CVGZ 2OTB HC2: SWOT ANALYSIS

WHAT IS SWOT ANALYSIS? - Examples - Entry of foreign competitors, Introduction of new substitute products, Product life
cycle in decline, Changing customer needs/tastes, Rival firms adopt new strategies, Increased
SWOT ANALYSIS government regulation, Economic downturn
- Acronym for Strengths, Weaknesses, Opportunities, and Threats.
- Technique is credited to Albert Humphrey who led a research project at Stanford University in AIM OF SWOT
the 1960s and 1970s.
- Planning tool used to understand - To help decision makers share and compare idea
- Strengths, Weaknesses, Opportunities, & Threats involved in a project / business. - To bring a clearer common purpose and understanding of factors for success.
- Used as framework for organizing and using data and information gained from situation analysis - To organize the important factors linked to success and failure in the business world.
of internal and external environment. - To analyze issues that have led to failure in the pasts
- Technique that enables a group / individual to move from everyday problems / traditional - To provide linearity to the decision making process allowing complex ideas to be presented
strategies to a fresh perspective systematically.

STRENGTHS WHO NEEDS SWOT?

- Characteristics of the business or a team that give it an advantage over others in the industry.
- Positive tangible and intangible attributes, internal to an organization. 1. JOB HOLDER
- Beneficial aspects of the organization or the capabilities of an organization, which includes - When supervisor has issues with work output
human competencies, process capabilities, financial resources, products and services, customer - Assigned to a new job
goodwill and brand loyalty. - New financial year – fresh targets • Job holder seeks to improve
- Examples - Abundant financial resources, Well-known brand name, Economies of scale, Lower - Performance on the job
costs [raw materials or processes], Superior management talent, Better marketing skills, Good
distribution skills, Committed employees. 2. BUISNESS UNIT
- When the team has not met its targets
WEAKNESSES - Customer service can be better
- Characteristics that place the firm at a disadvantage relative to others. - Launching a new business unit to pursue a new business
- Detract the organization from its ability to attain the core goal and influence its growth. - New team leader is appointed
- Weaknesses are the factors which do not meet the standards we feel they should meet.
However, weaknesses are controllable. They must be minimized and eliminated. 3. COMPANIES
- Examples: Limited financial resources, Weak spending on R & D, Very narrow product line, - When revenue, cost & expense targets are not being achieved
Limited distribution, Higher costs, Out-of-date products / technology, Weak market image, - Market share is declining
Poor marketing skills, Limited management skills, Under-trained employees. - Industry conditions are unfavorable • Launching a new business venture

OPPORTUNITIES Also required for/during:

- Chances to make greater profits in the environment - Changing Jobs
- External attractive factors that represent the reason for an organization to exist & develop. - Product Launch
- Arise when an organization can take benefit of conditions in its environment to plan and - Decision Making
execute strategies that enable it to become more profitable. - Personal Development Planning
- Organization should be careful and recognize the opportunities and grasp them whenever they - Competitor Evaluation
arise. Opportunities may arise from market, competition, industry/government and technology. - Product Evaluation
- Examples - Rapid market growth, Rival firms are complacent, Changing customer needs/tastes, - Strategic Planning
New uses for product discovered, Economic boom, Government deregulation, Sales decline for - Brainstorming Meetings
a substitute product - Workshop Sessions

THREATS HOW TO CONDUCT SWOT ANALYSIS?

- External elements in the environment that could cause trouble for the business -External
factors, beyond an organization’s control, which could place the organization’s mission or 1. Analyze Internal & External Environment
operation at risk.
- Arise when conditions in external environment jeopardize the reliability and profitability of the
organization’s business.
- Compound the vulnerability when they relate to the weaknesses. Threats are uncontrollable.
When a threat comes, the stability and survival can be at stake.
 CVGZ 2OTB HC2: SWOT ANALYSIS
STRENGHTS WEAKNESSES Besides the broad benefits, here are the other benefits of conducting SWOT Analysis:

Internal Factors
- Technological skills - Absence of important skills
- Leading brands - Weak brands poor access to distribution - Helps in setting of objectives for strategic planning
- Distribution channels - Low customer retention - Provides a framework for identifying & analyzing strengths, weaknesses, opportunities &
- Customer loyalty/relationships - Unreliable product/service threats
- Production quality - Sub-scale - Provides an impetus to analyze a situation & develop suitable strategies and tactics
- Scale - Management - Basis for assessing core capabilities & competencies
- Management - Evidence for, and cultural key to, change
OPPORTUNITIES THREATS - Provides a stimulus to participation in a group experience

External Factors
- Changing customer tastes - Changing customer base
- Technological advances - Closing of geographic markets PITFALLS OF SWOT ANALYSIS
- Changes in government policies - Technological advances - Can be very subjective. Two people rarely come up with the same final version of a SWOT. Use
- Lower personal taxes - Changes in government policies it as a guide and not as a prescription.
- Change in population age - Tax increases - May cause organizations to view circumstances as very simple due to which certain key
- New distribution channels - Change in population age strategic contact may be overlooked.
- New distribution channels - Categorizing aspects as strengths, weaknesses, opportunities & threats might be very
Positive Negative subjective as there is great degree of uncertainty in market.
- To be effective, SWOT needs to be conducted regularly. The pace of change makes it difficult
2. Perform SWOT Analysis to anticipate developments.
a. Establish the objectives - Purpose of conducting a SWOT may be wide/narrow, - The data used in the analysis may be based on assumptions that subsequently prove to be
general/specific unfounded [good and bad].
b. Select contributors - Expert opinion may be required for SWOT - It lacks detailed structure, so key elements may get missed.
c. Create a workshop environment -Encourage an atmosphere conducive to the free flow
of information BRAINSTORMING → PRIORITIZATION IN SWOT ANALYSIS
d. Allocate research & information gathering tasks - Background preparation can be
carried out in two stages – Exploratory and Detailed. Information on Strengths & OUTPUT FROM BRAINSTORMING EXERCISE IS PRIORITIZED
Weaknesses should focus on the internal factors & information on Opportunities &
Threats should focus on the external factors. Begin brainstorming by asking the following questions:
e. List Strengths, Weaknesses, Opportunities, & threats - What opportunities exist in our external environment?
f. Evaluate listed ideas against Objectives -With the lists compiled, sort and group facts - What threats to the institution exist in our external environment?
and ideas in relation to the objectives. - What are the strengths of our institution?
g. Carry your findings forward - Make sure that the SWOT analysis is used in subsequent - What are the weaknesses of our institution?
planning. Revisit your findings at suitable time intervals.
At the end of the Brainstorming exercises:
3. Prepare Action Plan
- Reduce the list of strengths & weaknesses to no more than five distinctive competencies and
- Once the SWOT analysis has been completed, mark each point with: debilitating weaknesses
- Things that MUST be addressed immediately - Strengths that are distinctive competencies
- Things that can be handled now - Weaknesses that are debilitating
- Things that should be researched further - Reduce threats and opportunities to the five most critically important of each.
- Things that should be planned for the future

TIPS & EXERCISE

BENEFITS & PITFALLS OF SWOT ANALYSIS
TIPS
BENEFITS OF SWOT ANALYSIS
Do’s
- Knowing the Competition: reviews a company's competitors & benchmarks against them to - Be analytical and specific.
configure strategies that will put the company in a competitive advantage - Record all thoughts and ideas.
- Decision Making Tool: provides well-rounded information that prompt well-informed - Be selective in the final evaluation.
decisions.
- Choose the right people for the exercise.
- Forecasting: provides a variety of information critical to forecasted variables. Threats, for
- Choose a suitable SWOT leader or facilitator.
e.g., can impact a business's forecast. By understanding the company's advantages &
- Think out of the box
disadvantages, forecasts will be more accurate
- Be open to change
 CVGZ 2OTB HC2: SWOT ANALYSIS
Don’ts
- Try to disguise weaknesses.
- Merely list errors and mistakes.
- Lose sight of external influences and trends.
- Allow the SWOT to become a blame-laying exercise.
- Ignore the outcomes at later stages of the planning process

Other
- When conducting a SWOT analysis, designate a leader or group facilitator.
- Introduce the SWOT method and its purpose in your organization to gain acceptance.
- Be willing to break away from traditional methods.
- Discuss and record the results. Prepare a written summary of your SWOT analysis to give to
participants.
- While doing a summary of the SWOT analysis for your job, invite someone to brainstorm with

EXERCISE
- Assume that a car manufacturing company has recently launched its products. Perform a SWOT
analysis for the same.

Helpful
STRENGTHS WEAKNESSES
• No Competition in the EV Segment. • High Price
• Environment friendly • Low aesthetic appeal
• Economic to Drive [Rs. 0.4 per km] • Small driving range [up to 80 KM]
* • Competition from gasoline
• Government subsidies [8% vehicles

Internal
External

excise duty] *
OPPORTUNITIES THREATS
Huge untapped EV market • Growing • Government incentives to gasoline
demand of green vehicles
technologies • Entry of competitors • Stringent
• Rising fuel costs safety
• Growing road congestion in urban requirements anticipated
cities • Availability of hybrid vehicles
Harmful

POINTS TO PONDER

- Keep your SWOT short and simple, but remember to include important details. For example, if
you think your communication skills is your strength, include specific details, such as verbal /
written communication.
• When you finish your SWOT analysis, prioritize the results by listing them in order of
the most significant factors that affect you / your business to the least.
- •Get multiple perspectives on you / your business for your SWOT analysis. Ask for input from
your employees, colleagues, friends, suppliers, customers and partners.
- •Apply your SWOT analysis to a specific issue, such as a goal you would like to achieve or a
problem you need to solve. You can then conduct separate SWOT analyses on individual issues
and combine them.