SWOT Analysis

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 SWOT Analysis Overview
What is SWOT Analysis?
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.

Remember, It’s Virtually Impossible To Focus Too Much On

What You Do Well And What Creates Profits For Your Business.
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 SWOT Example
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.

A start-up small consultancy business might carry out the

following SWOT analysis
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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?
POSITIVE NEGATIVE
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
Strengths Weaknesses

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
External
Oppurtunities Threats

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.

The AIT Group, Inc.

Steven Bonacorsi, Solution Provider
Lean Six Sigma Master Black Belt
3135 South Price Road, Suite 115
Chandler, AZ 85248-3549
Phone: +(1) 888.826.2484
E-mail: americas@theaitgroup.com
http://www.theaitgroup.com
http://blog.theaitgroup.com/?tag=change

Our Expert Consultants Can Help Your Business Growth

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 About The AIT Group

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