WHAT IS SWOT? It is a planning tool used to identify Strengths, Weaknesses, Opportunities and Threats involved in a business. It is used as part of Strategic Planning Process A SWOT analysis generates information that is helpful in matching an organization’s goals, programs, and capacities to the social environment in which they operate
SWOT Factors affecting an organization can usually be classified as: Helpful Harmful Internal factors Strengths (S) Strengths Weaknesses Weaknesses (W) External factors Opportunities (O) Opportunities Threats Threats (T)
SWOT Strengths- Internal attributes that are helpful to the organization to achieving its objective Weaknesses – Internal attributes that are harmful to the organization to achieving its objective Opportunities – External factors that help the organization achieve its objective Threats - External factors that are harmful to the organization to achieving its objective
STRENGTHS: INTERNAL FACTOR Strengths are positive tangible and intangible attributes, internal to an organization. They are within the organization’s control Strengths are Things a business is good at A characteristic giving a business an important capability Sources of clear advantage over rivals Distinctive competencies and resources that will help the business achieve its objectives
STRENGTHSExamples Examples High market share Technological Achieving economies leadership of scale Brand reputation High quality Protected IP Leadership & Distribution network management skills Employee skills Financial resources Research and High productivity development Flexibility of production capabilities
STRENGTHSImportance Strengths help to build up competitive advantage and serve as a cornerstone of strategy Strengths should be protected and built upon.
INTEL – SWOT ANALYSIS Favourable UnfavourableInternal Strengths Weaknesses • Strong market position • Customer and brand image concentration • Advanced technological capabilitiesExternal Opportunities Threats • Launch of Atom • Increasing processor competition • Partnerships and • Litigations alliances • Growing global semiconductor market • Expanding PC market
WEAKNESS- INTERNAL FACTOR Factors that are within an organization’s control that detract from its ability to attain the core goal. In which areas might the organization improve? Weaknesses are: A source of competitive disadvantage Things the business lacks or does poorly Factors that place a business at a disadvantage Issues that may hinder or constrain the business in achieving its objectives
WEAKNESSExamples Examples Low market share Cash flow problems Inefficient plant Undifferentiated products Inadequate distribution Outdated technology Low productivity Poor quality Skills shortages Lack of innovation De-motivated staff A weak brand name Products at the decline stage of product life cycle High costs
WEAKNESSImportance Management should seek ways to reduce or eliminate weaknesses before they are exploited further by the competition. Weakness should be seen as areas for improvement.
SWOT-ANALYSIS APOLLO TYRES LTD Favourable UnfavourableInternal Strengths Weaknesses •base in three countries with three • not invested in two and three product brands •Extensive distribution wheeler tyre segment •Leading player in commercial •In Africa, manufacturing facilities vehicle segment are sub-optimal •Ultra high performance in car tyre •Company unable to pass cost segments in Europe •Largest producerand exporter in escalations to customers Indian car tyre segmentExternal Opportunities Threats • first mover in truck & bus radial • slow downs in India economy segments •Increased competitions from global players •Apollo brand car tyres in Europe will • redundant capacities needing investments make sizable leverage •Raw material price volatility •Dunlop in Africa can explore more •Unpredictable political, economical and geographical advantages currency fluctuations at S. Africa •Market in A. America, Australia, •Decline in demand in Europe Russia S-E Asia yet to be explored
OPPORTUNITIES – EXTERNAL FACTOR External attractive factors that represent the reason for an organization to exist and develop. What opportunities exist in the environment which will propel the organization? Identify opportunities by their “time frames” An opportunity is any feature of the external environment which creates positive potential for the business to achieve its objectives.
OPPORTUNITIESExamples Examples Technological Cash flow problems innovation Undifferentiated products New demand Inadequate distribution Market growth Low productivity Skills shortages Demographic change De-motivated staff Social or lifestyle Products at the decline change stage of product life cycle Government spending programmes
SWOT-ANALYSIS KINGFISHER AIRLINES Favourable UnfavourableInternal Strengths Weaknesses •Strong brand value and reputation in • Still in RED (still to Break Even) the minds of the consumer (An outstanding of 950crs only to oil marketing •UB group as the parent company cost till may end ) •First Indian airline to have a new •High ticket pricing (KF First & Class) fleet of planes •Tough competition from Indian as well as •Quality service and innovation international players •More than 80 destinations •Less than 100 people (employees) per aircraftsExternal Opportunities Threats • If able to survive for a couple • Falling demand of years, then can have a big •Over capacity in the skies market share •ATF prices •Untapped International Markets •Economic slowdown •Untapped cargo market •Infrastructure issues •Expanding tourism business
THREATS – EXTERNAL FACTOR Threats are any external development that may hinder or prevent the business from achieving its objectives
THREATSExamples Examples New market entrants Economic downturn Change in customer Rise of low cost tastes or needs production abroad Demographic change Higher input prices Consolidation among New substitute buyers products New regulations Competitive price pressure
THREATSImportance The organization may prepare contingency plans to address threats. Classify them by their “seriousness” and “probability of occurrence”.
SWOT-ANALYSIS BJP PARTY Favourable UnfavourableInternal Strengths Weaknesses •A strong support base with an •Poorly defined ideological position. all-India presence •Inability to promote talent internally. •Active support from a large •Lack of creativity and intellectual depth worldwide base of supporters in the organization. •A large number of fulltime •Internal contradictions and conflict of workers spread across the interests within Sangh Parivar.. country •Top leadership is increasingly seen to •Support of the vast network of be old and weak, physically as well as RSS and related organizations politically (Sangh Parivar) •Growing Infighting and Factionalism •Absence of any credible national political alternative except Congress •BJP is the only all-India level political formation in the ideological segment, which can be loosely described as "Hindu Nationalist Political Stream".
SWOT-ANALYSIS BJP PARTY Favourable UnfavourableExternal Opportunities Threats • The party is in power in three •There is an impression among general states and in Centre. public that BJP is a sinking ship. •The party is the main •A new generation of Congress leaders opposition party in a large in the age group of 40 -55 is in control in number of states. many states. This leadership is dynamic, •There have been no major innovative and sharp. charges of corruption against •The image of Sonia Gandhi has been any minister of Central improving. She is often seen as better, Government. younger and more dynamic alternative. •Party has substantial financial •Rising unemployment is leading to resources at its command. frustration among youth. Party is being •The number of people who are seen as pro-rich, pro-multinational, anti- inclined to be pro-Hindutva is small-business, anti-small-industry. This increasing almost everyday. image combined with large •Sonia Gandhis Italian descent unemployment can wreak havoc. makes her unacceptable to many Indians.
POTENTIAL USE OF SWOT ANALYSIS Set Objectives– defining what the organization is intending to do Environmental Scanning– internal appraisals of the organizations 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 the results of an internal/external appraisal. This may include gap analysis which will look at environmental factors. Strategic issues defined– key factors in the development of a corporate plan which needs to be addressed by the organization
POTENTIAL USE OF SWOT ANALYSIS Develop new/revised strategies– revised analysis of strategic issues may mean the objectives need to change Establish critical success factors– the achievement of objectives and strategy implementation Preparation of operational, resource, projects plans for strategy implementation Monitoring results– mapping against plans, taking corrective action which may mean amending objectives/strategies
SWOT MATRIX Strength Weakness GOOD NOW BAD NOW Maintain, build, leverage Remedy, stop Opportunity Threat GOOD FUTURE BAD FUTURE Prioritize, optimize Counter