4. swot matrix

8/12/2019 4. SWOT Matrix

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Strategy Formulation

SWOT analysis


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Learning Objective

Explain the components

of a SWOT Analysis.

STRATEGIC MANAGEMENTDecember'08


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SWOT Analysis

Identifying

internal strengths (S)

and weaknesses (W)

and also examining

externalopportunities (O)and

threats (T)STRATEGIC MANAGEMENTDecember'08


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SWOT Analysis

South-Western College Publishing

S

W

OT

Things the company does well.

Things the company does not do well.

Conditions in the external environmentthat favor strengths.

Conditions in the external environmentthat do not relate to existing strengthsor favor areas of current weakness.

Internal

External



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SWOT Analysis

Production Costs Marketing Skills Employee Capabilities

Financial Resources Available Technology Company/Brand Image

Strengths and Weaknesses

INTERNAL



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Wal- Mart SWOT Analysis

Wal-Mart is powerful retail brand.

Wal-Mart has grown substantially over recent years and has

experienced global expansion.

Wal-Mart has a core competence involving its use of IT tosupport its international logistics system.

A focused strategy is in place for HRM and development.

Strengths



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Wal- Mart is the Worlds largest grocery retailer and

control of its empire, despite its IT advantages, could leaveit week in some areas due to the huge span of control

Since Wal-Mart sell products across many sectors, it may

not have the flexibility of some of its more focused

competitors. The company is global, but has a presence in relatively few

countries Worldwide.

Weaknesses



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SWOT Analysis

Opportunities and Threats

EXTERNAL

Social

Demographic

Economic

Technological

Political/Legal

Competitive



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To take over, merge with, or form strategic alliances with

other global retailers.

There are tremendous opportunities for future business

expansion.

New locations and store types offer Wal-Mart

opportunities.

Opportunities exist for Wal-Mart to continue with its

current strategy of large, super centres.

Opportunities



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Being number one means that Wal-Mart is the target of

competition, locally and globally. Being a global retailer means that Wal-Mart is exposed to

political problems in the countries where it has operations.

Intense price competition.

Threats



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Environmental Scanning &

MonitoringEnvironmental scanningis a concept from businessmanagement by which businesses gather information

from the environment, to better achieve a sustainablecompetitive advantage.

To sustain competitive advantage the company must

also respond to the information gathered from

environmental scanning by altering its strategiesand

planswhen the need arises.
http://en.wikipedia.org/wiki/Sustainable_competitive_advantagehttp://en.wikipedia.org/wiki/Sustainable_competitive_advantagehttp://en.wikipedia.org/wiki/Strategyhttp://en.wikipedia.org/wiki/Marketing_planhttp://en.wikipedia.org/wiki/Marketing_planhttp://en.wikipedia.org/wiki/Strategyhttp://en.wikipedia.org/wiki/Sustainable_competitive_advantagehttp://en.wikipedia.org/wiki/Sustainable_competitive_advantage


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Environmental Scanning & Monitoring-

Techniques

SWOT

I ndustry Analysis

Techniques

Competi tor Analysis

PEST QUEST

8- 11STRATEGIC MANAGEMENTDecember'08


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SWOT(Strength-Weakness-Opportunity-Threat)

Identification of threats and Opportunitiesin the environment (External) and strengths

and Weaknessesof the firm (Internal) is thecornerstone of business policy formulation;it is these factors which determine the

course of action to ensure the survival andgrowthof the firm.



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SWOT Analysis



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The SWOT analysis is an extremely useful tool for understandingand decision-making for all sorts of situations in business andorganizations. SWOT is an acronym for Strengths, Weaknesses,

Opportunities, Threats. SWOT analysis came from the research conducted at Stanford

Research Institute from 1960-1970. The background to SWOTstemmed from the need to find out why corporate planning failed.The research was funded by the fortune 500 companies to find out

what could be done about this failure. The Research Team wereMarion Dosher, Dr Otis Benepe, Albert Humphrey, Robert Stewart,Birger Lie.

It all began with the corporate planning trend, which seemed toappear first at Du Pont in 1949. By 1960 every Fortune 500 company

had a 'corporate planning manager' (or equivalent) and'associations of long range corporate planners' had sprung up inboth the USA and the UK.



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Strategic and Creative Use of S.W.O.T

Analysis : Orienting to An Objective

If SWOT analysis does not start with defining a desired

end state or objective, it runs the risk of beinguseless. A SWOT analysis may be incorporated intothe strategic planningmodel.

An example of a strategic planning technique thatincorporates an objective-driven SWOT analysis is

SCANanalysis.

http://en.wikipedia.org/wiki/Strategic_planninghttp://en.wikipedia.org/wiki/Strategic_planninghttp://www.mbatoolbox.org/stories/storyReader$19http://www.mbatoolbox.org/stories/storyReader$19http://en.wikipedia.org/wiki/Strategic_planning


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SWOT: Studying Internal & External

Environment

The aim of any SWOT analysis is to identify the key

internal and external factors that are important to

achieving the objective. SWOT analysis groups key

pieces of information into two main categories: Internal factorsThe strengthsand

weaknessesinternal to the organization.

External factorsThe opportunitiesand

threatspresented by the external

environment.



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If a clear objective has been identified, SWOTanalysis can be used to help in the pursuit of that

objective. In this case, SWOTs are:

Strengths: attributes of the organizationthat are helpful to achieving the objective.

Weaknesses: attributes of the organizationthat are harmful to achieving the objective.

Opportunities: externalconditions that are

helpful to achieving the objective.

Threats: externalconditions that areharmful to achieving the objective.



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Examples of SWOTs

Strengths and Weaknesses

Resources: financial, intellectual, location

Cost advantages from proprietary know-how

Creativity / ability to develop new products

Valuable intangible assets: intellectual capital

Competitive capabilities

Big campus selection



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Opportunities and Threats Takeovers

Market Trends

Economic condition

Mergers

Joint ventures

Strategic alliances Expectations of stakeholders

Technology

Public expectations

Competitors and competitive actions Poor Public Relations Development

Criticism (Editorial)

Global Markets

Environmental conditions



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Uses of SWOT Analysis

Corporate planning

Set objectivesdefining what the organisation is intending to do

Environmental scanning Internal appraisals of the organisations SWOT, this needs to include an

assessment of the present situation as well as a portfolio of products/services

and an analysis of the product/service life cycle

Analysis of existing strategies, this should determine relevance from theresults of an internal/external appraisal. This may include gap analysis(compare its actual performance with its potential performance which willlook at environmental factors)

Strategic Issuesdefinedkey factors in the development of a corporate planwhich needs to be addressed by the organisation

http://en.wikipedia.org/wiki/Gap_analysishttp://en.wikipedia.org/wiki/Gap_analysishttp://en.wikipedia.org/wiki/Gap_analysis


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Develop new/revised strategiesrevised analysis of

strategic issues may mean the objectives need tochange

Establish critical success factorsthe achievement

of objectives and strategy implementation

Preparationof operational, resource, projects plans

for strategy implementation

Monitoring resultsmapping against plans, taking

corrective action which may mean amendingobjectives/strategies.

http://en.wikipedia.org/wiki/Critical_success_factorhttp://en.wikipedia.org/wiki/Critical_success_factor


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Also;

Use SWOT analysis for business planning,

strategic planning, competitor

evaluation, marketing, business andproduct development and research

reports.



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Handling SWOTs

Strengths (maintain, build and leverage)

Opportunities (prioritise and optimise)

Weaknesses (remedy or exit)

Threats (counter)



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SWOT Analysis

Strengths, Weaknesses,

Opportunities, and Threats


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SWOT Planning and OrganizingTool

organizational strategic planning

public policy development

personal career planning

Helps focuson key issues



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Strengths and weaknesses are generally

internalfactors.

Opportunities and Threats are generally

externalissues.



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Strengths

Consider from both the view of the firm (product) aswell as from customers and competitors

Realistic and not modest

Ones strength is anothers weakness

Questions:

What are the firms advantages over others?

What does the firm do well?

What makes you stand out from your competitors?



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Weaknesses

Consider from internal and external viewpoint Be truthful so that weaknesses may be overcome as

quickly as possible

Ones strength is anothers weakness

Questions.

What is done poorly?

What can be improved?

What should be avoided?



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Opportunities and Threats

Primarily external in nature

Represent characteristics of:

the research environment

growth in potential markets

changes in the competitive, economic, political/legal,

technological, or socio-cultural environments

A threat to some is an opportunity to another.



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Questions on opportunities:

Is there a product/service area that others havenot yet covered?

Are there emerging trends that fit with your

company's strengths?

Questions on threats:

Are your competitors becoming stronger?

Are there emerging trends that amplify one of

your weaknesses?



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For acompanya strengthcould be:

marketing expertise location of your business

innovative product

company image any other aspect that adds value to your

product or service



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For a companya weaknesscould be:

lack of marketing expertise

undifferentiated products and service (i.e. in

relation to your competitors)

location of your business

damaged reputation



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For a companyan opportunitycould be:

a developing market such as the Internet. mergers, joint ventures or strategic alliances

a new international market

a market vacated by an ineffective competitor any external factor that may create demand or

the possibility for increased profitability



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For a companya threatcould be:

a new competitor in your market price wars with competitors

a competitor has a new, innovative product or

service competitors have superior access to channels

of distribution



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Word of Caution:

SWOT analysis can be very subjective.

Do not rely on it too much.

Two people rarely come-up with the same final

version of SWOT.



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SWOT for Southwest Airlines

Organizational (Internal) Strengths Highly productive pilots and ground crews

Low Costs

Weaknesses

Inability to provide nonstop long distance travel

Opportunities

Ability to add scheduled flights to new cities

Low prices enable market share growthThreats

Difficulty securing new gates at existing airports

Low cost rival Jet Blue - competition



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Suggestions for conducting SWOT Analysis:

Be realistic; no need to inflate strengths or be indenial about shortcomings.

Distinguish between where your technology is today,

and where it could be in the future.

Be specific. Avoid grey areas.

Always analyze in the context of your competitive

environment.

Keep your SWOT short and simple.



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Using the SWOT Analysis

Weaknesses should be looked at in order toconvert them into strengths.

Try to match your strengths with externalopportunities.

Threats should be converted intoopportunities.

Strengths and opportunities should be

matched.



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Expanding Your SWOT Analysis

Delve deeper into the details of thetechnology.

Include more detailed competitor information

in the analysis.

Take a closer look at the business

environment.

Expand the reach of a SWOT analysis throughsurveys.



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THANK YOU

4. swot matrix

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