0
SWOT analysis—introduction
What It IsWhat It Is
• SWOT analysis is a situational analysis of the firm’s internal
strengt...
3
The First Step Is To Define the Level and Scope of the SWOT
Analysis
Step 1: Determine the level and scope of the SWOT a...
6
Competitor Trend Analysis Helps To Pinpoint External
Threats
Competitor Trends
Identify the number, size, consolidation,...
9
The Trend Summary Matrix Helps Summarize and Verify
External Opportunities and Threats
NOTE: Paper merchants play a faci...
12
Client Performance on Each Critical Success Factor Should
Be Rated
Client’s strengths and weaknesses should be determin...
15
A Sample Strategic Hypothesis Develop Matrix Is Presented
Below
Strategic Hypothesis Development Matrix
Key Paper Merch...
1
Flevy (www.flevy.com) is the marketplace
for premium documents. These
documents can range from Business
Frameworks to Fi...
Upcoming SlideShare
Loading in …5
×

SWOT Analysis

1,287 views

Published on

This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here:
http://flevy.com/browse/business-document/SWOT-Analysis-124

SWOT (Strengths Weaknesses Opportunities Threats) Analysis is a consulting framework used to form a situational analysis of a company's internal strengths and weaknesses, and its external opportunities and threats.

Published in: Business, Economy & Finance
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,287
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
0
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

SWOT Analysis

  1. 1. 0 SWOT analysis—introduction What It IsWhat It Is • SWOT analysis is a situational analysis of the firm’s internal strengths and weaknesses, and its external opportunities and threats • Strengths and Weaknesses are defined as: • Characteristics of the enterprise or business processes, the operational assets, and liabilities • Tangible assets, such as an extensive distribution network • Opportunities and Threats are defined as: • Possibilities, constraints, and other factors that assist or hinder the ability of an organization to achieve its goals • External, environmental factors that can have positive or negative effects for the enterprise, depending on its strengths and weaknesses • The underlying theory is that assessment of competitive position should combine both an external and an internal analysis: • SWOT analysis is a situational analysis of the firm’s internal strengths and weaknesses, and its external opportunities and threats • Strengths and Weaknesses are defined as: • Characteristics of the enterprise or business processes, the operational assets, and liabilities • Tangible assets, such as an extensive distribution network • Opportunities and Threats are defined as: • Possibilities, constraints, and other factors that assist or hinder the ability of an organization to achieve its goals • External, environmental factors that can have positive or negative effects for the enterprise, depending on its strengths and weaknesses • The underlying theory is that assessment of competitive position should combine both an external and an internal analysis: Why We Use ItWhy We Use It • Ascertain a company’s competitive position.• Ascertain a company’s competitive position. Strengths & LimitationsStrengths & Limitations • Benefits • Provides a holistic, easily understood and applied structure for strategic analyses • Can be conducted at several levels of detail (e.g. “icebreaker” versus structured framework for performing detailed competitor analysis) • Useful as input to strategy implementation • Defining critical success factors and core competencies for a client • Prioritizing strategic alternatives • Developing appropriate measures for a balanced scorecard • Limitations • Primary risk in using SWOT analysis is insufficient information • Industry expertise required or key opportunities (threats) could be missed • Important data is often difficult to acquire even if the individuals performing analysis are “asking the right questions” • The data collected is often in a “raw” form, with no trends identified or conclusions drawn • Interviews with industry experts and client personnel often result in unsubstantiated opinion and conjecture • Analyst should always seek to verify data collected by seeking support from a second or third source and “triangulating” on result • Benefits • Provides a holistic, easily understood and applied structure for strategic analyses • Can be conducted at several levels of detail (e.g. “icebreaker” versus structured framework for performing detailed competitor analysis) • Useful as input to strategy implementation • Defining critical success factors and core competencies for a client • Prioritizing strategic alternatives • Developing appropriate measures for a balanced scorecard • Limitations • Primary risk in using SWOT analysis is insufficient information • Industry expertise required or key opportunities (threats) could be missed • Important data is often difficult to acquire even if the individuals performing analysis are “asking the right questions” • The data collected is often in a “raw” form, with no trends identified or conclusions drawn • Interviews with industry experts and client personnel often result in unsubstantiated opinion and conjecture • Analyst should always seek to verify data collected by seeking support from a second or third source and “triangulating” on result Internal Assessment External Assessment – Weaknesses – Strengths – Opportunities – Threats Strategic Choices
  2. 2. 3 The First Step Is To Define the Level and Scope of the SWOT Analysis Step 1: Determine the level and scope of the SWOT analysis Analyst should determine level of detail required, and form of end deliverable desired, at the outset of analysis • Will deliverable be a text-based summary or quantitative analysis of market growth and competitor costs ? • This will help structure data collection and avoid non-value added work • Level of detail is limited by time available to perform analysis − Data collection requires significant time and resources − Text-based trend summaries are the easiest to do, quantitative analyses are the most difficult Scope of analysis should be determined to ensure data collection is efficient • To focus analysis, markets of interest should be defined and boundaries should be set for those markets • Within selected of markets, primary competitors should be identified • Scope of markets and competitors to be analyzed is defined by the time and resources available to perform the analysis This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/swot-analysis-124
  3. 3. 6 Competitor Trend Analysis Helps To Pinpoint External Threats Competitor Trends Identify the number, size, consolidation, vertical integration and rivalry of competitors in the markets under analysis For each competitor, focus on the relevant performance characteristics: • Production capabilities (technologies) • Capacity utilization • Cost structure • Strategy (low cost versus differentiation) • Stated versus implied intentions • Joint venture/alliance strategies • “Reaction profile” Limit number of competitors analysed to ensure necessary level of detail • Analysis should focus only on relevant competitors* • Competitors should be grouped in some way to scale effort down (representative competitor should be selected for more detailed analysis) * “Relevant” competitors should be identified by market share, growth rate, profitability, product quality, marketing spending, degree of vertical integration, or cost structure. The goal would be to identify representative sample of competitors with differing strategies and performance to determine reasons for their success or weakness. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/swot-analysis-124
  4. 4. 9 The Trend Summary Matrix Helps Summarize and Verify External Opportunities and Threats NOTE: Paper merchants play a facilitative role in the paper industry value chain, buying from the paper manufacturers and selling to paper retail outlets and office-supply stores. PAPER MERCHANT INDUSTRY Trend Summary Matrix # KEY MARKET TRENDS EVIDENCE or OBSERVATIONS for TRENDS IMPLICATIONS Opportunities Threats STRATEGIC HYPOTHESES (SO WHAT?) & TREND LINK COMPETITIVE ADVANTAGE GAINED? 1. Historically fragmented, industry is beginning to consolidate and grow primarily through acquisitions. The top 3 competitors combined have a 23% market share. Unisource acquired 10 companies in the first 6 months of 1996. O - Consolidate industry by buying smaller companies O - Companies w strong financial positions can gain market share T - Competitors can also try to consolidate the industry. T - It may be difficult to enter a segment, channel or, geographic market if relationships with customers are captured by competitors. 1. Access to customers is critical to business success 2. Merchants should consider ways to “lock in” customers. Based on the traditional paper supply chain model , consolidation makes merchants a stronger gatekeeper to suppliers and customers. Ability to consolidate is primarily dictated by one’s access to capital. Access to capital is not a barrier for most large paper merchants who are owned by large paper manufacturers. May gain advantage if able to capture particular customer segment, channel or geography first. 2. Customers have decreasing amounts of brand loyalty towards paper merchants Customers identify w/sales reps and not company O - Define 80% of customer base as target accounts and develop strong ties to the company (EDI, Special buying programs, special customer service incentives) T - If Sales Reps leave for fear of losing relationship control to merchant, they have the power to take the account with them. Merchants should consider ways to “lock in” customers. Use a target account strategy to broaden scope of product offerings for national and international customers Strengthen relationship with customer, enhance company name equity. Customers will recognize brand equity 3. Merchants are looking for opportunities to decrease the commodity nature of profits. Paper Industry Sales 1994: $ 94 B 1995: $108 B 1996E: $104B 2000F: $137B Average profit margin is 2-4% O - Merchants have established relationships with customer purchaser. Exploit for opportunities in other products (i.e. industrial & office supplies, furniture) T - Limited control over timing of downturns in paper market. 1. Access to customers is critical to business success 2. Merchants should consider ways to “lock in” customers. Diversify product line for current customers to include products that are not correlated to paper market. Will stabilize profits and cash flow by offsetting paper market downturns. Provides ability manage product portfolio by profitability and cash flow by product and channel (retail channel and stationary product segment). This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/swot-analysis-124
  5. 5. 12 Client Performance on Each Critical Success Factor Should Be Rated Client’s strengths and weaknesses should be determined by rating the client relative to each competitor on the critical success factors for that external opportunity (e.g market entry) or threat (potential entrants) • Analysis should be performed by creating matrix with critical success factors on vertical axis and competitors on horizontal axis • Rating scheme used should be “+” (client better than competitor), “-” (client worse than competitor), or “0” (client the same as competitor) • Level of analytical detail pursued when completing matrix is dependent on time and resources available • Example in next slide clarifies this discussion This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/swot-analysis-124
  6. 6. 15 A Sample Strategic Hypothesis Develop Matrix Is Presented Below Strategic Hypothesis Development Matrix Key Paper Merchant Industry Trends Industry Consolidating Customer Loyalty Decreasing Product Differentiation Increasing Critical Success Factors Opportunity: Acquire Comp. A Threat: Costs Not Competitive Opportunity: Acquire New Customers Threat: Sales Reps Take Customers Opportunity: Product Line Extension Threat: Over- Extend Product Line Overall Strengths: Brand / Product Image + + + + + 5 Breadth of Product Line + + 2 Advertising / Promo Skills + + + + + + 6 Management Skills + + + 3 Leadership + + 2 Organization Structure + 1 Weaknesses: Manufacturing Cost Position - - - -3 Production Technology - - - -3 Flexible Facilities - - - -3 Degree of Vertical Integration - - - -3 Strategic Focus 1 1 2 2 -1 2 ----- NOTE: Client strengths are CSFs with largest number of positive entries (e.g. advertising , brand image). Weaknesses are CSFs with largest number of negative entries. In this case, all CSFs have equal importance. Possible addition to matrix would be to include “importance weights” to differentiate the critical success factors. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/swot-analysis-124
  7. 7. 1 Flevy (www.flevy.com) is the marketplace for premium documents. These documents can range from Business Frameworks to Financial Models to PowerPoint Templates. Flevy was founded under the principle that companies waste a lot of time and money recreating the same foundational business documents. Our vision is for Flevy to become a comprehensive knowledge base of business documents. All organizations, from startups to large enterprises, can use Flevy— whether it's to jumpstart projects, to find reference or comparison materials, or just to learn. Contact Us Please contact us with any questions you may have about our company. • General Inquiries support@flevy.com • Media/PR press@flevy.com • Billing billing@flevy.com

×