Chapter 3

SWOT: The Analysis of Strengths,

Weaknesses, Opportunities, & Threats
 Benefits of the SWOT Analysis…
Simple process which lowers costs
No extensive training required
Flexible-enhances strategic planning
Integration-synthesizes qualitative &
quantitative information
Collaboration-encourages interdepartmental
coordination

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 Directives for a Productive
SWOT Analysis…
Stay focused
Search extensively for competitors
Collaborate with other functional areas
Examine issues from the customers’
perspectives
Separate internal issues from external issues

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 Keys to Staying Focused

Focus on specific products & markets

Adapt the marketing mix to address
environmental issues
Examine overall strategic business units
Make certain you have 1
SWOT analysis for each
product/market combination

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 Search Extensively for
Competitors
Do not overlook any competitor (current or
future)
Consider:
– Product competitors
– Generic competitors
– Total budget competitors

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 Collaborate with Other Functional
Areas
Stimulates communication outside normal
channels
Result is varied information from diverse sources
Provides an ‘outsiders’ perspective in the SWOT
– Sales -Inventory control
– Production -Quality control
– Advertising -Research & development
– Finance
– Customer service
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 Examine Issues from the Customers’
Perspectives in the SWOT
What do our customers believe about us as a
company?
What are their perceptions of:
– Product quality
– Customer service
– Price/value
– Convenience
– Promotional
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 Customer Segment Evaluations
Should be Benchmarked
Consider internal customers (employees)
Consider all relevant stakeholders:
– Investors & stockholders
– Suppliers
– Customers
– Governmental
– Societal

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 Concerns Beyond External Issues

Internal issues (strengths & weaknesses)

Biggest problem with SWOTS
– failure to understand the difference between internal
& external issues

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 The Elements of the SWOT
Analysis
Strengths & Weaknesses:
– A strength is meaningful only when it addresses
customer needs
– A customer-focused SWOT can uncover potential
weaknesses
– Weaknesses associated with customer needs should
be minimized
– Determine where resources are available & lacking
– Match strengths with market opportunities
– Strengthen weaknesses or minimize their negatives
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 The Elements of the SWOT
Analysis
Opportunities & Threats:
– Changes in the external environment can impede the
ability to deliver value to customers
– Changes can occur in:
• market growth
• competition
• overall economy
• political/legal environment
• technology
• sociocultural issues
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 SWOT-Driven Strategic Planning

Utilizing a SWOT for strategic planning requires:

– Looking beyond the firm’s current products
– Matching strengths with opportunities (translate
strengths into capabilities)
– Investing in key areas: customer support, R&D,
promotion, employee training)
– Converting weaknesses into strengths
– Understanding that weaknesses that cannot be
converted into strengths become limitations
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 One Way to Conduct a SWOT
Analysis-SWOT Matrix
4 cells categorizing the SWOT:strengths,
weaknesses, opportunities & threats
Assess magnitude and importance of each
– Based on customer perceptions, not managers

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 Developing Sustainable
Competitive Advantages
Capabilities allow the firm to better serve
customer needs (competitive advantage)
Sources of competitive advantage:
– customer loyalty -brand equity -distribution
– patents & trademarks -salesforce -culture
Capabilities that do not solve customer needs
are of little value
– Must have a core competency
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 How to Achieve a Competitive
Advantage
Operational excellence-efficiency
Product leadership-research & development,
technology, products
Customer intimacy-relationship marketing

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 Matching Strengths to Opportunities
(Johnson & Murphy)
2 key strengths: reputation for quality & personal
service
2 key opportunities: demand for high quality
products & good service
J & M uses a product leadership strategy &
customer intimacy strategy
J & M stresses convenience of locations &
catalog services (overnight delivery options)
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 Considerations in Developing
Marketing Goals
Attainability
Consistency
Comprehensiveness
Intangibility

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 Considerations in Developing
Marketing Objectives
Attainability
Continuity
Timeframe
Assignment of responsibility

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 Strategies Converting Strengths
or Threats into Opportunities
Find new markets for a firm’s products
(conversion strategy)
– May require significant financial resources
– Must identify major liabilities that continue to occur

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 Minimize or Avoid Weaknesses or
Threats Which Cannot Be Converted
Become a niche marketer
Reposition the product
Realize your limitations
– Diversify to minimize risks of operating in a
single market

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How would you react to the idea that a
SWOT analysis is unnecessary?

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 How could each of the following
be a strength or weakness?
Highest quality product in the industry
Significant excess production capacity
Excellent relationship with a single supplier
Sizable amount of cash on hand
Offering a product that is designed to suit
everyone’s needs

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 Identify some opportunities & threats
in the following industries…
Commercial aviation
Health care
Television
Pet supplies
Education
Transportation

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