SWOT Analysis

Geo George Gangsham Jebin John Jose Karthik Kingsley Kirthana Leo Jude

SWOT Analysis
It is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. It analyses the Strengths, Weaknesses, Opportunities & Threats of a business The purpose is to enable the creation of a strategy that will best align an organizations resources and capabilities to the requirements of the environment in which the firm operates

It is the foundation for evaluating the internal potential (strengths) and limitations (weaknesses) and the probable/likely opportunities and threats from the external environment

SWOT Analysis
The key role of SWOT is to help develop a full

awareness of all factors that may affect strategic planning and decision making. It can be applied to almost any aspect of industry It views all positive and negative factors inside and outside the firm that affect the success Successful businesses build on their strengths, correct their weakness and protect against internal weaknesses and external threats, recognize and exploit new opportunities faster than its competitors

Strengths

Weaknesses

Internal qualities that contribute to success Beneficial spects that enable achievement of mission and vision Can be tangible or intangible Distinct features, expertise, traits and qualities Internal factors that prevent the achievement of success and hinders growth They are controllable Should be minimized and eliminated

Opportunities

Possiblities for growth and profitability Influenced by the external environment in which the firm operates Used to gain a competitive advantage Conditions in the external environment that jeopardize the firms operations They are uncontrollable
Can reduce the profitability of the firm

Threats

SWOT CONCEPTUAL FRAMEWORK

SWOT MATRIX
STRENGTHS 1. 2. 3. 4. OPPORTUNITIES 1. 2. 3. 4. 1. 2. THREATS 1. 2. 3. 4. Strength-Opportunity (SO) Strategies Maxi-max strategy Use strengths to take advantage of opportunities WEAKNESSES 1. 2. 3. 4. Opportunity-Weakness (OW) Strategies Mini-Max strategy Overcome weaknesses by taking advantage of opportunities 1. 2.

Strength-Threat (ST) Weakness-Threat (WT) Strategies Strategies Minimize weaknesses and avoid threats Maxi-Min Strategy Mini-Min strategy Use strengths to avoid threats 1. 1. 2. 2.

Illustration SWOT matrix

STRENGTHS 1. Current profit ratio increased 2. Employee morale high 3. Market share has increased WEAKNESSES 1. Legal suits not resolved 2. Plant capacity has fallen 3. Lack of strategic management system

OPPORTUNITIES 1. Western European unification 2. Rising health consciousness in selecting foods 3. Demand for soups increasing annually

Strength-Opportunity (SO)
Strategies Acquire food company in Europe (S1, S3, O1) Develop new healthy soups (S2, O2)

Opportunity-Weakness (OW) Strategies

Develop new Farm products (W1, O2, O3)

THREATS 1. Low value of dollar 2. Tin cans are not biodegradable

Strength-Threat (ST) Strategies

Develop new biodegradable soup containers (S1, T2)

Weakness-Threat (WT) Strategies

Close unprofitable European operations (W3, T1)

External Analysis
Examines opportunities and threats that exist in the environment. Classified into four groups
Macro Environment PESTEL Trends

Micro Environment Porters 5 forces model

Competitor Analysis Same segment targeting, understanding the enemy Market Analysis Todays needs and tomorrows trends

Macro Environment
PESTEL evaluates and identifies the broad societal trends happening in the market and gives us a birds eye view of dominant forces shaping the outcome which we finally see. Key Drivers for change are likely the high impact factors which decide the success or failure of a strategy.

Micro Environment
Operating Environment : - Sector, Industry, Rivals, Buyers, Sellers, New Entrants. Aim of Porters 5 Forces Model:
To identify the drivers of competitive behavior in the sector To evaluate long run profit potential of the industry/company.

Competitor Analysis
Involves the analysis of strategic groups and market segments. By observing the similarity in
Extent of Product Diversity

Geographic Coverage
Segments Served Distribution Channels

We can identify Strategic Groups.

Market Segment can be identified by evaluating attractiveness , KSF in each segment.

Market Analysis
To determine attractiveness and competitiveness of the market. Key variables to determine the above.
Market Size

Market share of key competitors

Growth rates & other trends Segments Profitability

Existing & likely competitors

Accessibility Issues

Critical Success Factors

Understand the industry space and assess the critical success factors
Customer requirements Competitive factors that must be met Regulations/industry standards in the business The resource requirements to implement competitive strategy Technical requirements to build a competitive position.

Identify the distinctive core competencies or factors that sustain the business

The Strategy
Evaluate Business Strategy.
Internal assessments based on functional, process capabilities and financial resources
Strengths Weakness

External assessments based on the critical success factor

Opportunities Threats

The SWOT
Discuss your opportunities first For those opportunities, which strengths can we leverage? Which weaknesses must we overcome? Can any threat refuse our opportunity?

Analysis
Identify Critical Issues And Prioritize.
Understanding of the critical issues that the firm faces in maintaining or improving its competitive and financial performance. Rank by priorities

Make Recommendations
Must address the critical issues

Short term
Long term

Internal Evaluation
Identify the critical factors that influence business Develop a profile of the firms resources & skills Compare the profile to key success factors Identify the areas of strength which the firm can use to exploit opportunities for the business critical weakness to prevent failure Compare the strength & weakness with that of rivals in business

Isolate areas in which resources & skills are significantly

stronger or weaker than its competitors

Lets Do a Swat Analysis

Benefits of SWOT
You can use a SWOT analysis when you don't have much time to address a complex situation Understand your business better Address weaknesses

Deter threats
Capitalise on opportunities Take advantage of your strengths Develop business goals and strategies for achieving them.

Limitations of SWOT
Though this matrix is simple, it cannot properly address complex issues. It can only cover aspects that definitely fall under the categories Strength, weakness, opportunities and Threats...but doesn't take into effect the factors that are uncertain or two sided by nature... Doesn't prioritise issues

Limitations of SWOT cont...

Doesn't provide solutions or offer alternative decisions Can generate too many ideas but not help you choose which one is best Can produce a lot of information, but not all of it is useful.

THANK YOU