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SWOT ANALYSIS
Definitions Strengths :- A company strength is a successful application of a competency or exploitation of a critical factor to develop company competitiveness.
Weaknesses :- A company weakness is an unsuccessful application of a competency or the non- exploitation of a critical factor that diminishes company competitiveness.
Opportunities :- An opportunity is an external condition that could positively impact the company’s critical performance parameters and improve competitive advantage provided positive action is taken in time.
Threats :- A threat is an external condition that could negatively impact the company’s critical performance parameters and diminish competitive advantage provided positive action is not taken in time.
Key to SWOT-Driven Strategic Planning
Look beyond the organization’s products to assess its business
processes
Offer customers “solutions” rather than specific products
Match key strengths with opportunities to create capabilities that
can be developed into competitive advantages
Invest strategically in key areas to convert weaknesses into
strengths and threats into opportunities
Minimize the impact of limitations (unconverted weaknesses) and
liabilities (weaknesses paired with threats), especially those that
are obvious to customers or that put the organization at a major
competitive disadvantage
Political and Legal Influences on Strategy
1. What changes in government policy can be expected with
regard to industry cooperation, antitrust activities, foreign
trade, taxation, depreciation, environmental protection,
deregulation, defense, foreign trade barriers, and other
important parameters.
2. What success will a new administration have in achieving its
stated goals?
3. What effect will that success have on the firm?
4. Will specific international climates be hostile or favorable?
5. Is there a tendency toward instability, corruption, or violence?
6. What is the level of political risk in each foreign market/
7. What other political or legal constraints or supports can be
expected in international business (e.g., trade barriers, equity
requirements, nationalism, patent protection)?
SWOT Analysis Procedure
Step 1: External Opportunities and Threats: Brainstorm opportunities and threats using the definitions provided previously. Use the examples given in the sample tables as a guide. Prioritise this list. On Table 1.2 Opportunities / Threats Analysis form supplied rate each factor from Major Opportunity to Major Threat. Also give each factor a probability of occurrence / success rating. Plot each factor on the Probability of Occurence - Attractiveness / Seriousness (Table 1.4). Items in cell 1 should be adopted. Items in cell 2/3 should be monitored for change are ok. Items in cell 3 are of low priority. Items in cell 4 point to potential mis-application of resources.
Step 2: Internal Strengths and Weaknesses: Concentrate on the current and past performance of your company in the market place. Review marketing, financial, manufacturing, organisational and any other competencies that are relevant to your company. Brainstorm factors that influence each competency. Prioritise this list. On Table 1.1 Strength / Weaknesses Analysis form supplied rate each factor from Major Strength to Major Weakness. Also give each factor an importance rating. Plot each factor on the Importance - Performance Matrix (Table 1.3). Items in cell 1 should be strengthened. Items in cell 2 are ok. Items in cell 3 are of low priority. Items in cell 4 point to potential mis-application of resources.
Step 3: Once the SWOT review is complete, the future strategy may be readily apparent or, as is more likely the case, a series of strategies or combinations of tactics will suggest themselves.
Table 1.4: External Condition - Probability Matrix
Attractiveness / Seriousness
Probability of Occurrence / Success
High Low High Probability of Success of Opportunity
High Probability of Occurrence of Threat
High
Major Opportunity
Monitor for change
Low 3. Monitor for change
Major Threat
Major Opportunity Major Threat
Examples of Evaluation Factors
Competencies and Factors External Conditions
Marketing Company Reputation Market Share Quality/Service Reputation Promotion effectiveness Sales-force effectiveness Geographical Coverage R & D and Innovation
Industry Structural Changes
Finance Cost / Availability of capital Profitability Financial Stability
Market Place Economic factors Social Factors
Operations Facilities / Capacity Able Dedicated Workforce Ability to Deliver on Time Technical Manufacturing skill
Competition Rival Companies
Organisation Visionary Capable Leadership Dedicated Employees Entrepreneurial Orientation Flexible / Responsive
Technology Core Technology changing Process Technology
DRAWBACKS OF SWOT
SWOTs usually reflect a person's existing position and viewpoint, which can be misused to justify a previously decided course of action rather than used as a means to open up new possibilities. It is important to note that sometimes threats can also be viewed as opportunities, depending on the people or groups involved. There is a saying, " A pessimist is a person who sees a calamity in an opportunity, and an optimist is one who sees an opportunity in a calamity ."
SWOTs can allow institutions to take a lazy course and look for 'fit' rather than to 'stretch' they look for strengths that match opportunities yet ignore the opportunities they do not feel they can use to their advantage. A more active approach would be to involve identifying the most attractive opportunities and then plan to stretch the college to meet these opportunities. This would make strategy a challenge to the institution rather than a fit between its existing strengths and the opportunities it chooses to develop
