Team FME
Strategy Skills
SWOT Analysis
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SWOT AnAlySiS
Table of Contents
Preface 2
Visit Our Website 3
Introduction 4
SWOT Analysis 6
Importance of Clear Definitions 8
Internal Analysis 12
Strengths 13
Weaknesses 14
External Analysis 16
Opportunities 17
Threats 19
Matching and Converting 21
Advantages and Disadvantages 23
SWOT Analysis Example 24
Summary 29
Other Free Resources 30
References 31
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Preface
This eBook describes the SWOT analysis, a technique that you can perform for products,
services, and markets when deciding on the best strategy for achieving future growth.
You will learn:
● How SWOT can be used to guide strategy at the highest level or be tied to a spe-
cific business objective
● How to identify internal factors including: organizational culture, expertise, re-
sources, and unique qualities
● How to identify internal factors including the market and ‘ecosystem’
● How to use ‘matching’ and ‘converting’ when analyzing SWOT results
● The advantages and limitations of this popular and versatile analysis method
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SWOT AnAlySiS
Visit Our Website
More free management eBooks along with a series of essential templates and check-
lists for managers are all available to download free of charge to your computer, iPad, or
Amazon Kindle.
We are adding new titles every month, so don’t forget to check our website regularly for
the latest releases.
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introduction
Today’s organizations find themselves operating in an environment that is changing
faster than ever before. The process of analyzing the implications of these changes and
modifying the way that the organization reacts to them is known as business strategy.
‘Strategy is the direction and scope of an organization over the long term,
which achieves advantage in a changing environment through its configura-
tion of resources and competences’ Johnson et al. (2009).
While your role as a manager is unlikely to require you to make decisions at the strategic
level, you may be asked to contribute your expertise to meetings where strategic con-
cerns are being discussed. You may also be asked to comment on pilot schemes, presen-
tations, reports, or statistics that will affect future strategy.
Meetings
Pilot Schemes
Presentations
How you
participate in
strategy
Statistics
Reports
Whether you work in a large multinational corporation or a small organization, a good
understanding of the appropriate business analysis techniques and terminology will help
you to contribute to the strategic decision-making processes.
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SWOT AnAlySiS
• Defi ning the
strategy
• Internal
capability to
espond
• Implementation
of the strategy
• External
environment
Analyze Assess
Aid Assist
Typical scenarios where you could be asked to provide information and data for your
organization’s strategic decision making include:
● Analyzing the organization’s external environment.
● Assessing the organization’s internal capabilities and how well it can respond to
external forces.
● Assisting with the definition of the organization’s strategy.
● Aiding in the implementation of the organization’s strategy.
Strategic
Defi nition
Strategic
Analysis
Strategic
Planning
Internal
Capability
External
Environment SWOT, Ansoff
PESTLE, Porters
5 Forces Boston Box
The diagram above shows where five widely used business analysis tools fit into the stra-
tegic planning process. This series of eBooks will give you a solid understanding of how
these tools can be used, as well as an appreciation of their limitations.
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SWOT AnAlySiS
This knowledge will enable you to take an active and productive role when asked to par-
ticipate in the strategic decision-making process.
KEy POINTS
4 You may be asked to contribute your expertise to meetings where strategic
concerns are being discussed.
4 Typical scenarios where you could be asked to provide information for stra-
tegic decision making include: analyzing the organization’s external environ-
ment, assessing internal capabilities, assisting strategy definitions, and aiding
in the implementation.
SWOT Analysis
The SWOT analysis is a business analysis technique that your organization can perform
for each of its products, services, and markets when deciding on the best way to achieve
future growth. The process involves identifying the strengths and weaknesses of the or-
ganization, and opportunities and threats present in the market that it operates in. The
first letter of each of these four factors creates the acronym SWOT.
Helpful Harmful
Strengths Weaknesses
Opportunities Threats
Internal
Origin
External
Origin
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SWOT AnAlySiS
As a manager, your role in any strategic planning is likely to involve providing operational
data to help assess the internal capabilities, and (depending on your job function) you
may also be asked to provide market intelligence.
The completion of a SWOT analysis should help you to decide which market segments
offer you the best opportunities for success and profitable growth over the life cycle of
your product or service.
SWOT Analysis
Your position against your competitors
Identifi es best future opportunities
Highlights cu
ent & future threats
The SWOT analysis is a popular and versatile tool, but it involves a lot of subjective deci-
sion making at each stage. It should always be used as a guide rather than as a prescrip-
tion and it is an iterative process. There is no such thing as a definitive SWOT for any
particular organization because the strengths, weaknesses, opportunities, and threats
depend to a large extent on the business objective under consideration. This concept is
described in detail later in this eBook.
After completing a SWOT analysis, your organization will then use an analysis tool such
as the Ansoff Matrix to define the best growth strategy to achieve the chosen objective.
If you are unfamiliar with the Ansoff Matrix or want to understand it in greater detail
then visit our website www.free-management-ebooks and download our free ‘Ansoff
Matrix’ business strategy eBook.
http:
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SWOT AnAlySiS
KEy POINTS
4 SWOT Analysis provides information that helps in synchronizing an organiza-
tion’s resources and capabilities with the external environment in which the
organization operates.
4 The acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
4 Strengths and weaknesses are considered to be internal factors over which
you have some measure of control.
4 Opportunities and threats are considered to be external factors over which
you have no control.
4 SWOTs depend on the business objective under consideration.
4 There is NO definitive SWOT analysis for any organization.
4 SWOT is often the first step in a more complex and in-depth analysis.
Importance of Clear Definitions
Before looking at how the SWOT analysis can be applied to your organization, it is im-
portant to be clear about what exactly we mean by the terms Strengths, Weaknesses,
Opportunities, and Threats.
Strengths—Internal factors that are favorable for achieving your organiza-
tion’s objective.
Weaknesses—Internal factors that are unfavorable for achieving your orga-
nization’s objective.
Opportunities—External factors that are favorable for achieving your orga-
nization’s objective.
Threats—External factors that are unfavorable for achieving your organiza-
tion’s objective.
These definitions are open to interpretation and a weakness of the SWOT technique is
that it can be highly subjective. For example, if your organization was dependent on one
single large distributor then this could be seen as a strength, as you would be able to get
your products into the market quickly and efficiently. However, it could also be seen as a
weakness because you are totally dependent on them to do so.
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Some factors will always be easy to categorize. For example, it is difficult to imagine huge
financial resources, a
oad product line, no debt, and committed employees being any-
thing other than strengths, whatever the objective of the organization may be.
However, some factors can be either strengths or weaknesses depending upon the busi-
ness objective. For example, a large number of distributors could be a strength if your
objective is to place your products in as many outlets as possible. But if could be a weak-
ness if your objective was to control your retail prices and prevent discounting.
The strength of the SWOT analysis comes from the fact that it can be applied to many
different organizational scenarios, but its weakness is that it requires clear thinking and
good judgment to obtain any real value from using it. You will often see SWOT analysis for
an organization in which no specific business objective has been stated (see the example
for Audi later in this eBook). These top-level SWOTs can have value in guiding strategy at
the very highest level, but when a potential strategy has been identified and is being con-
sidered as a business objective then additional SWOTs will be required at this lower level.
Remember, when you are using the SWOT analysis technique, the processes of clearly
identifying the business objective and categorizing the SWOT factors are equally impor-
tant because they are interdependent.
This interdependence means that the SWOT analysis is often an iterative process in
which the findings cause the objective to be reset and another analysis made. The output
of any particular analysis is not necessarily definitive.
equires a new
SWOT
SWOT, a dynamic
iterative process
uses defi ned
objective
produces an
analysis
initial objective
may alte
defi nes factors
involved
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SWOT AnAlySiS
The analysis is normally performed at a meeting involving representatives from the nec-
essary stakeholders groups that have specialist knowledge and supporting data. Each of
these individuals
ings their own particular perspectives and expertise to the discussion.
The end result