SWOT Analysis – the basics

Strengths Weaknesses

Opportunities Threats

1
 The problems
• Hill and Westbrook (1997) carried out a survey of
50 UK manufacturing companies who had carried
out a recent SWOT analysis and found the
following:
– Long lists of factors (often over 40) – which can lead
to too many strategic options for action.
– Meaningless and generalised descriptions
– No prioritising of factors listed
– No attempt to verify the points made
– None of the outputs from the analysis were used in
subsequent stages of the strategy process

2
 The problems
• Often SWOT factors are based on qualitative
analysis
• The quality of the analysis is heavily dependent
on the skills of the managers conducting the
audits of external and internal factors
• Little attempt to determine the importance of
different factors
• Some factors can be classed as Threats and
Opportunities or Strengths and Weaknesses.

Source: Kajanus et al., 2004, Ghazinoory et al. , 2007

3
 The practice
Strengths Weaknesses
• Competitiveness in North, • Short-term signings,
South and Central American revenues and profitability
markets. Signings growth (in March)
• Build-to-order growth • Europe performance
• Asian growth (without • Japan performance
Japan)

Source: Coman and Ronen, 2008

4
 The practice
Strengths
• Competitiveness in North,
South and Central American
markets. Signings growth
• Build-to-order growth
• Asian growth (without
Japan)
Good points :
• It is concise
Source: Coman and Ronen, 2008
Weaknesses
• Short-term signings,
revenues and profitability
(in March)
• Europe performance
• Japan performance
Areas for improvement/faults:
• Vague and often generalised
• No prioritisation
• Some of the elements could actually be
Opportunities (e.g. Asian growth)
• Lack of supporting evidence and figures
5
 1. Take a more critical approach

Concise

Actionable Authentic

Significant

Source: Coman and Ronen, 2008 6

 SWOT for Russian Subsidiary of International Satellite Transmission and Broadcast Provider
Strengths
1) Staff: experienced employees successfully managing global
telecommunication and broadcasting projects, able to identify goals by
oneself and overcome targets.
2) Customer Base: 90% percents of tier one media groups in the region
including the majority of state supported TV channels became XXXX
clients. 99% of contracts are long-term and were renewed even during
2008 crisis.
3)Stable Market Position: XXXX provides state of the art, expensive
services, for customers interested in reliable broadcasting solutions. The
leader on regional market of international broadcasting services.
4) Financial recourses: The cost of capital is law. Company is 100%
subsidiary of ZZZ Telecom and receives funds if Head Quarter confirms
the yearly “Sales and Development plan”.
5) Sales channels: 90% of sales are direct and to clients from CIS region,
5% - through other Business Units and the rest – regional agents network
Thus Russian Business unit is independent and self-sufficient
6) Products and Services: 90% of Services and Products sold are
produced and originated outside of Russia (0 capex, low opex). Portfolio
consists mainly from traditional and reliable services launched on the
marker in the beginning of 2000.
7)Profit: Business unit is profitable, mainly due to ability to keep a high
margin for expensive satellite distribution services.
8) Growth: Rev. has been growing at ~ 30% during last 4 years.
Opportunities
1)Market growth, regional and international broadcasting market is steadily
growing. The ever. daily viewing time per individual is growing at 2% per
year, it is expected that the total number of TV channels will grow on 33%
in 2015 in comparison to 2010.
2) Complimentary market, XXXX Moscow services are in high demand on
complimentary markets, such as rising digital cinema delivery market,
online video advertisement displaying, OTT video platforms.
3) Alliances and mergers, XXXX Moscow profits from alliances with local
broadcasting and production companies (XXXX resells its services to
international clients having 0 costs)
4) Activities of XXXX’s international competitors are relatively low on
Russian market
Weakness
1)Staff: Russian employees handle multiple projects in Eastern Europe and
CIS; often visit dangerous local armed conflicts areas. Financial motivation
and career growth are limited.
2)Customer Base: majority of clients are politically committed and can
disappear when one or another political regime fails. Insignificant
contribution from sales to overseas and private clients.
3)Market Position: from the perspective of medium and small media groups
XXXX services are overpriced, customer care is dedicated and efficient for
major state supported clients only.
4)Financial recourses: The financing decisions are made at corporate HQ
level, are of formal and bureaucratic character.
5)Lack of new services: the whole company is extremely late with new
products and services in spite of considerable efforts and financial inputs.
Russian business completely depends from services produced outside BU
(as opposed to all the others international BU).
6)Sales channels: Business unit completely depends from sales managers
generating direct sales (90% of revenue). Very law level of sales through
others international XXXX’s Business Units.
7)Growth: due to relatively fast business growth the quality of service is going
down
Threats
1) Downturn on broadcasting market, Eastern European and CIS
government and state supported TV channels are suffering from cost cutting,
TV advertisement market are vulnerable
2) Shortage of satellite capacity over Russia ( due to ongoing losses of
satellites and poorly thought-out telecommunication policy) hinders the
launch of new XXXX services and products
3) Political issues, Russian legal regulation, and licensing regulations are
negatively influence on service development plan of XXXX Russian office
4) Severe competition on Eastern European markets
5) Technological Shift, Broadcasting market switches from traditional
satellite and cable technologies to Internet based
7
 SWOT for Russian Subsidiary of International Satellite Transmission and Broadcast Provider

Strengths Weakness
1) Staff: experienced employees successfully managing global 1)Staff: Russian employees handle multiple projects in Eastern Europe and
Too many
oneself and overcome targets.
Many of the points
telecommunication and broadcasting projects, able to identify goals by CIS; often visit dangerous local armed conflicts areas. Financial motivation
and career growth are limited.
items – do not pass the “so
2) Customer Base: 90% percents of tier one media groups in the region 2)Customer Base: majority of clients are politically committed and can
including the majority of state supported TV channels became XXXX disappear when one or another political regime fails. Insignificant
needs to be what” test - a
clients. 99% of contracts are long-term and were renewed even during contribution from sales to overseas and private clients.
2008 crisis. 3)Market Position: from the perspective of medium and small media groups
more further step is
3)Stable Market Position: XXXX provides state of the art, expensive XXXX services are overpriced, customer care is dedicated and efficient for
services, for customers interested in reliable broadcasting solutions. The major state supported clients only.
concise needed to move
leader on regional market of international broadcasting services. 4)Financial recourses: The financing decisions are made at corporate HQ
these to being
4) Financial recourses: The cost of capital is law. Company is 100%
subsidiary of ZZZ Telecom and receives funds if Head Quarter confirms
level, are of formal and bureaucratic character.
5)Lack of new services: the whole company is extremely late with new
the yearly “Sales and Development plan”. obviously products and services in spite of considerable efforts and financial inputs.
5) Sales channels: 90% of sales are direct and to clients from CIS region, Russian business completely depends from services produced outside BU
actionable
5% - through other Business Units and the rest – regional agents network (as opposed to all the others international BU).
Thus Russian Business unit is independent and self-sufficient 6)Sales channels: Business unit completely depends from sales managers
6) Products and Services: 90% of Services and Products sold are generating direct sales (90% of revenue). Very law level of sales through
produced and originated outside of Russia (0 capex, low opex). Portfolio others international XXXX’s Business Units.
consists mainly from traditional and reliable services launched on the 7)Growth: due to relatively fast business growth the quality of service is going
marker in the beginning of 2000. Most of the strengths and
down
7)Profit: Business unit is profitable, mainly due to ability to keep a high
margin for expensive satellite distribution services. weaknesses need a
8) Growth: Rev. has been growing at ~ 30% during last 4 years.
comparison with competitors
Opportunities to improve their validity
Threats
This seems to be more of
1)Market growth, regional and international broadcasting market is steadily 1) Downturn on broadcasting market, Eastern European and CIS
growing. The ever. daily viewing time per individual is growing at 2% per government and state supported TV channels are suffering from cost cutting,
strength than an opportunity –
year, it is expected that the total number of TV channels will grow on 33% TV advertisement market are vulnerable
in 2015 in comparison to 2010.
need to be clear about what
2) Complimentary market, XXXX Moscow services are in high demand on
2) Shortage of satellite capacity over Russia ( due to ongoing losses of
satellites and poorly thought-out telecommunication policy) hinders the
complimentary markets,each category
such as rising digitalis
cinema delivery market, launch of new XXXX services and products
online video advertisement displaying, OTT video platforms.
3) Political issues, Russian legal regulation, and licensing regulations are
3) Alliances and mergers, XXXX Moscow profits from alliances with local negatively influence on service development plan of XXXX Russian office
broadcasting and production companies (XXXX resells its services to
Is this a threat? Without more4)detail
international clients having 0 costs)
Severe itcompetition
is on Eastern European markets
5) Technological Shift, Broadcasting market switches from traditional
4) Activities of XXXX’s not
international possible
competitors are to verify
relatively lowthe
on point
satellite and cable technologies to Internet based
Russian market 8
 Sources: Framework: Kajanus et
al. 2004; Analysis: Bass et al., 2013 2. Take a more quantitative approach

9
 Illustration 3: Tesco
Strengths
• Multi-channel approach
• Services portfolio
complementing Tesco's core
retail business
• Significant presence in the
private label market
Opportunities
• Joint venture with Tata
Group
• Growing e-commerce market
in the UK
Source: Marketline, 2016
Weaknesses
• Bad accounting denting
Tesco's image and triggering
regulatory investigations
• Product recalls
Threats
• Intense competition from
discount retailers
• Increasing labour costs in the
UK may affect the company's
profitability
• Surge in shoplifting losses
10
 Which element of SWOT is most
important for Tesco’s current strategy?

A. Strengths
B. Weaknesses
C. Opportunities
D. Threats
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11
 Which of Tesco’s Strengths are most
important for its current strategy?

A. Multi-channel
approach
B. Services Portfolio
C. Private label
presence 0% 0% 0%

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12
 AHP Methodology
SWOT GROUP WEIGHTING 1 SWOT FACTORS WEIGHTING 2 FACTOR PRIORITY W1 x W2
Strengths 0

Weaknesses

Opportunities

Threats

13
 Resource Matrix
Strategic importance of resource
in creating customer value
1 5 10
10
Black Holes Crown Jewels
Relative Resource Strength
compared to competitors

(Superfluous (Key Strengths)

Strengths)
5
Sleepers Achilles’ Heels
(Zone of (Key Weaknesses)
Irrelevance)
1

Source: Grant, 2010

 3. Link it explicitly to internal and
external analysis
4. Make it dynamic
• Using TOWS - “A conceptual framework for a
systematic analysis that facilitates matching the
external threats and opportunities with the internal
weaknesses and strengths of the organisation”
(Weihrich, 1982)
• Should list all the factors and also prepare several
TOWS matrices to take account of dynamic
environment – past, present and future

15
 5. Explore relationships between factors
Prepare a SW Audit in: Management and Organisation,
TOWS Operations, Finance, Marketing, Other
Internal factors List internal List internal
External factors Strengths Weaknesses
Identify and List external SO: Maxi-Maxi WO: Mini-Maxi
evaluate the Opportunities
following factors: Which organisational Which organisational
Economic, Social, strengths can be used weaknesses need to be
to exploit opportunities addressed in order to be
Political,
in the external able to exploit
Demographic, environment? opportunities in the
Products and external environment
Technology, Market
Source: Weihrich, 1982

and Competition List external ST: Maxi-Mini WT: Mini-Mini

Threats
Which organisational Which organisational
Prepare a forecast
strengths can mitigate weaknesses need to be
– make predictions or lessen threats in the addressed and which
and assessment of external environment? external threats mitigated.
the future
16
 6. Add in strategic imperatives
Numerous environmental
opportunities

Turnaround Aggressive
strategy strategy
Critical Substantial
internal internal
weaknesses strengths
Defensive Diversification
strategy strategy

Major environmental
Source: Pearce and Robinson, 2011
threats 17
 7. Drill down to the core issues
Owner value was created

High sales
Source: Coman and Ronen, 2009

Sales to market leaders

growth rate

Rapid Influence in
Strong Sales Good engineering multidisciplinary standards
Department and production system view committee
development

Technological
Good inter-functional High employee
innovation and
communications motivation
professionalism

Choice people working Technological

Sales & partnerships
in an atmosphere of Leadership
with leading firms
excellence
Core Competences
18
 Firm’s market value was insufficient
Source: Coman and Ronen, 2009

No Exit The firm is losing money

Product over-specification and

No over-design
Awareness of
M&A
Low profitability
objectives

Not enough Product not New Markets

No access to the
strategic differentiate require
end user
gating in R&D d enough education

Excessive Focus on Small player in giants’

High burn
technology single new playground
rate
orientation technology
Core problems
19
 Reading
• Please read Chapter 4 of the Thompson et al.
textbook(pages 96-136)
• And Ambrosini et al.’s paper on dynamic
capabilities.
• The next workshop will be on the Tesla case –
so if you want to keep ahead then give this a
first read through and think about how this
week’s lecture and reading can be applied to
the case.
20
 References
• Ambrosini, V., Bowman, C. and Collier, N. (2009) “Dynamic Capabilities: An Exploration of How Firms Renew their Resource
Base” British Journal of Management, Vol.20, pp. S9-S24
• Barney, J. (1991) “Firm Resources and Sustained Competitive Advantage,” Journal of Management 17, no. 1, pp. 99–120
• Barney, J.B. and Hesterly, W.S. (2011) Strategic management and competitive advantage, Harlow: Pearson Higher Education.
• Coman, A. and Ronen, B (2009) “Focused SWOT: diagnosing critical strengths and weaknesses”, International Journal of
Production Research, Vol.47, No.20, pp.5677-5689
• Fitzroy, G., Hulbert, D., and Ghobadian, A. (2011) Strategic Management, Routledge, Abingdon
• Gledhill, M. and Janes, A. (2012) Emerging Themes: CIM Study Guide, BPP, London
• Grant, R. (2010) Contemporary Strategy Analysis, John Wiley and Sons, Chichester
• Helfat, C. and Peteraf, M. (2003) “The dynamic resource-based view: Capability lifecycles” Strategic Management Journal,
vol.24, pp. 997-1010.
• Helfat, C, Finklestein, S., Mitchell, W., Peteraf, M., Singh, H., Teece, D., and Winter, S., (2007) Dynamic Capabilities:
Understanding Strategic Change in Organisations, Oxford, Blackwell.
• Hill, T., and Westbrook, R. (1997) “SWOT Analysis: It’s time for a product recall”, Long Range Planning, Vol.30, No.1, pp.46-52
• Interbrand (2014) Best Global Brands 2013, available at: www.bestglobalbrands.com [accessed 21st July 2014]
• Kajanus, M., Kangas, J. and Kurttila, M. (2004) “The use of value focused thinking and the A’WOT hybrid method in tourism
management” Tourism Management, Vol.25, pp.499-506
• Kraaijenbrink, J., Spender, J-C., Groen, A. (2010) “The Resource-Based View: A Review and Assessment of its Critiques”,
Journal of Management, Vol.36, No.1, pp.349-372.
• Pearce, J. and Robinson, R. (2011) Strategic Management, McGraw Hill Irwin, New York
• Peteraf, M.A. (1993). ‘The Cornerstone of Competitive Advantage: A Resource-Based View.’ Strategic Management Journal,
14(3): 179-192.
• Porter, M. (1985) Competitive Advantage, Free Press, New York
• Thompson, A. Strickland, L., Gamble, J., Peteraf, M., Janes, A. and Sutton, C. (2013) Crafting and Executing Strategy: The
quest for Competitive Advantage, 1st European edition, McGraw-Hill, Maidenhead.
• Weihrich, H. (1982) “The TOWS Matrix – A tool for Situational Analysis” Long Range Planning, Vol.15, No. 2, pp.54-66