SWOT ANALYSIS Matthew Gurto Christopher Anderson Robert Williams Kathryn Connelly Scott Hoffman

SUMMARY Origins of SWOT Importance of SWOT Simple Rules for SWOT analysis Strengths Weaknesses Opportunities Threats Limitations of SWOT Class Exercise

ORIGINS OF SWOT More than 2,000 years ago Sun-Tzu in his ‘Art of War’ wrote: “Know your enemy, know yourself, and your victory will not be threatened.” Credited to Albert Humphrey Stanford Research Institute from 1960-1970 Funded by fortune 500 companies Need to find out why corporate planning failed 1100 companies and organizations were interviewed and a 250-item questionnaire was designed and completed by over 5,000 executives SWOT created SWOT analysis came from the research conducted at Stanford Research Institute from 1960-1970. The background to SWOT stemmed from the need to find out why corporate planning failed. The research was funded by the fortune 500 companies to find out what could be done about this failure. The Research Team were Marion Dosher, Dr Otis Benepe, Albert Humphrey, Robert Stewart, Birger Lie. The technique is credited to Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from Fortune 500 companies. The research carried on from 1960 through 1969. 1100 companies and organizations were interviewed and a 250-item questionnaire was designed and completed by over 5,000 executives.

IMPORTANCE OF SWOT Knowing SWOT provides a foundation for good decision making Used for organizational planning and strategy development Organizations must align internal activities with external realities to be successful Internal factors, Strengths and Weaknesses, involve specific organizational issues — both positive and negative. External factors, Opportunities and Threats, relate to influence in the organization’s environment — once again both positive and negative. Maximizes the potential of the strengths and opportunities while minimizing the impact of the weaknesses and threats Overall, SWOT provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operates A common tool used in organizational planning and strategy development

RULES FOR SWOT ANALYSIS Be realistic about the strengths and weaknesses Distinguish between where your organization is today, and where it could be in the future SWOT should always be specific Always apply SWOT in relation to your competition Keep it short and simple SWOT is subjective Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis. SWOT analysis should distinguish between where your organization is today, and where it could be in the future. SWOT should always be specific. Avoid grey areas. Always apply SWOT in relation to your competition i.e. better than or worse than your competition. Keep your SWOT short and simple. Avoid complexity and over analysis SWOT is subjective.

STRENGTHS A firm’s strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage Competitive advantage = The strategies, skills, knowledge, resources or competencies that differentiate a business from its competitors Consider your strengths relative to your competitors and from your customers' perspective What is golden about your company? What do you do well (in sales, marketing, operations, management)? What are your assets? What are your core competenceis? Where are you making money? What experience do you have? What makes you stand out from your competitors? What advantages do you have over other businesses? A firm’s strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Competitive advantage=The strategies, skills, knowledge, resources or competencies that differentiate a business from its competitors. Consider your strengths relative to your competitors and from your customers' perspective. What is golden about your company? What do you do well (in sales, marketing, operations, management)? What are your assets? What are your core competenceis? Where are you making money? What experience do you have? What makes you stand out from your competitors? What advantages do you have over other businesses?

LIMITATIONS OF SWOT Scanning not Strategy — A SWOT analysis does not generate an organization’s strategy; it identifies issues that are important in the creation of an organization’s strategy Factors that affect the organization should not be confused with organizational objectives Subjective nature — The factors that fill in the four perspectives, may in some cases be determined by people who are too close or too far away from the actual activities of the organization to make an objective assessment. This can lead to a misfit strategy or to a focus that is too narrow or too broad to be useful in strategy development Static view — A SWOT analysis often represents a view particular to a specific point in time. Uncertainty should not be excused from an analysis because of the difficulty it may present to planners. Other tools, such as scenarios, may need to be built into the SWOT to make it fit with the realities of today A SWOT analysis is a starting point for strategy development. It's important not to overextend its application or overstate its ability to model reality Limitations of the approach The ubiquitous nature of SWOT in planning exercises has given rise to a number of valid criticisms. While these concerns do not undermine SWOT analysis, they do provide sensible guidelines for applying the tool. Like any other tool, its utility is directly related to the appropriateness of application and the skill of those using it. A few common pitfalls can be recognized and avoided:

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