1. SWOT Analysis CHAPTER 7

2. What is SWOT? SWOT is a business or strategic planning technique used to summarise the key components of your strategic environments.

3. Introduction A SWOT analysis provides a useful springboard for the identification of strategy, since it identifies the Weaknesses that need to be strengthened, the Strengths that can be used for competitive advantage, the Opportunities that can be used to the organization’s advantage and the Threats that it needs to guard against.

4. SWOT is a summary of your S trengths W eaknesses O pportunities T hreats Internal External SWOT Analysis

5. Internal vs. External Strengths and Weaknesses are considered internal factors---meaning you as the business owner can control them. How you manage or market the business controls whether it is a strength or weakness Opportunities and Threats are considered external factors---meaning you have little control over them. It is your job as a business owner to respond appropriately

6. Strengths Strength Defined: A strength is a core capability of your business where your business have an advantage over your competitor(s), which your customers value i.e. you passed the better than your competitors test. You will find your strengths only when completing your internal analysis.

7. Example - Strengths Tangible Strengths –Plant and equipment –Unique or market leading products –Cost advantages Intangible Strengths –Strong recognized brands –Your reputation –Patents or proprietary products –Managerial experience

8. Weaknesses Weakness Defined: A weakness is a core capability of your business where your competitor(s) have an advantage over your business, which your customers value i.e. you failed the better than your competitors test. You will find your weaknesses only when completing your internal analysis

9. Example - Weaknesses Tangible Weaknesses –Old plant and equipment –Narrow product line –Insufficient financial resources Intangible Weaknesses –Weak or unrecognised brand –Poor customer relationships –Lack of industry knowledge

10. Opportunities Opportunity Defined: An opportunity is an environmental condition in your industry environments that can improve your organizations competitive position relative to that of your competitors. You will find your opportunities when completing your industry environment analysis.

11. Example - Opportunities Industry Opportunities –Expand product range –Diversify –Vertical integration (forward or backward) –Export or increase geographic cover

12. Threats Threat Defined: A threat is a forecast environmental condition that is out of your control and has the potential to harm your businesses profitability. You will find your threats when completing your industry environment analysis.

13. Example - Threats Industry Threats –Low cost imports –Substitute products –Market decline

14. Short-term SWOT Table Step 1 Identifying Present Competitors Step 2 Identifying Present Critical Offer Features Step 3 Identifying Present Significant Operating Factors Step 4 Identifying the Present Strategic Resources Step 5 Identifying the Present Issues

15. Long-term SWOT Table Step 1 Determining the Present situation Step 2 Determining the Future Significant Operating Factors Step 3 Determining the Future Strategic Resources Needs Step 4 Establishing Strengths and Weaknesses Step 5 Establishing Opportunities and Threats

16. Question Discuss with your friend and do SWOT analysis about one of organization that you know.