eliminate too quickly any candidate SWOT entry. location Customer service . intellectual. The factors may include all of the 4P's. as well as changes in the marketplace or competitive position. The external factors may include macroeconomic matters. It also presents the resulting lists uncritically and without clear prioritization so that. SWOT analysis groups key pieces of information into two main categories: • • Internal factors . A SWOT item that produces valuable strategies is important. a salesperson. External factors . Examples of SWOTs Strengths and weaknesses • • Resources: financial. as well as personnel. legislation. How can we Defend against each Threat? Ideally a cross-functional team or a task force that represents a broad range of perspectives should carry out the SWOT analysis. What may represent strengths with respect to one objective may be weaknesses for another objective. A SWOT item that generates no strategies is not important. an executive manager. How can we Exploit each Opportunity? 4. The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. Internal and external factors The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. For example. it may tend to persuade companies to compile lists rather than think about what is really important in achieving objectives. and an ombudsman. SWOT analysis is just one method of categorization and has its own weaknesses. The results are often presented in the form of a matrix.

SWOTs should not exist in the abstract. .• • • • • • • • • • • • • • • • • • • • Efficiency Infrastructure Quality Staff Management Price Delivery time Cost Capacity Relationships with customers Brand strength Local language knowledge Ethics principles patents strong brand names good reputation among customers cost advantages from proprietary know-how exclusive access to high grade natural resources favorable access to distribution networks Opportunities and threats • • • • • • • • • • Political/Legal Market Trends Economic condition Expectations of stakeholders Technology Public expectations Competitors and competitive actions Bad PR Criticism (Editorial) Global Markets Errors to be avoided The following errors have been observed in published accounts of SWOT analysis: 1. If the desired end state is not openly defined and agreed upon. the participants may have different end states in mind and the results will be ineffective. Conducting a SWOT analysis before defining and agreeing upon an objective (a desired end state). Opportunities external to the company are often confused with strengths internal to the company. They should be kept separate. 2. They can exist only with reference to an objective.

6. and cite figures. Strengths Weaknesses Opportunities Threats Reputation marketplace in Shortage of consultants at Well established Large consultancies operating level rather position with a well operating at a minor than partner level defined market niche level . Additional uses of SWOT Analysis The usefulness of SWOT analysis is not limited to profit-seeking organizations. It is a technique widely used by a group. Be as specific as you can about the precise nature of a firm’s strength and weakness. department. 5. Examples include: non-profit organizations. SWOTs are sometimes confused with possible strategies. Avoid vague. to make it plain why a particular factor is important. organisation or even an individual. Do not build content with general factors like economies of scale. it may be useful to think of opportunities as "auspicious conditions". Using SWOT to analyse the market position of a small management consultancy with specialism in HRM. Do not mistake the outcomes of strength (such as profits and market share) for strengths in their own right. SWOTs are descriptions of conditions. 7.3. As part of Continuing Professional Development SWOT analysis can be contained within and feed into an indidviduals CPD. "Make your points long enough. while possible strategies define actions. weakness. To avoid this error. Include precise evidence. Following the steps described above should lead to clarification of issues and development of goal-oriented alternatives. SWOT analysis may also be. where possible. general opportunities and threats that could be put forward for just about any organisation under any circumstances. and include enough detail. and why it can be considered as a strength. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. used in pre-crisis planning and preventive crisis management. unit. Alternative view on SWOT SWOT alongside PEST/PESTLE can be used as a basis for the analysis of business and environmental factors. This error is made especially with reference to opportunity analysis. governmental units and individuals. opportunity or threat. and often is. 4.

paper – may have ideas requiring and eliminating middle excellent track but these come over as development of management layers to record in incoherent. recognized by top dealing with major overall organizational needs to be asked management who areas of HR. job effectiveness through rather than by-pass it by evaluation. Reactive rather HR contribution not techniques for wanting to improve than pro-active. More general the effect of removing imagination. use of personal energies. results through undirected De-centralization having energy.Expertise at Unable to deal with Other small Identified market for partner level in multi-disciplinary consultancies looking consultancy in areas HRM assignments because of to invade the other than HRM consultancy size or lack of ability marketplace Developmental Track record No administrative back opportunities for Limited successful up extending business into resources assignments the EU financial A SWOT carried out on a HR Department may look like this: Strengths Weaknesses Opportunities Threats Developed New management team. management new managers form flatter structure of specialized area experience and expertise organization limited . organizational developing employing external psychometric testing development and cultural unsolicited ideas consultants and basic training management programmes A SWOT carried by an individual manager could look like this: Strengths Weaknesses Opportunities Threats Not good at achieving Enthusiasm. trouble at expressing management departments where the expertise in themselves orally and on opportunities individual is employed subject area.

such as focus groups Quantitative marketing research. This may include gap analysis which will look at environmental factors Strategic Issues defined – key factors in the development of a corporate plan which needs to be addressed by the organisation Develop new/revised strategies – revised analysis of strategic issues may mean the objectives need to change Establish critical success factors – the achievement of objectives and strategy implementation Preparation of operational. but some of the more common include: • • • Qualitative marketing research. this needs to include an assessment of the present situation as well as a portfolio of products/services and an analyse of the product/service life cycle Analysis of existing strategies. they often conduct market research (alternately marketing research) to obtain this information. and other factors. competitive positioning and product differentiation. resource. focusing especially on their relative competitive strengths and weaknesses using SWOT analysis. degree of vertical integration. taking corrective action which may mean amending objectives/strategies. Using SWOT in marketing Main article: Marketing management In Competitor analysis. Marketers employ a variety of techniques to conduct market research. sources of profits. Marketing managers will examine each competitor's cost structure. projects plans for strategy implementation Monitoring results – mapping against plans. resources and competencies. historical responses to industry developments. Marketing management often finds it necessary to invest in research to collect the data required to perform accurate marketing analysis. • • • • • • • • Set objectives – defining what the organisation is intending to do Environmental scanning o Internal appraisals of the organisations SWOT. such as statistical surveys Experimental techniques such as test markets . this should determine relevance from the results of an internal/external appraisal.SWOT within corporate planning As part of the development of strategies and plans to enable the organisation to achieve its objectives. As such. marketers build detailed profiles of each competitor in the market. then that organisation will use a systematic/rigorous process known as corporate planning.

• • Observational techniques such as ethnographic (on-site) observation Marketing managers may also design and oversee various environmental scanning and competitive intelligence processes to help identify trends and inform the company's marketing analysis. SWOT Diagram .

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