SWOT Analysis

Introduction

Strengths and weaknesses are essentially internal to the organisation and relate to matters concerning resources, programmes and organisation in key areas such as:

Sales / marketing / distribution.

Management systems / expertise.

Manufacturing efficiency / capacity.

Products / quality / pricing.

The external threats and opportunities confronting a company, can exist or develop in the following areas:

The company's own industry where structural changes may be occurring

The marketplace which may be altering due to economic or social factors

Competition which may be creating new threats or opportunities

New technologies which may be causing fundamental changes in products, processes, etc.

Definitions

Strengths:- A company strength is a successful application of a competency or exploitation of a critical factor to develop company competitiveness.

Weaknesses:- A company weakness is an unsuccessful application of a competency or the non-exploitation of a critical factor that diminishes company competitiveness.

Opportunities:- An opportunity is an external condition that could positively impact the company’s critical performance parameters and improve competitive advantage provided positive action is taken in time.

Threats:- A threat is an external condition that could negatively impact the company’s critical performance parameters and diminish competitive advantage provided positive action is not taken in time.

Prerequisites

Information on company / competitor status.

Strengths / Weaknesses Analysis sheet.

Opportunities / Threats Analysis sheet.

Performance - Importance Matrix.

Brainstorming Kit

The Right Participants - don’t be afraid to use outside opinions

Procedure

Step 1:

External Opportunities and Threats:

Brainstorm opportunities and threats using the definitions provided previously. Use the examples given in the sample tables as a guide.

Prioritise this list.

On Table 1.2 Opportunities / Threats Analysis form supplied rate each factor from Major Opportunity to Major Threat. Also give each factor a probability of occurrence / success rating.

Plot each factor on the Probability of Occurence - Attractiveness / Seriousness (Table 1.4).

Items in cell 1 should be adopted. Items in cell 2/3 should be monitored for change are ok. Items in cell 3 are of low priority. Items in cell 4 point to potential mis-application of resources.

Step 2:

Internal Strengths and Weaknesses:

Concentrate on the current and past performance of your company in the market place. Review marketing, financial, manufacturing, organisational and any other competencies that are relevant to your company. Brainstorm factors that influence each competency.

Prioritise this list.

On Table 1.1 Strength / Weaknesses Analysis form supplied rate each factor from Major Strength to Major Weakness. Also give each factor an importance rating.

Plot each factor on the Importance - Performance Matrix (Table 1.3).

Items in cell 1 should be strengthened. Items in cell 2 are ok. Items in cell 3 are of low priority. Items in cell 4 point to potential mis-application of resources.

Step 3:

Finally enter the major strength, weaknesses, opportunities and threats into Table 1.5: SWOT Summary.

Once the SWOT review is complete, the future strategy may be readily apparent or, as is more likely the case, a series of strategies or combinations of tactics will suggest themselves. Use the SWOT analysis to help identify possible strategies as follows:

Build on strengths

Resolve weaknesses

Exploit opportunities

Avoid threats

The resulting strategies can then be filtered and moulded to form the basis of a realistic strategic plan.

Table 1.1: Strengths / Weaknesses Analysis

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Table 1.2: Opportunities / Threats Analysis

External Condition					Probability of Occurrence / Success
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Examples:

Competencies and Factors	External Conditions
Marketing Company Reputation Market Share Quality Reputation Service Reputation Cost Promotion effectiveness Sales-force effectiveness Geographical Coverage R & D and Innovation	Industry Structural Changes
Finance Cost / Availability of capital Profitability Financial Stability	Market Place Economic factors Social Factors
Operations Facilities Capacity Able Dedicated Workforce Ability to Deliver on Time Technical Manufacturing skill	Competition Rival Companies
Organisation Visionary Capable Leadership Dedicated Employees Entrepreneurial Orientation Flexible / Responsive	Technology Core Technology changing Process Technology
Product Area …
Distribution …

Table 1.3: Performance - Importance Matrix

Importance	Performance
		Low	High
	High	1. Concentrate here	2. Keep up the good work
	Low	3. Low priority	4. Possible overkill

Table 1.4: External Condition - Probability Matrix

Attractiveness / Seriousness	Probability of Occurrence / Success
		High	Low		High Probability of Success of Opportunity High Probability of Occurrence of Threat
	High	1. Major Opportunity	2. Monitor for change
	Low	3. Monitor for change	4. Major Threat
	Major Opportunity			Major Threat

Table 1.5: SWOT Summary

Strengths	Weaknesses
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.	1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Opportunities	Threats
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.	1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

For more information on SWOT Analysis, please contact Denis Kearney at AMT Ireland, a PROMISE Partnership Member, at denis.kearney@ul.ie.