1
“SWOT” Analysis
General Idea: Our definition of strategic planning is the process by which missions
and purposes are pursued, strategies implemented and results reviewed. We will
further examine the forces which play on these activities and the abilities of the
organizations themselves in order to gain a better understanding of strategic planning.
Parts: Classic analysis breaks the investigation into two parts.
• Part one is the examination of forces external to or outside the control of the
company itself. These forces are further categorized by separating them into
“opportunities” and “threats.”
• Part two is the examination of the traits of the organization’s internal
environment and/or abilities. This analysis is called a “strengths” and
“weaknesses” analysis.
• “SWOT” is the acronym created from the first letters of each and this in term
is called a SWOT analysis.
Forces: In general, a business unit has to monitor key external forces and associated
tell-tale signs at two levels:
• macroenvironment forces (demographic/economic, technological,
political/legal, and social/cultural) and
• microenvironmental actors (customers, competitors, distribution channels,
suppliers) that affect its ability to earn profits.
Tracking Trends: The enterprise uses market research to track trends and important
developments. As noted, for each tell-tale sign or trend, management seeks to identify
the associated opportunities and threats.
Part One: External Environment or Forces: Opportunity and Threat
Analysis1
Opportunities: From a marketing perspective, an opportunity is “an area of buyer
need in which a company can perform profitably.
Opportunities can refer to both
existing operations as well as potential new undertakings.
Opportunities can he
classified according to:
• their attractiveness and
• their success probability. The company’s success probability depends on whether
its business strengths not only match the key success requirements for
operating in the target market but also exceeds those of its competitors. Mere
competence does not constitute a competitive advantage (to be discussed in
lecture 8). The best-performing company will be the one that can generate the
greatest customer value and sustain it over time.”
Opportunity Example2: “Examine the opportunity matrix in Exhibit 1,
• the best marketing opportunities facing the TV-lighting-equipment company
are listed in the upper-left cell (#1); management should pursue these
opportunities.
• The opportunities in the lower-right cell (#4) are too minor to consider.
• The opportunities in the upper-right cell (#2) and lower-left cell (#3) should
1 Philip Kotler, Marketing Management 1997
2 Philip Kotler, Marketing Management 1997 pg 82
