SWOT ANALYSIS *******************************************************************************
INTRODUCTION *******************************************************************************
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.
This method was created in the 1960s by Edmund P. Learned, C. Roland Christensen, Kenneth Andrews and William D. Book in their book "Business Policy, Text and Cases" (R.D. Irwin, 1969).
It all began with the corporate planning trend, which seemed to appear first at Du Pont in 1949.
By 1960 every Fortune 500 company had a 'corporate planning manager' (or equivalent) and 'associations of long range corporate planners' had sprung up in both the USA and the UK.
However a unanimous opinion developed in all of these companies that corporate planning in the shape of long range planning was not working.
It was widely held that managing change and setting realistic objectives which carry the conviction of those responsible was difficult and often resulted in questionable compromises.
The fact remained, despite the corporate and long range planners, that the one and only missing link was how to get the management team agreed and committed to a comprehensive set of action programmes.
To create this link, starting in 1960, Robert F Stewart at SRI in Menlo Park California lead a research team to discover what was going wrong with corporate planning, and then to find some sort of solution, or to create a system for enabling management teams agreed and committed to development work, which today we call 'managing change'.
We discovered that we could not change the values of the team nor set the objectives for the team so we started as the first step by asking the appraisal question, for example, what's good and bad about the operation. We began the system by asking what is good and bad about the present and the future. What is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present is a Fault and bad in the future is a Threat. This was called the SOFT analysis.
When this was presented to Urick and Orr* in 1964 at the Seminar in Long Range Planning at the Dolder Grand in Zurich Switzerland they changed the F to a W and called it SWOT Analysis.
This remarkable piece of history as to the origins of SWOT analysis was provided by Albert S Humphrey, one of the founding fathers of what we know today as SWOT analysis
SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
A SWOT analysis measures a business unit, a proposition or idea
A SWOT analysis is a subjective assessment of data which is organized by the SWOT format into a logical order that helps understanding, presentation, discussion and decision-making.
Strengths and Weaknesses are regarded distinctly as internal factors, whereas Opportunities and Threats are regarded distinctly as external factors.
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*******************************************************************************IMPORTANCE
SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture
identifying the internal and external factors that are favorable and unfavorable to achieving that objective. These internal and external factors come from within the company's unique value chain.
Meaning of TERMS:- *******************************************************************************
It is important to clearly identify the subject of a SWOT analysis, because a SWOT analysis is a perspective of one thing, be it a company, a product, a proposition, and idea, a method, or option, etc.
Strengths: attributes of the organization that are helpful to achieving the objective.
How can we Use and Capitalize on each Strength?
Weaknesses: attributes of the organization that are harmful to achieving the objective.
How can we Improve each Weakness? Opportunities: external conditions that are helpful to achieving the objective.
How can we Exploit and Benefit from each Opportunity?
Ex.- opportunities such as: energy-saving, process-improvement, training, advertising, or discontinuing loss-making products
Threats: external conditions which could do damage to the business's performance.
How can we Mitigate each Threat?
Ex.- threats such as: desertion or key staff, the loss of major contracts,
Internal factors – The strengths and weaknesses internal to the organization. These may include factors such as the 4P's; as well as personnel, finance, manufacturing capabilities, and so on.
External factors – The opportunities and threats presented by the external environment to the organization. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position.
SWOT in business and marketing tends to be an assessment of a business or a proposition, whether it is your own business or (less commonly) a competitor's business or proposition.
Strengths and Weaknesses
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the internal environment -
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the situation inside the company or organization
for example, factors relating to products, pricing, costs, profitability, performance, quality, people, skills, adaptability, brands, services, reputation, processes, infrastructure, etc.
factors tend to be in the present
Opportunities and Threats *******************************************************************************
The External Environment -
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the situation outside the company or organization
for example, factors relating to markets, sectors, audience, fashion, seasonality, trends, competition, economics, politics, society, culture, technology, environmental, media, law, etc.
factors tend to be in the future
BENEFITS
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The primary objective of a SWOT analysis is to help organizations develop a full awareness of all the factors involved in a decision.
IT enables proactive thinking, rather than relying on habitual or instinctive reactions.
The SWOT analysis is an extremely useful tool for understanding and decision-making for all sorts of situations in business and organizations.
The SWOT analysis headings provide a good framework for reviewing strategy, position and direction of a company or business proposition, or any other idea.
SWOT analysis also works well in brainstorming meetings.
Use SWOT analysis for business planning, strategic planning, competitor evaluation, marketing, business development and product development and research reports.
You can also use SWOT analysis exercises for team building games.
SWOT analysis is also a widely recognized method for gathering, structuring, presenting and reviewing extensive planning data within a larger business or project planning process.
SWOT analysis is a planning process that allows your company to overcome challenges and determine what new leads to pursue.
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Conclusion :-
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The results are often presented in the form of a matrix.
IT acts as a quick decision-making tool
Its use is not restricted to business and marketing.
USED IN *******************************************************************************
a company (its position in the market, commercial viability, etc)
a method of sales distribution
a product or brand
a business idea
a strategic option, such as entering a new market or launching a new product
a opportunity to make an acquisition
a potential partnership
changing a supplier
outsourcing a service, activity or resource
project planning and project management
an investment opportunity
personal financial planning
personal career development - direction, choice, change, etc.
education and qualifications planning and decision-making
life-change - downshifting, relocation,
relationships, perhaps even family planning?..
strengths *******************************************************************************
Advantages of proposition?
Capabilities?
Competitive advantages?
USP's (unique selling points)?
Resources, Assets, People?
Experience, knowledge, data?
Financial reserves, likely returns?
Marketing - reach, distribution, awareness?
Innovative aspects?
Location and geographical?
Price, value, quality?
Accreditations, qualifications, certifications?
Processes, systems, IT, communications?
Cultural, attitudinal, behavioural?
Management cover, succession?
weaknesses *******************************************************************************
Disadvantages of proposition?
Gaps in capabilities?
Lack of competitive strength?
Reputation, presence and reach?
Financials?
Own known vulnerabilities?
Timescales, deadlines and pressures?
Cashflow, start-up cash-drain?
Continuity, supply chain robustness?
Effects on core activities, distraction?
Reliability of data, plan predictability?
Morale, commitment, leadership?
Accreditations, etc?
Processes and systems, etc?
Management cover, succession?
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opportunities
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Market developments?
Competitors' vulnerabilities?
Industry or lifestyle trends?
Technology development and innovation?
Global influences?
New markets, vertical, horizontal?
Niche target markets?
Geographical, export, import?
Market need for new USP's?
Market response to tactics, e.g., surprise?
Major contracts, tenders?
Business and product development?
Information and research?
Partnerships, agencies, distribution?
Market volume demand trends?
Seasonal, weather, fashion influences?
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Threats
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Political effects?
Legislative effects?
Environmental effects?
IT developments?
Competitor intentions - various?
Market demand?
New technologies, services, ideas?
Vital contracts and partners?
Obstacles faced?
Insurmountable weaknesses?
Employment market?
Financial and credit pressures?
Economy - home, abroad?
Seasonality, weather effects?
Strengths
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End-user sales control and direction.
Right products, quality and reliability.
Superior product performance vs competitors.
Better product life and durability.
Spare manufacturing capacity.
Some staff have experience of end-user sector.
Have customer lists.
Direct delivery capability.
Product innovations ongoing.
Can serve from existing sites.
Products have required accreditations.
Processes and IT should cope.
Management is committed and confident.
Weaknesses
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Customer lists not tested.
Some gaps in range for certain sectors.
We would be a small player.
No direct marketing experience.
We cannot supply end-users abroad.
Need more sales people.
Limited budget.
No pilot or trial done yet.
Don't have a detailed plan yet.
Delivery-staff need training.
Customer service staff need training.
Processes and systems, etc
Management cover insufficient.
Opportunities
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Could develop new products.
Local competitors have poor products.
Profit margins will be good.
End-users respond to new ideas.
Could extend to overseas.
New specialist applications.
Can surprise competitors.
Support core business economies.
Could seek better supplier deals.
Threats
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Legislation could impact.
Environmental effects would favour larger competitors.
Existing core business distribution risk.
Market demand very seasonal.
Retention of key staff critical.
Could distract from core business.
Possible negative publicity.
Vulnerable to reactive attack by major competitors.
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