SWOT Analysis: A Strategic Tool for Business Success, Lecture notes of Business Accounting

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SWOT Analysis

What is SWOT?

 Tool for auditing an organization and its environment  First stage of planning  Helps marketers to focus on key issues.  SWOT stands for S trengths, W eaknesses, O pportunities, and T hreats.  Strengths & Weaknesses = INTERNAL factors  Opportunities & Threats = EXTERNAL factors

Why Use It?

• The main purpose of a SWOT analysis is to add value to products and services
• Doing this can help a business recruit new customers, retain loyal customers, and extend products and services to customer segments over the long-term.

When to Use It?

 At least once per year  When individual issues need to be addressed: ◦ staffing issues ◦ business culture and image ◦ organizational structure ◦ advertising ◦ financial resources ◦ operational efficiency

A SWOT strength could be:

 Special marketing (or other) expertise  A new, innovative product or service  Location of a business  Being a market leader  Quality processes and procedures  Any other aspect of a business that adds value to the product or service

Which one is a STRENGTH for

McDonald’s?

A—Unhealthy food B—Lawsuits against McDonald’s C—The idea to add home meal delivery D—Having the largest fast food market share in the world

A SWOT weakness could be:

 Lack of marketing (or other) expertise  Undifferentiated products or services (i.e. in relation to your competitors)  Location of your business  Poor quality goods or services  Price that is too high  Damaged reputation

Which one is a WEAKNESS for

McDonald’s?

A—High employee turnover B—Lawsuits against McDonald’s C—$2 million advertising budget D—Changing customer habits and new customer groups

A SWOT opportunity could be:

 A developing market such as the Internet  Mergers, joint ventures or strategic alliances  Moving into new market segments that offer improved profits  A new international market  A market vacated by an ineffective competitor  Technology

Which one is an OPPORTUNITY for

McDonald’s?

A—Local fast food restaurant chains B—The idea to add home meal delivery C—Partnerships with many big brand names D—Negative publicity

A SWOT threat could be:

 A new competitor in your home market  Price wars with competitors  A competitor has a new, innovative product or service  Competitors with superior access to channels of distribution  Taxation is introduced on your product or service  Changes in technology  Weather  Regulation & deregulation

Which one is a THREAT for McDonald’s?

A—An unhealthy food menu B—Brand recognition valued at $40 billion C—Creating new menu items for changing customer habits and new customer groups D—Trend towards healthy eating

Simple Rules for a Successful

SWOT Analysis

 Be realistic about the strengths and weaknesses of your organization.  It should distinguish between where your organization is today, and where it could be in the future.  Be specific--avoid grey areas.  Always apply SWOT in relation to your competition (i.e. better than or worse than your competition).  KISS! Keep it short and simple --avoid complexity and over analysis  SWOT analysis is subjective.

Let’s Practice!!