SWOT Analysis Overview pdf

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SWOT Analysis

Template

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SWOT Analysis Overview What is SWOT Analysis?

Remember, It’s Virtually Impossible To Focus Too Much On What You Do Well And What Creates Profits For Your Business

A SWOT (Strengths, Weaknesses, Opportunities, and Threats) is a tool used to

provide a general or detailed snapshot of a company's health Think of your SWOT

as a tune-up that every business needs periodically to diagnose and fix what’s a bit worn, what’s on the verge of breaking down, or what’s already broken and needs replacement so that you can keep the business humming—even better than it has

in the past

9 SWOT offers professional managers an effective evaluative technique to aid the decision making process

9 It can not find the solution for you, but it will ensure that issues are: identified,

classified and prioritized clearly, showing the problem in terms of key underlying issues Decision makers can then see the answer

9 It's a four-part approach to analyzing a company's overall strategy or the strategy of its business units All four aspects must be considered to implement a long-range plan of action

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SWOT Example

A start-up small consultancy business might carry out the

following SWOT analysis

Strengths:

¾ We are able to respond very quickly as we have no red tape, no need for higher management approval, etc

¾ We are able to give really good customer care, as the current small amount of work means we have plenty of time to devote to customers

¾ Our lead consultant has strong reputation within the market

¾ We can change direction quickly if we find that our marketing is not working

¾ We have small overheads, so can offer good value to customers

Weaknesses:

¾ Our company has no market presence or reputation

¾ We have a small staff with a shallow skills base in many areas

¾ We are vulnerable to vital staff being sick, leaving, etc

¾ Our cash flow will be unreliable in the early stages

Opportunities:

¾ Our business sector is expanding, with many future opportunities for success

¾ Our local council wants to encourage local businesses with work where possible

¾ Our competitors may be slow to adopt new technologies

Threats:

¾ Will developments in technology change this market beyond our ability to adapt?

¾ A small change in focus of a large competitor might wipe out any market position we achieve

¾ The consultancy might therefore decide to specialize in rapid response, good value services to local

businesses Marketing would be in selected local publications, to get the greatest possible market presence for

a set advertising budget The consultancy should keep up-to-date with changes in technology where possible.

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SWOT Analysis How Does SWOT Analysis Work?

9 The strategy is to look at the organizations current performance (strengths and

weaknesses) and factors in the external environment (opportunities and threats) that

might affect the organizations future

9 Once the attributes for each section have been identified it is possible to determine the

point of balance Eventually the points of balance of strengths versus weaknesses and

opportunities versus threats can be plotted together

9 For example, an information technology department needs to determine the strengths

and weaknesses of its people and its technology It also needs to make sure the IT

strategy complements the company's business goals The department head needs to

ask: What is each staff member good at? What are they not good at?

9 Project leaders also must consider opportunities and threats or customers and

competitors How attractive is the market or direction they're considering? What's their

market share and cost structure?

INTERNAL Strengths Weaknesses EXTERNAL Opportunities Threats

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SWOT Example

Delta Air Lines Inc., chose to invest in a multibillion-dollar customer service system that addresses the flight delay problems experienced by 20% of its passengers Although some companies might think the move was excessive considering 80% of customers have no problems, Delta believed customer service was an important area for increasing market share and that competitors could pose a threat if Delta didn't address the problem

Another example is Dell Computer Corp., which is a great example of how an IT company can use

a SWOT analysis to carve out a strong business strategy, according to Glazer

Dell recognized that its strength was selling directly to consumers and keeping its costs lower than those of other hardware vendors

As for weaknesses, the company acknowledged that it lacked solid dealer relationships

Identifying opportunities was an easier task Dell looked at the marketplace and saw that customers increasingly valued convenience and one-stop shopping and that they knew what they wanted to purchase Dell also saw the Internet as a powerful marketing tool

On the threats side, Dell realized that competitors like IBM and Compaq Computer Corp had

stronger brand names, which put Dell in a weaker position with dealers

Dell put together a business strategy that included mass customization and just-in-time

manufacturing (letting customers design their own computers and custom-building systems) Dell also stuck with its direct sales plan and offered sales on the Internet

Clarity in strategy works Fuzzy strategies fail Most strategies

fail because they don't have a clear direction

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SWOT Analysis Operational Definitions

A STRENGTH is something that you truly do well, excel at versus the competition, can

build on; something that truly differentiates your business, a key metric that is improving, etc Most companies do surprisingly bad job of identifying what they are really good at doing Every company has strengths A strength can be something very concrete like a large, growing customer base or less measurable: a well-run customer service

department that keeps customers satisfied (thus helping both retention and new sales) Note that a STRENGTH can also be a weakness: e.g you’re Number One in your market

is a STRENGTH, but if you are taking that for granted—that’s also a weakness

A Weakness is a real gap, a deficiency, a problem, or a key metric that is going south;

something you’re not doing very well and that you should be doing better; something

that’s dated that no longer applies—even though it used to; something important that you really don’t know or aren’t sure about In fact, one good outcome of a SWOT is to

discover what you really don’t know and then do something about it A weakness can be

very tangible and concrete or it can be an attitude: e.g a complete unwillingness to invest

in any marketing initiatives or a lack of understanding what to do

The best way to identify STRENGTHS, WEAKNESSES, OPPORTUNITIES & THREATS is to ask the right questions

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SWOT Analysis Operational Definitions (Cont.)

An OPPORTUNITY is a favorable external condition; something (that you haven’t acted

on or taken advantage yet) that could impact you positively Opportunities are new ways that your exploit your STRENGTHS, WEAKNESSES & THREATS new things that that you can do to potentially improve your business—that turn into recommendations and actions This list becomes the most important part of your SWOT for prioritizing and

determining what next steps to take

A THREAT is something external to your business that can potentially impact you

negatively: competitors (actually doing specific things vs just being there), changing

conditions in your particular marketplace, the overall economy, government regulations, etc Threats are part of the playing field that you can’t ignore They are part of the context

of your business Some threats, though, are internal: e.g hanging onto the status quo when change is required or the impact on remaining if you decide to cut costs (maybe an OPPORTUNITY)

You should also make an ongoing list of Issues and questions that inevitably pop-up as a result of developing the STRENGTHS, WEAKNESSES, OPPORTUNITIES & THREATS lists—for further analysis and discussion—and possible incorporation into your SWOT Generally, STRENGTHS & WEAKNESSES are current in timeframe, and OPPORTUNITIES & THREATS are in the future— starting with tomorrow.

The purpose of strategy is to be really clear before you take the direction

The point of a SWOT analysis is to have the best shot at a grounded plan

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SWOT Analysis

Template

SWOT Analysis

Internal

External

Writing alone on a piece of paper, without a name, provides

some protection of anonymity, & some observations about

sensitive issues can be revealed this way

The SWOT Template is a Simple Worksheet

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SWOT Analysis

Tips

9 Traditionally, a SWOT confines strengths and weaknesses to your company's

internal workings while opportunities and threats refer only to the external

environment

9 Put someone in charge of spearheading it—ideally a knowledgeable consultant (see below) or objective insider who will take the time and be objective

9 Take one or two weeks, not one or two months—to complete your SWOT

9 Make big lists, but right-off-the bat start, prioritizing your lists—digitally, so that that they are easy to change and modify (and you may want to take the step of weighting the importance of each STRENGTH, WEAKNESS, OPPORTUNITY & THREAT); keep prioritizing and then weed the lowest priority items at the end

9 Aim for about five pages: a page for each STRENGTH, WEAKNESS,

OPPORTUNITY & THREAT as well as a page for Issues/Questions

9 Focus on the present and recent past for your STRENGTHS & WEAKNESSES — and not very far into the future for your OPPORTUNITIES & THREATS: 90 to 180 days, maximum

9 Review your key Marketing & Sales materials like you’ve never seen them before

Get input from at least 3-5 key people who have varying views & opinions

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SWOT Analysis

Tricks

9 Minimize the “group grope” and meeting stuff while developing your SWOT — meet

to discuss the SWOT, modify it as necessary, and develop one or more action steps

9 Ask the hard questions and challenge all of your basic assumptions — none are

sacred

9 Be objectively critical but also don’t undersell yourself

9 Get the key facts but don’t get paralyzed with analysis and fact-finding You may

need to do some other fact-finding and analysis before implementing your

recommendations, but don’t get bogged down at the micro-level of detail

9 Keep “personal” issues off the list — and handle those separately

9 This is important, especially if there are to be major changes in the organization and the content of the program; all members should feel comfortable that this is a group process, not dominated by factions or individuals

“Its what you learn after you know it all that counts!”

- John Wooden

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About The Author

Steven Bonacorsi is a Senior Master Black Belt instructor and coach Steven Bonacorsi has trained hundreds of Master Black Belts, Black Belts, Green Belts, and Project Sponsors and Executive Leaders in Lean Six Sigma DMAIC and

Design for Lean Six Sigma process improvement methodologies.

Our Expert Consultants Can Help Your Business Growth

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3135 South Price Road, Suite 115

Chandler, AZ 85248-3549

Phone: +(1) 888.826.2484

E-mail: americas@theaitgroup.com

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About The AIT Group

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