Mod 1

Strategic management in a business refers to the planning, management, utilization of resources to

define and achieve objectives efficiently. It also includes a review of internal processes and external
factors impacting the business. Formulating and implementing strategies allow a company to
proceed with its action plan.

Strategic management is the management of an organization’s resources to achieve its goals and
objectives.

Strategic management involves setting objectives, analyzing the competitive environment, analyzing
the internal organization, evaluating strategies, and ensuring that management rolls out the
strategies across the organization. Strategic management involves developing and implementing
plans to help an organization achieve its goals and objectives. This process can include formulating
strategy, planning organizational structure and resource allocation, leading change initiatives, and
controlling processes and resources.

Strategic planning involves identifying business challenges, choosing the best strategy, monitoring
progress, and then making adjustments to the executed strategy to improve performance. Tools like
SWOT (strengths, weaknesses, opportunities, and threats) analysis are used to assess where
opportunities and threats lie between the organization, its competition, and the overall market.

Strategic management happens at broader levels like organization-wide leadership, but it can also
be implemented at a department or team level.

The strategic management process helps an organization's leadership plan for its future goals.
Setting a roadmap and actionable plan ensures that employees and leaders know where they're
going and how to get there in the most efficient, cost-effective manner. It is a work in progress, so
strategic plans should continuously be evaluated and adjusted as the market outlook changes.

Financial benefits:

 Increase market share and profitability.

 Prevent legal risk.

 Improve revenue and cash flow.

Non-financial benefits:

 Relieves the board of directors of responsibilities.

 Allows for an objective review and assessment.

 Enables an organization to measure progress throughout time.

 Provides a big-picture perspective of the organization's future.

Goal Setting

Goal setting is one of the most crucial steps in the entire strategic management process journey as it
established the foundation.

The vision and goals of the organization are clearly stated. The short-term and long-term goals are
defined, processes to achieve the objectives are identified and current staff is evaluated to choose
capable people to work on the processes. This can be done through proper environmental scanning.

The problem statement should be clearly defined at this step. Unclear goals can lead to issues at
later stages and con cost organizations.

Analyze the current situation.

The second step is analysis and research. Using tools like SWOT analysis and examining the
organization's resources, including budget, time, people (staff), and more, you'll gain a better
understanding of how to leverage what's working and get rid of what's not.

. Formation

Once you have the information you need, it is time to create an action plan for reaching the goal.
Make sure the steps are clear, focused and directly related to the goal. Prepare easy-to-understand
implementation guidelines if the process or procedure will impact many people within the
organization.

Execution

Follow the steps outlined in your strategic plan. Make sure that all stakeholders are implementing
the plan as designed for maximum efficiency.

Strategy Evaluation

In this process, the strategies being implemented are evaluated regularly to check whether they are
on track and are providing the desired results. In case of deviations, the corrective actions are taken.

As shown in the figure, the five stages are not stand-alone and constantly interact with each other in
order to ensure better management of the business.
Business Level Strategy

Business level strategy

The business level strategy is the second tier in the strategy hierarchy.
Sitting under the corporate strategy, the business strategy is a means to achieve the
goals of the specific business units in the organization.
The initiatives and objectives within each business unit’s strategy will be focused on
gaining a competitive advantage in the particular market in which the business unit
operates.
There are different types of business level strategies organizations adopt depending
on the competitive advantage they want to gain. Organizations face crucial decisions
here, with options like adopting a differentiation strategy or embracing a cost
leadership approach.

📚 Learn more about the different types of business strategies in our article: What Is A
Business Level Strategy? How To Create It + Examples

Each business area must make a strategic decision and define the approach they’ll
choose to get closer to their goals.
One thing to note, implementing this strategy level is only useful for organizations
with multiple business units. An organization with multiple business units may sell
products and services or may sell multiple product lines and services in different
industries.

A business level strategy examples

A large bank is a prime example of an organization selling multiple services in
different industries.
To name a few, it has business units like retail banking, investment management,
and insurance company. Each of these business units would have distinct goals and
a distinct business unit strategy to achieve these goals.

Strategy levels example

📚 Read more: The 7 Best Business Strategy Examples I've Ever Seen

Include middle managers at the business level strategy

Strategies at the business level should be constructed by VPs and—global or

regional—business unit heads. However, also including other middle managers
within each unit is a best practice.
Including a range of managers from each unit to participate in the strategy
process has two main benefits:

1. It increases buy-in:
Managers who've had a chance to contribute to the strategy formulation feel included
in the decision-making. Therefore, they’re more likely to accept the strategy and jump
on board with its execution.
2. It improves ownership:
Employees who are given the opportunity to contribute to the strategy development
are more likely to take ownership of its completion.
💡 Pro Tip: If your organization only has one business unit, you don't need to worry about this
strategy level—and can skip to the functional strategy level.

👉🏻 Grab your free business strategy template to follow a structured approach

and create your business strategic plan.

Functional Level Strategy

Functional level strategy

This level of strategy designs the approach for the different functional areas or
departments—we’ve already given you a little spoiler with the previous image of the
bank strategy levels example. These functions can include the marketing
department, finance, supply chain, manufacturing, human resources, and more.
The primary objective of functional strategy is to align the activities and efforts of
these individual departments with the broader goals and objectives set at higher
strategic levels, such as business and corporate strategy.
Functional strategy deals with a fairly narrow focus. They are designed to address
the unique challenges and opportunities within each functional area.
Your marketing strategy, finance, IT, and other departments all have goals and
responsibilities to deliver. Having a visible functional level of strategy that aligns back
to the overall corporate strategy will increase the chances of success.
These strategies involve resource allocation, measurable goals, and a focus on
continuous improvement, all within the context of individual functions.

The secret to a successful functional level strategy

Now, having each department equipped with a well-defined functional strategy is an
excellent beginning. But beware of the pitfalls of isolating each functional area in its
own strategy bubble; that's venturing into siloed territory.
There are two pivotal aspects to keep in mind for a successful functional strategy:

 Cross-functional collaboration: The magic happens when different departments

join forces. When you foster collaboration between these functions, you open the
door to innovation and synergy.
 Strategic alignment: Ensuring that the strategy of each functional area seamlessly
matches the overarching organizational goals is the foundation of success.

In Cascade, you can create strategic plans for each function in your organization,
which link back to the main corporate plan to ensure everything is moving in the right
direction.
"A journey of a thousand miles begins with one step,” as the saying goes.

Check out our strategic planning templates for different functions:

 Marketing Strategy Template

 HR Strategy Template
 Finance Strategy Template
 Supply Chain Strategy Template

📚 Explore thousands of other free strategy templates in our Template Library!

Operational Level Strategy

Operational level strategy

Operational level strategy, situated at the lowest tier of the strategic hierarchy,
focuses on the day-to-day actions and tactics needed to run the business, manage
processes, and implement change effectively. It’s the “boots-on-the-ground” aspect
of strategy, ensuring that plans are translated into tangible actions and results.
In simple terms, this is the strategy that will inform the day-to-day work of employees
and will ultimately keep your organization moving in the right direction.
It's primarily concerned with short-term objectives and the practical execution of
plans, detailing the specific actions, procedures, and activities that need to be
executed to meet organizational goals.
The operational level strategy involves roles like PMOs, team leaders, individual
contributors, and team members, and plays a pivotal role in the
successful implementation of broader strategies.
It’s probably the most important level of strategy because, without it, your
organization can quickly lose traction and “get stuck” while the competition moves
forward.

Strategic direction refers to a course of action that leads to the achievement of the goals of an
organization. The broad roadmap outlines how an organization should move forward to reach its
vision, mission, and long-term objectives. Strategic direction is the guiding principle that shapes an
organization’s actions, operations, and decisions.

Here are the main components of strategic direction:

1. Vision: A vision is a future-oriented, aspirational statement describing where the

organization wants to be. It provides a clear idea of what the organization seeks to achieve
in the long run.

2. Mission: A mission statement describes the organization’s purpose or reason for existence.
It clarifies the organization’s core business and its intended audiences or markets.

3. Strategic Objectives: These are the specific, measurable, achievable, relevant, and time-
bound (SMART) goals that guide an organization toward its vision. They clearly understand
what the organization plans to achieve in the short and medium term.

4. Strategies: These are the specific approaches and plans the organization will use to achieve
its strategic objectives.

5. Tactics: These are the specific actions, activities, or initiatives undertaken to execute the
strategies.

6. KPIs and Targets: These are the key performance indicators and targets used to measure
progress toward achieving strategic objectives.

A clear strategic direction helps an organization align its resources and efforts, inspires employees,
provides a sense of purpose, and helps stakeholders understand where the organization is headed
and how it plans to get there.
Business Definition

A business [entity] is an organisation or any other entity engaged in commercial, professional,

charitable or industrial activities. It can be a for-profit entity or a not-for-profit entity and may or
may not have a separate existence from the people/person controlling it.

A business [activity] is a commercial activity which involves providing goods or services with a
primary motive of earning profits.

Concept Of Business

The business concept is the fundamental idea behind the business. The business model, plan, vision,
and mission are developed based on this concept. Uber, for example, was started on the concept of
aggregating taxi drivers and providing their services on demand under one brand. Every
other business strategy was developed based on this concept.

Objective Of The Business

The business objective is what makes the business go on and conduct its activities in a long run. It is
the reason why the business exists. While most of the people argue that profit making is the core
objective of every business. Few have come up with the new underlying objective.

According to the traditional concept, business exists only to earn profits by providing the goods and
services to the customers.

According to the modern concept, the underlying objective of every business is customer satisfaction
as this is what results in most profits. If the customer is satisfied, business excels.

Mod 2

Strategic analysis models and tools are frameworks used by organizations to assess their internal and
external environments, identify key opportunities and threats, and formulate effective strategies to
achieve their goals.

PESTLE is an external environmental study tool to investigate external business factors. These factors
are, in general, out of control to the businesses. And, the study of these business factors results
either in

 Threats or

 Opportunities to the organization.

These external influencing factors are vital information to develop and/or refine strategies in order
to stay within Vision, Mission, Goals and Objectives of the organization.

Here, a Business Analyst may be involved in:

 The detailed analysis, and

 to involve Subject Matter Experts,

 and to provide summary information to senior management to take strategic decisions.

The basic PESTLE analysis includes 6 key areas:

The following section deepness each of the key areas of PESTLE analysis:

1. Political: These factors come from government influences. Here we investigate the degree to
which a government may influence a business environment.
Like, a political change may introduce many influences. For example, the government may add a new
tax. That may change the entire revenue generation structure of an organization. An example of
political factors may also include:

 Tax policies,

 Fiscal policies,

 Trade, and

 Tariff, etc.

Great Depression in India is an excellent example of political factors. The Government of British India
introduced a trade policy, caused considerable damage to the Indian economy. During the period
1929–1937, exports and imports fell drastically. And, railways & the agricultural sector were the
most affected.

2. Economics:These factors are related to the economic performance of the country. Which have
long term impacts due to its direct effect on businesses – Such as a rise in the inflation rate, which
may have an impact over

 How organizations price their products and services,

 the purchasing power of consumers, etc.

And as a result, change demand-supply model for that economy. Sometimes economic impacts have
worldwide effects.

The subprime mortgage crisis affected many organizations. And as per Wikipedia, the crisis had
severe, long-lasting consequences for the U.S. and European economies. The U.S. entered a deep
recession, with nearly 9 million jobs lost during 2008 and 2009, roughly 6% of the workforce.

Another example of economic factors could be:

 change in interest rate,

 economic growth pattern

 Foreign Direct Exchange etc.

All these factors determine the direction in which an economy might move. And, organizations study
these factors based on their environment. And, develop strategies based on the identified changes
that are about to occur.

3. Social: Every culture has a unique mindset. And, that uniqueness cast an impact on businesses and
sales of their products and services. Organizations need to study:

 Social lifestyle,

 Domestic structures,

 And cultural implications for understanding their consumers and market better.
And, that is very important to develop strategic long term plans.

For example, a rise in disposable fashion introduces:

 Opportunities to the organizations which are related to disposable business already. And,

 Threats to the organizations which produce clay pots to serve the beverages.

4. Technological: Businesses need to integrate technological development to stay connected along

the way. For that, companies investigate:

How consumers are reacting to technological trends and using for their benefits.

For example, the technological revolution may open new doors to technological trends. This
revolution may produce opportunities for many businesses. And, the companies which are unable to
integrate these new trends face enormous threats.

5. Legal: The legislation’s change from time to time and affect many businesses, such as labor law,
food safety law. Organizations need to make sure legal compliance’s. And, sometime it need change
in strategies.

For example, the minimum unit price of alcohol may introduce threats to the organization, which is
selling with a higher price of the minimum unit price. And, business pressure could enforce them to
lower the prices.

6. Environmental: These factors come from the natural environment. And, affect certain industry
like farming, agriculture. Example factors could be an increasing concern in packaging and pollution.

These investigations are consolidated in the PESTLE analysis. It is normally performed in a workshop
which may be facilitated by Business Analyst. In this workshop, representatives from a range of
factors are involved and brainstorm:

How all of the identified factors affect each other and provide specialist information.

It is recommended that before conducting the workshop:

These specialists investigate, research reports related to their concerned areas.

In conclusion, PESTLE analysis is performed to understand external environmental factors to

consolidate Threats and Opportunities. These factors are out of control to the businesses and need
to be taken care in strategic input.

What Are Porter's Five Forces?

Michael E. Porter’s Five Forces framework is one of the most widely regarded business strategy
tools. Born out of his work in 1979, this framework offers organizations a systematic approach to
assessing their competitive environment and making strategic decisions that can influence their
long-term success.

The five forces include the factors that influence every industry. The five critical dimensions which
shape the competitive business landscape are:

1. Competitive Rivalry

2. Supplier Power

3. Buyer Power
 4. Threat of Substitution

5. Threat of New Entrants

Competitive Rivalry

Competitive Rivalry evaluates the number of existing players and how established they are in the
industry. How many competitors do you have? Are their products better than your own?

In industries with cutthroat competition, companies often lower prices and invest in expensive
marketing campaigns to increase market share. That means suppliers and buyers can quickly move
towards your competitors. Conversely, businesses in less competitive sectors enjoy more
comfortable profit margins.

For example, the airline industry has intense competition. Major players such as American Airlines,
Delta Air Lines and United Airlines often differentiate themselves by reducing costs, improving
customer experience and launching new routes to attract passengers.

Supplier Power

Suppliers provide the essential ingredients for a business’s operations. How much influence does a
supplier wield over a company’s profits?

When only a few suppliers can provide a product, they can dictate terms and pressure businesses to
accept higher prices. Even if terms are unfavorable, some get pressured to take them because of the
costs of moving to another supplier.

In an ideal scenario, companies must be able to diversify their supplier base. By reducing their
dependency on a supplier, businesses can safeguard their supply chains, control costs and maintain
a competitive edge.

For example, the automotive industry has many suppliers for engines, electronics and tires.
However, a relatively small number of companies supply critical components such as semiconductor
chips, which grants them substantial power.

Buyer Power

Buyer Power refers to the influence customers wield over a business. If an industry has strong buyer
power, consumers can demand lower prices, higher quality or improved service, affecting a
company’s profitability.

Buyers wield more power in a market with fewer customers and more sellers. In this scenario,
businesses can differentiate themselves by formulating unique value propositions to justify their
higher prices. Some examples include loyalty programs, excellent customer service and novel
experiences.

The electronics industry provides a compelling example of buyer power within Porter’s Five Forces
framework. Consumers can access various electronic products, from smartphones and laptops to
smartwatches and home entertainment systems. Price comparisons are easily accessible online, so
finding the best deals and discounts is easy.

For example, companies such as Apple let consumers customize their devices with various features,
colors and accessories. They consistently upgrade their products with new features because it’s easy
to transition to alternative brands or products.
Threat of Substitution

The Threat of Substitution refers to the likelihood that customers might switch to a different product
or service. When substitution threats are high, businesses are vulnerable to sudden shifts in
consumer preferences.

One notable example of the threat of substitution occurs in the beverage industry. Consumers can
choose from many beverages including carbonated soft drinks, bottled water, juices, energy drinks,
coffee, tea and alcoholic beverages. That’s why beverage companies must explore niche markets,
introduce limited-edition flavors and change their packaging to differentiate themselves.

Threat of New Entrants

How easy is it for new competitors to enter the market and threaten existing players? Threat of New
Entrants involves evaluating the barriers to entry in an industry.

High barriers such as high starting capital costs and a small pool of suppliers can deter new rivals
from early success. For example, an established company with significant resources can lower prices
to maintain a competitive edge over new entrants. However, new competitors can easily weaken
your business’s position and quickly disrupt the status quo.

Environmental Threat and Opportunity Profile (ETOP) is a strategic management tool used by
organizations to systematically analyze the external factors influencing their business environment.
Here are the key aspects of ETOP:

1. Definition:

 ETOP is a framework that assesses the external environment by identifying and

prioritizing the significant threats and opportunities facing an organization.

 It helps organizations anticipate changes, identify risks, and capitalize on

opportunities in the external environment.

2. Components:

 Environmental Factors: ETOP considers various external factors such as economic,

social, political, technological, legal, environmental, and competitive factors.

 Threats: These are external factors that pose potential risks or challenges to the
organization's performance and competitiveness. Examples include market
competition, regulatory changes, economic downturns, and technological
disruptions.

 Opportunities: These are external factors that offer potential advantages or growth
opportunities for the organization. Examples include emerging market trends,
technological advancements, changing consumer preferences, and favorable
regulatory changes.

3. Process:

 Data Collection: Organizations gather relevant information on external

environmental factors from various sources such as market research reports,
industry publications, government data, and competitor analysis.
  Analysis: The collected data is analyzed to identify key trends, patterns, and
potential threats and opportunities affecting the organization.

 Prioritization: The identified threats and opportunities are prioritized based on their
potential impact and likelihood of occurrence. This helps focus the organization's
attention on the most critical factors.

 Strategy Formulation: Based on the ETOP analysis, organizations develop strategies

to mitigate threats, leverage opportunities, and adapt to changes in the external
environment.

4. Purpose:

 Strategic Planning: ETOP provides valuable insights for strategic planning by helping
organizations understand the external factors shaping their business environment.

 Risk Management: By identifying threats, ETOP enables organizations to proactively

manage risks and develop contingency plans to mitigate their impact.

 Opportunity Identification: ETOP helps organizations identify and capitalize on

emerging opportunities in the external environment, enabling them to stay
competitive and innovative.

 Decision Making: ETOP serves as a basis for informed decision-making by providing a

comprehensive understanding of the external factors influencing the organization's
performance and future prospects.

5. Benefits:

 Enhanced Competitiveness: ETOP enables organizations to anticipate changes in the

external environment and adapt their strategies accordingly, enhancing their
competitiveness.

 Strategic Alignment: ETOP ensures that organizational strategies are aligned with
external market dynamics and opportunities, maximizing the likelihood of success.

 Risk Mitigation: By identifying threats early, ETOP allows organizations to implement

proactive measures to mitigate risks and minimize potential disruptions.

 Innovation and Growth: ETOP helps organizations identify emerging trends and
opportunities, fostering innovation and supporting growth initiatives.

The term value chain refers to the various business activities and processes involved in creating a
product or performing a service. A value chain can consist of multiple stages of a product or service’s
lifecycle, including research and development, sales, and everything in between. The concept was
conceived by Harvard Business School Professor Michael Porter in his book The Competitive
Advantage: Creating and Sustaining Superior Performance.

Taking stock of the processes that comprise your company’s value chain can help you gain insight
into what goes into each of its transactions. By maximizing the value created at each point in the
chain, your company can be better positioned to share more value with customers while capturing a
greater share for itself. Similarly, knowing how your firm creates value can enable you to develop a
greater understanding of its competitive advantage.
COMPONENTS OF A VALUE CHAIN

According to Porter’s definition, all of the activities that make up a firm's value chain can be split into
two categories that contribute to its margin: primary activities and support activities.

Primary activities are those that go directly into the creation of a product or the execution of a
service, including:

 Inbound logistics: Activities related to receiving, warehousing, and inventory management of

source materials and components

 Operations: Activities related to turning raw materials and components into a finished
product

 Outbound logistics: Activities related to distribution, including packaging, sorting, and

shipping

 Marketing and sales: Activities related to the marketing and sale of a product or service,
including promotion, advertising, and pricing strategy

 After-sales services: Activities that take place after a sale has been finalized, including
installation, training, quality assurance, repair, and customer service

Secondary activities help primary activities become more efficient—effectively creating a

competitive advantage—and are broken down into:
  Procurement: Activities related to the sourcing of raw materials, components, equipment,
and services

 Technological development: Activities related to research and development, including

product design, market research, and process development

 Human resources management: Activities related to the recruitment, hiring, training,

development, retention, and compensation of employees

 Infrastructure: Activities related to the company’s overhead and management, including

financing and planning

WHAT IS VALUE CHAIN ANALYSIS?

Value chain analysis is a means of evaluating each of the activities in a company’s value chain to
understand where opportunities for improvement lie.

Conducting a value chain analysis prompts you to consider how each step adds or subtracts value
from your final product or service. This, in turn, can help you realize some form of competitive
advantage, such as:

 Cost reduction, by making each activity in the value chain more efficient and, therefore, less
expensive

 Product differentiation, by investing more time and resources into activities like research
and development, design, or marketing that can help your product stand out

Typically, increasing the performance of one of the four secondary activities can benefit at least one
of the primary activities.

HOW TO CONDUCT A VALUE CHAIN ANALYSIS

What is the Organizational Capability Profile (OCP)?

The OCP is an assessment tool used to examine an organization’s capabilities in different areas like
strategy, culture, processes, and competencies. It provides a comprehensive overview of how well
an organization is performing and identifies areas that need improvement.

Benefits of Using OCP

There are several benefits of using the OCP. Here are some of them:

 Understand your organization’s strengths and weaknesses

 Identify critical areas for improvement

 Get a holistic view of your organization

 Develop strategies to enhance operations

 Align resources with strategic priorities

The Five Key Areas of OCP

The OCP framework contains five key areas that organizations should focus on when assessing their
capabilities:

1. Strategic Capability

This area evaluates the organization’s ability to develop and execute strategies that deliver business
goals. It assesses whether the organization has a clear vision and mission, sets meaningful
objectives, and allocates resources effectively.

2. Cultural Capability

Cultural capability examines an organization’s core values, beliefs, and norms. It assesses whether
the culture supports the execution of strategy, decision-making, and employee behavior.

3. Process Capability

Process capability examines how well the organization’s processes support its objectives. It assesses
whether processes are efficient, effective, and aligned with best practices.

4. Resource Capability

Resource capability assesses the organization’s ability to allocate resources effectively. It examines
whether the organization’s resources are aligned with its strategic priorities and whether they
support the achievement of its objectives.

5. People Capability

People capability evaluates the organization’s ability to attract, retain, and develop talent. It assesses
whether the organization has the right people with the right skills in the right roles.

How to Use OCP

To use the OCP, organizations need to follow these steps:

1. Define the scope of the assessment

2. Identify the appropriate stakeholders who will participate in the assessment

3. Collect data using various methods such as interviews, surveys, and questionnaires

4. Analyze the data to understand the organization’s capabilities

5. Develop a report that outlines the strengths and weaknesses of the organization

6. Develop a plan to address any areas where improvement is needed

Conclusion

The OCP is a comprehensive tool that provides organizations with a holistic view of their capabilities.
By assessing their strengths and weaknesses in key areas such as strategy, culture, process,
resources, and people, organizations can identify critical areas for improvement. This, in turn, helps
them optimize their operations, become more efficient, and achieve their goals. By following the
steps outlined in this article, organizations can use the OCP to enhance their overall capabilities and
achieve long-term success.
What Is a SWOT Analysis?

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT analysis is a
technique for assessing these four aspects of your business.

SWOT Analysis is a tool that can help you to analyze what your company does best now, and to
devise a successful strategy for the future. SWOT can also uncover areas of the business that are
holding you back, or that your competitors could exploit if you don't protect yourself.

A SWOT analysis examines both internal and external factors – that is, what's going on inside and
outside your organization. So some of these factors will be within your control and some will not. In
either case, the wisest action you can take in response will become clearer once you've discovered,
recorded and analyzed as many factors as you can.

In this article, video and infographic, we explore how to carry out a SWOT analysis, and how to put
your findings into action. We also include a worked example and a template to help you get started
on a SWOT analysis in your own workplace.

Why Is SWOT Analysis Important?

SWOT analysis can help you to challenge risky assumptions and to uncover dangerous blindspots
about your organization's performance. If you use it carefully and collaboratively, it can deliver new
insights on where your business currently is, and help you to develop exactly the right strategy for
any situation.

For example, you may be well aware of some of your organization's strengths, but until you record
them alongside weaknesses and threats you might not realize how unreliable those strengths
actually are.

Equally, you likely have reasonable concerns about some of your business weaknesses but, by going
through the analysis systematically, you could find an opportunity, previously overlooked, that could
more than compensate.

Figure 1. A SWOT Analysis Matrix.

Strengths What do you do well? What unique Weaknesses What could you improve? Where
resources can you draw on? What do others see as do you have fewer resources than others?
your strengths? What are others likely to see as weaknesses?

Opportunities What opportunities are open to you? Threats What threats could harm you? What is
What trends could you take advantage of? How can your competition doing? What threats do your
you turn your strengths into opportunities? weaknesses expose to you?

SWOT Analysis Template

When conducting your SWOT analysis, you can either draw your own matrix, or use our free
downloadable template.

How to Do a SWOT Analysis

Avoid relying on your own, partial understanding of your organization. Your assumptions could be
wrong. Instead, gather a team of people from a range of functions and levels to build a broad and
insightful list of observations.

Then, every time you identify a Strength, Weakness, Opportunity, or Threat, write it down in the
relevant part of the SWOT analysis grid for all to see.

Let's look at each area in more detail and consider what fits where, and what questions you could
ask as part of your data gathering.

Strengths

Strengths are things that your organization does particularly well, or in a way that distinguishes you
from your competitors. Think about the advantages your organization has over other organizations.
These might be the motivation of your staff, access to certain materials, or a strong set of
manufacturing processes.

Your strengths are an integral part of your organization, so think about what makes it "tick." What
do you do better than anyone else? What values drive your business? What unique or lowest-cost
resources can you draw upon that others can't? Identify and analyze your organization's Unique
Selling Proposition (USP), and add this to the Strengths section.

Then turn your perspective around and ask yourself what your competitors might see as your
strengths. What factors mean that you get the sale ahead of them?

Remember, any aspect of your organization is only a strength if it brings you a clear advantage. For
example, if all of your competitors provide high-quality products, then a high-quality production
process is not a strength in your market: it's a necessity.

Weaknesses

Weaknesses, like strengths, are inherent features of your organization, so focus on your people,
resources, systems, and procedures. Think about what you could improve, and the sorts of practices
you should avoid.

Once again, imagine (or find out) how other people in your market see you. Do they notice
weaknesses that you tend to be blind to? Take time to examine how and why your competitors are
doing better than you. What are you lacking?

Be honest! A SWOT analysis will only be valuable if you gather all the information you need. So, it's
best to be realistic now, and face any unpleasant truths as soon as possible.

Opportunities

Opportunities are openings or chances for something positive to happen, but you'll need to claim
them for yourself!

They usually arise from situations outside your organization, and require an eye to what might
happen in the future. They might arise as developments in the market you serve, or in the
technology you use. Being able to spot and exploit opportunities can make a huge difference to your
organization's ability to compete and take the lead in your market.
Think about good opportunities that you can exploit immediately. These don't need to be game-
changers: even small advantages can increase your organization's competitiveness. What interesting
market trends are you aware of, large or small, which could have an impact?

You should also watch out for changes in government policy related to your field. And changes in
social patterns, population profiles, and lifestyles can all throw up interesting opportunities.

Threats

Threats include anything that can negatively affect your business from the outside, such as supply-
chain problems, shifts in market requirements, or a shortage of recruits. It's vital to anticipate
threats and to take action against them before you become a victim of them and your growth stalls.

Think about the obstacles you face in getting your product to market and selling. You may notice
that quality standards or specifications for your products are changing, and that you'll need to
change those products if you're to stay in the lead. Evolving technology is an ever-present threat, as
well as an opportunity!

Always consider what your competitors are doing, and whether you should be changing your
organization's emphasis to meet the challenge. But remember that what they're doing might not be
the right thing for you to do. So, avoid copying them without knowing how it will improve your
position.

Be sure to explore whether your organization is especially exposed to external challenges. Do you
have bad debt or cash-flow problems, for example, that could make you vulnerable to even small
changes in your market? This is the kind of threat that can seriously damage your business, so be
alert.