BITP 3233

Week 6

Week 6 BITP 3233 1

 SWOT Analysis
Introduction
• Defines relationship between the internal and external
appraisal in strategic analysis
• Often completed as part of business and marketing
plans
• A method for assessing a business, its resources and
its environment
• It involves an analysis of:
Positive Negative
factors factors
Internal Relate to the present situation
factors S W
External Relate to changes in the
factors O T environment that impact the firm

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 SWOT Analysis
Cont...
• SWOT analysis provides information that is helpful in
matching the firm’s resources and capabilities to the
competitive environment in which it operates
• Can be used to assess competitors. (Ex can capitalize
on competitor’s weaknesses and avoid going against
it’s strength.)
• The essence of SWOT analysis is to discover
– What the business does well?
– How it could improve?
– Whether it is making the most of the opportunities around?
– And whether there are any changes in the environment which
may require corresponding changes in business strategy?

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 SWOT Analysis
What do we mean by strengths?
• Strengths are:
– Things the firm is good at
– A characteristic giving it an important capability
– Specific points where the company has clear
advantages over its rivals
– Distinctive competencies and resources that will
help the organization achieve its objectives

• Strengths help to build up competitive

advantage
• Strengths should be protected and built upon
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 SWOT Analysis
Checklist of Possible Strengths
• Market dominance • Technological leadership
• Economies of scale • Brand reputation
• Low cost production • Patents and copyright
• Leadership and • Distribution network
management skills
• Employee skills
• Financial resources
• High productivity
• Research and
• Plant and equipment
development capabilities
• Access to high grade
• Core competencies
resources
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 SWOT Analysis
What do we mean by weaknesses?
• Weaknesses are:
– A source of competitive disadvantage
– Things the firm lacks or does poorly
– A condition placing it an a disadvantage
– Any aspect which may hinder or constrain the
organization in achieving its objectives
– Particular problem areas where the company could be
vulnerable to competitive attack : eg deficiency in
know-how, lack of key assets.
• Firm should seek ways to reduce or eliminate
weaknesses before being exploited by competitor
• Weaknesses should be seen as areas for
improvement
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 SWOT Analysis
Checklist of Possible Weaknesses
• Low market share • Cash flow problems
• Old plant • Inadequate distribution
• Outdated technology network
• Problems over quality • Quality problems
• Low R&D capabilities • Low employee morale
• Weak position
• Low productivity
• A weak brand name
• Skills gap
• A high cost structure
• Poor reputation
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 SWOT Analysis
What do we mean by opportunities?
• As any feature of the external
environment which creates positive
potential for the organization to
achieve its objectives
• The best market opportunities are
those offering the best prospects for
growth, competitive advantage and,
at the same time, are a good match
with the firm’s capabilities.

Week 6 BITP 3233 8

 SWOT Analysis
Checklist of Possible Opportunities
• Technological • Economic upswing
innovation
• Trade liberalization
• New demand
• EU enlargement
• Market growth
• Diversification
• Demographic change opportunity
• Social or lifestyle • Deregulation of the
change market

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 SWOT Analysis
Examples of Opportunities

• Liberalization of postal market – opportunities for private

sector firms
• Enlargement of EU – increased opportunities to export to
eastern Europe
• Concern about health food – opportunities for organic food
producers
• Philipines 2019 (SEA Games) – opportunities for a wide
variety of firms providing the infrastructure for the games
• Flat screen and high definition television – the former has
proved a great
• Opportunity for manufactures, the latter is likely to be the
next great opportunity

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 SWOT Analysis
Threats
• A threat is any external
development that may hinder
the organization in achieving
its objectives
• They are defined as external
factors presenting a danger to
the firm
• Firms should devise
strategies to minimize threat

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 SWOT Analysis
Checklist of Possible Threats
• New market entrants • Economic downturn
• Change in customer tastes • Rise of low cost production
or needs abroad
• Demographic change • Higher input prices
• Consolidation among • Threat from rivals
buyers • Threat from substitute
• New regulations products
• Change a laws • Competitive price pressure

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 SWOT Analysis
Examples of Threats
• Prohibition on smoking in enclosed public places a
threat to some pubs
• Avian flu – a threat to poultry producers
• Rise of China and India as economic superpowers
– Threat of low cost competition
• Liberalization of postal services – a threat to the
Royal Mail
• Continuing rise of the supermarket giants – a threat
to convenience stores especially as the major players
have moved into this market
Week 6 BITP 3233 13
 SWOT Analysis
Match Opportunities to Strengths
• Match the strengths of the organization to
opportunities presented in the market
• Strengths which do not match any available
opportunity are of limited use
• For instance, a firm which is the most efficient
producer of a product for which there is no demand is
not going to prosper
• Opportunities which do not have any matching
strengths are of little immediate use
• There might be great opportunities in the market but
unless the firm can take advantage of them it will be of
little relevance
Week 6 BITP 3233 14
 SWOT Analysis
Convert Weaknesses to Strengths
• Technological weakness - invest in the latest
technology to leapfrog ahead of rivals
• Skills gap - invest in training
• Overdependence on a single product - diversify the
product portfolio
• Weaknesses of the brand - re-launch the product
involving repositioning and possible renaming
• High unit cost - explore the option of outsourcing
non-core activities, if necessary abroad

Week 6 BITP 3233 15

 SWOT Analysis
Convert Threat into Opportunities
• New waste management laws – sell waste
management services to other firms
• Supermarkets move into convenience store - move
into a niche, organic food market
• Rising labor costs – outsource non core activities
• Prohibition on smoking in enclosed public places –
change the ambiance of the pub to be more family
friendly for the health conscious market
• Concern for healthy options - Walker’s develop low
fat crisps

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 SWOT Analysis
Action from SWOT Analysis

Internal Strengths Internal Weaknesses

External • Capitalize on these areas of • Improve these areas of the

Opportunities the business. business.
• Pursue opportunities that • Overcome weaknesses to
are a good fit to the pursue opportunities
company’s strengths
External • Monitor these areas of the • Eliminate these activities.
Threats business • Establish a defensive plan
• Identify ways that a firm can to prevent it becoming
use its strengths to reduce highly susceptible to
its vulnerability to external external threat
threats

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 SWOT Analysis
Possible responses on basis of SWOT
Evaluation of IS capability
Strengths Weaknesses
Opportunities Attack the competitor Beware.
“Go for it” “Don’t do it” as it is less
assured of success with
Situation IS faces

more adequate IS

Threats Explore to maintain & Protect.

opening up “Watch yourself”
opportunities & to
identify overlooked
potential
“If I have time”

Week 6 BITP 3233 18

 SWOT ANALYSIS

END
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