SWOT ANALYSIS

Prepared by: Robert V. Espiritu

SWOT ANALYSIS
(definition from Investopedia)

◦ SWOT (strengths, weaknesses, opportunities, and

threats) analysis is a framework used to evaluate
a company's competitive position and to develop
strategic planning. SWOT analysis assesses internal
and external factors, as well as current and future
potential.
◦ A SWOT analysis is designed to facilitate a realistic,
fact-based, data-driven look at the strengths and
weaknesses of an organization, its initiatives, or an
industry. The organization needs to keep the analysis
accurate by avoiding pre-conceived beliefs or gray
areas and instead focusing on real-life contexts.
OPPORTUNITIES
AND THREATS
The External Environment
External Environment:
Opportunities and Threats
Opportunities and Threats are, by their very
meaning, potential future events.
They are specific events that occur in the
external environment, more specifically the
competitive, task, and general environments.
A specific event that will cause an increase in
the level of competition is a Threat. A specific
event that will cause a decrease in the level
of competition is an Opportunity.
5 Forces
Analysis
Michael Porter’s 5
Forces of
Competition
provides a
framework that can
be used to analyze
how these specific
events affects each
force which in turn
affects the overall
level of
competition.
STRENGTHS AND
WEAKNESSES
The Internal Environment
Internal Environment: Strengths
A firm's strengths are its resources and
capabilities that can be used as a basis for
developing a competitive advantage.
Competitive advantage is defined as the
strategic advantage one business entity has
over its rival entities within its competitive
industry.
A) Resources can be divided into:
1. Tangible – Physical and financial assets. Eg:
Machinery, offices, warehouses
2. Intangible – Skills, reputation, and brand names.
3. Human Resources – Skilled Employees
B) Organizational capabilities:
They refer to the business routines, processes and
the organizational culture. A firm must analyze
which resources and capabilities are most
important in providing a sustainable competitive
advantage to the firm. It should also identify its
strengths and weaknesses with respect to its
competitors. The firm must ensure that all resources
and capabilities are fully employed and exploited.
Internal Environment: Weaknesses
◦ Characteristics of a firm that causes a
firm to be disadvantaged relative to
its competitors.
◦ Weaknesses are the qualities that
prevent a company from
accomplishing its mission and
achieving its full potential. These
weaknesses deteriorate influences
on the organizational success and
growth. Weaknesses are the factors
which do not meet the standards the
company feels they should meet.
◦ Weaknesses stop an organization from
performing at its optimum level. They are
areas where the business needs to
improve to remain competitive: a weak
brand, higher-than-average turnover,
high levels of debt, an inadequate supply
chain, or lack of capital.
◦ Weaknesses in an organization may be
depreciating machinery, insufficient
research and development facilities,
narrow product range, poor decision-
making, etc. Weaknesses are
controllable. They must be minimized
and eliminated.
Benchmarking
Benchmarking is the process of
comparing the business
processes and performance
metrics including cost, cycle time,
productivity, or quality to another
that is widely considered to be an
industry standard benchmark or
best practice.
 ◦ VRIO is a four-part business analysis
framework used to determine a business’
competitive potential.

VRIO ◦ The dimensions (value, rarity, imitability, and

organization) ask whether the business in
FRAMEWORK question’s resources and capabilities are
valuable, if they’re unique, if they’re easily
replicable, and if the business itself has the
right systems and processes in place is ready
to truly capture value.
 BRIEF HISTORY OF VRIO

Barney, however,
The originator of didn’t agree with
VRIO is James B Wernerfelt’s view
Barney, an American RBV provided the that all of a company’s
professor of strategic Barney evolved a foundation for resources were
management. He has previously-used businesses to reflect relevant. That’s why
taught and written at concept on their resources, he expanded the RBV
length about business called RBV (Resource- helping them to into the VRIO
strategy, including in Based View) created acknowledge if they framework, allowing
his book Strategic by Birger Wernerfelt. had a competitive businesses to run
Management And advantage or not. whatever resources
Competitive they deem relevant
Advantage Concepts. through the
framework’s analysis.
VRIO FRAMEWORK
Competitor
Matrix: The
SW Marketing
Perspective
As marketers, it is
important to identify
which Strengths and
Weaknesses are
relevant and
actionable. Other
Strengths and
Weaknesses may
not be necessarily
marketing’s
immediate concern
or within
marketing’s control.
 ◦ The TOWS Matrix is a strategic analysis tool which
can help you generate, compare, and then select
one or more strategies to pursue.
◦ SWOT and TOWS are both acronyms for precisely
the same words, just in a different order:
Strengths, Weaknesses, Opportunities, and
Threats. Although they are constructed using the

THE TOWS same words, the tools are not the same. Your
TOWS analysis will follow your SWOT analysis.

MATRIX ◦ Once you’ve summarized all the information

you’ve collected in your SWOT matrix, the next
step is to generate strategic options and select
one or more of them to pursue. This is where
TOWS analysis comes in. The purpose of a TOWS
matrix is to help you come up with strategic
options based on your SWOT analysis. Your TOWS
analysis will link your external factors to your
internal factors.
 THE
TOWS
MATRIX
Sample TOWS MATRICES
from the Internet
◦ Please note that the succeeding samples are not 100%
perfect. Like most analysis frameworks, there are levels
of subjectivity based on the profile and experience of
the analysts, the industry the company belongs, the
country where the company is based, the year the
analysis was made, etc.
◦ Its also important to note that most of the sample
matrices in the following slides may not exhibit a
marketing perspective but instead show a more general
management perspective.