SWOT Analysis


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A brief revision presentation which outlines the SWOT model of analysis.

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SWOT Analysis

  1. 1. SWOTAnalysis
  2. 2. What is SWOT Analysis?• A method for analysing a business, its resources, and its environment• Often used as part of strategic planning• Looks at – Internal strengths – Internal weaknesses – Opportunities in the external environment – Threats in the external environment
  3. 3. SWOT Analysis aims to discover• What the business does better than the competition• What competitors do better• Whether it is making the most of the opportunities available• How a business should respond to changes in its external environment
  4. 4. The SWOT Matrix Positive factors Negative factorsInternal factors Strengths WeaknessesExternal factors Opportunities Threats
  5. 5. Internal v External• Strengths and weaknesses – Are internal to the business – Relate to the present situation• Opportunities and threats – Are external to the business – Relate to changes in the environment which will impact the business
  6. 6. What do we mean by strengths?• Strengths are: – Things a business is good at – A characteristic giving it an important capability – Provide a clear advantage over rivals – Distinctive competencies and resources that will help the business achieve its objectives• Strengths help to build up competitive advantage and serve as a cornerstone of strategy• Strengths should be protected and built upon
  7. 7. Some possible strengths• Market share • Technological• Economies of scale leadership • Brand reputation• High quality • Protected IP• Leadership & • Distribution network management skills • Employee skills• Financial resources • High productivity• Research and • Flexibility of production development capabilities
  8. 8. What do we mean by weaknesses?• Weaknesses are: – A source of competitive disadvantage – Things the business lacks or does poorly – Places the business at a disadvantage – May hinder or constrain the business in achieving its objectives• 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
  9. 9. Some possible weaknesses• Low market share • Cash flow problems• Inefficient plant • Undifferentiated• Outdated technology product• Poor quality • Inadequate• distribution Lack of innovation • Quality problems• A weak brand name• • Low productivity High costs • Skills gap • De-motivated staff
  10. 10. What are opportunities?An opportunity is any featureof the external environment which creates positivepotential for the business to achieve its objectives
  11. 11. Possible opportunities• Technological • Higher economic innovation growth• New demand • Trade liberalisation• Market growth • EU enlargement• Demographic change • Diversification• Social or lifestyle opportunity change • Deregulation of the• Government spending market programmes
  12. 12. What are threats? Any externaldevelopment that may hinder or prevent thebusiness from achieving its objectives
  13. 13. Some possible threats• 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
  14. 14. SWOT is more than a list• SWOT analysis should be more than a list• It is an analytical technique to support strategic decisions• Strategy should be devised around strengths and opportunities• The key words are: match and convert
  15. 15. Match and convert Match Convert Strengths Weaknesses with intoOpportunities Strengths
  16. 16. Convert weaknesses into strengthsWeakness Possible ResponseOutdated Acquire competitor with leading technologytechnologySkills gap Invest in training & more effective recruitmentOverdependence on Diversify the product portfolio by enteringa single product new marketsPoor quality Invest in quality assuranceHigh fixed costs Examine potential for outsourcing or offshoring
  17. 17. Threat or Opportunity? For every perceivedthreat, the same changepresents an opportunity for business
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