UNPRG Course: Strategic Planning UNPRG

SWOT analysis

SWOT matrix analysis

The DOFA matrix (known by some as FODA, and SWOT in English) is a

a very useful tool for understanding and making decisions in all kinds of
business and company situations. DOFA is the acronym for Weaknesses,
Opportunities, Strengths, and Threats. The headings of the matrix provide a good
framework for reviewing the strategy, position, and direction of a company
business proposal or idea.

Completing the matrix is easy, and it is suitable for workshops and meetings of
brainstorming. It can be used for company planning, planning
strategic, competitor evaluation, marketing, business development or
products, and research reports. The development of a SWOT matrix can be
useful in team formation games.

The SWOT analysis can be used in conjunction with the PEST matrix (discussed further
below), which measures the market and the potential of a company according to external factors,
specifically Political, Economic, Social, and Technological. It is advisable
conduct the PEST analysis before the SWOT. The first measures the market, the second one,
business unit, proposal or idea.

The SWOT analysis is a subjective evaluation of data organized in the SWOT format.
that places them in a logical order that helps to understand, present, discuss, and make
decisions. It can be used in any type of decision-making, since the
template encourages proactive thinking, instead of the common reactions
instinctive.

Some examples of use for the SWOT analysis:

• A company (its market position, commercial viability, etc.)

• A sales distribution method
• A product or brand
• A business idea
• A strategic option, such as entering a new market or launching a new
product
• An opportunity to make an acquisition
• Evaluate a change of supplier
• A potential partnership
• Deciding to outsource a service, activity, or resource
• Analyze an investment opportunity

The four dimensions are an extension of the simple headers of Pro and
Against.

The SWOT analysis template is generally presented as a matrix of four

secciones, una para cada uno de los elementos: Debilidades, Oportunidades,
Strengths and Threats. The example below includes sample questions, whose
answers must be inserted in the corresponding section. The questions are

Teacher: Yasmy Castañeda Vasquez 1

just examples, or points of discussion, that can obviously be modified according to
the topic of analysis. Note that many of the questions are also points of
discussion for other sections - use them in whatever way is most useful to you, or
create your own.

It is important to clearly identify and describe the topic analyzed through SWOT.
so that the participants understand the purpose and its implications.

SWOT analysis template

Analysis topic: (define here the topic to analyze)

Fortresses
Weaknesses

• Advantages of the proposal? • Drawbacks of the proposal?

• Capabilities? • Gaps in capacity?
• Competitive advantages? • Lack of competitive strength?
• PUV's (unique proposal of • Reputation,
presence and veins)? scope?
• Resources, assets, people? • Financial Aspects?
• Experience, knowledge, • Vulnerabilities
own data? known?
• Financial reserves, return • Timeline, deadlines
probable? and pressures?
• Marketing – scope, • Cash flow,
distribution drainage, awareness? cash?
• Innovative aspects? • Continuity, robustness of the
• Geographical location? supply chain?
• Price, value, quality? • Effects on activities
• Accreditations, qualifications, main, distraction?
certifications? • Reliability of the data,
• Processes, systems, IT, predictability of the plan?
communications? • Motivation,
commitment
Cultural, attitudinal, of ?
• leadership?
behavior? • Accreditation,
etc?
• Management coverage, succession? • Processes and systems, etc?
• Management coverage, succession

2
 Opportunity Threats
it
• Political effects?
• Legislative effects?
• Market developments?
• Environmental effects?
• Vulnerabilities of
• IT developments?
the competitors? • Intentions of the
• Industry trends or
competitors
of
lifestyle? ?
• Market demand?
• Technological developments
• New technologies,
and innovations?
• Global influences? services, ideas?
• Vital contracts and alliances?
• New markets,
• Keep the
verticals, horizontals?
• Niche target markets? internal capabilities?
• What obstacles faced?
• Geography
• Unsurmountable weaknesses?
export
• Loss of key personnel?
import?
• Sustainable financial backing?
• New unique proposals of
sale? • Economy - local or foreign?
• Tactics - surprise, • Seasonal influences,
of the climate, or of the
large contracts, etc?
• Business development or fashion?
products?
• Information and research?
• Societies,
agencies, distribution?
• Volumes, production,
economies?
• Seasonal influences,
of the climate, or of fashion?

Example of SWOT analysis

This example is based on an imaginary situation. The setting is a company.

manufacturer, business-to-business, that had historically depended on
distributors to deliver their products to the end customer. The opportunity, and in
As a consequence, the object of the SWOT analysis is for the company to create a new one.
own company, that directly distributes its products to certain sectors of
end customers who are not being covered by their current distributors.

Analysis topic: creating your own distribution company

to access end customer sectors that are not being
developed
Fortresses Weaknesses

• Control and direction over The client list has not

sales to the end customer has been tested
• Product, quality, and • Certain gaps in the range
reliability for certain sectors
of the product • We would be a weak competitor
• Better performance of Little experience in
product, compared to direct marketing
competitors • Inability to supply to
• Better quality of life and clients abroad
product durability Need for a
• Idle capacity of greater force of
manufacturing sales
• Some employees • Limited budget
they have experience in It has not been done
final customer sector no evidence
• Available customer list • There is still no plan
• Direct delivery capacity detailed
• Continuous improvements to Delivery personnel
the products needs training
• It can be attended from the • Processes and systems
current facilities The management team
• The products have it is insufficient
the accreditation
necessary
• The processes and IT are
they can
adapt
• The management is
committed and confident

It may surprise the

Opportunities •
competition

• They could be developed

new products
Local competitors
they have
low products
quality
• The profit margins
they will be good
• End customers
respondent
against new ideas
• It could be extended to others.
countries
• New applications
special
 to the competitors
Threats big
Risk for distribution
actual
• Impact of the legislation • The market demand is
The effects very seasonal
environmental • Retention of key personnel
is It could distract from
they could core business
to favor • Possible negative publicity

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 • They could be achieved • Vulnerability to
better agreements with the big competitors
suppliers

PEST analysis tool

PEST analysis is a very useful tool for understanding growth or
decline of a market, and consequently, the position, potential, and direction of a
business. It is a business measurement tool. PEST is composed of the
initials of Political, Economic, Social, and Technological factors, used for
evaluate the market in which a business or unit is located.

The PEST functions as a framework for analyzing a situation, similar to the SWOT analysis.
it is useful for reviewing the strategy, position, direction of the company, proposal
of marketing or idea. Completing a PEST analysis is easy and convenient for the
discussion in a workshop, a brainstorming meeting and even as an exercise for
team building games.

The factors analyzed in PEST are essentially external; it is

recommended
carry out this analysis before the SWOT analysis, which is based on internal factors
(Strengths and weaknesses) and external (opportunities and threats). The PEST measures the
market, the SWOT analyzes a business unit, proposal, or idea.

The PEST analysis is sometimes extended to 7 factors, including Ecological.

Legislatives and Industry, thus becoming PESTELI. Many consider this
unnecessary extension, since if done correctly, the PEST covers in a way
natural additional factors (Legislative would fall under Political, Industry under Economy)
and Ecological scattered among the four). The extension should only be used when it seems
something is missing in the first four factors.

SWOT analysis measures a business unit or a proposal; PEST analysis measures

the potential and the situation of a market, specifically indicating growth or
decline, and consequently its appeal, business potential, and the suitability of its
access.

The PEST analysis uses four perspectives, which provide a logical structure that
allows understanding, presenting, discussing, and making decisions. These four dimensions are
An extension of the traditional Advantages and Disadvantages table. The PEST template.
promotes proactive thinking, instead of waiting for instinctive reactions.

The PEST analysis template is presented as a table with four sections, one
for each of the factors. The sample template below includes questions about
example, whose answers can be included in the same section. The questions
these are examples of discussion points, and they can be altered according to the subject of
analysis.
As in the SWOT analysis, it is important to be clear about the issue being analyzed - if it is
loses
the focus, the result of the analysis will also be out of focus.

A market is defined by what is directed towards it, be it a product, a company,

a brand, a business unit, a proposal, an idea, etc. Consequently, it is
It's important to be clear about how the market being analyzed is defined, especially if ...
will conduct the PEST analysis in a workshop, in a team exercise or as an activity
Delegate. The matter of the analysis must be a clear definition of the market to which it is
it directs, and it can be from any of the following perspectives:

• A company looking at its market

• A product seeing its market
• A brand in relation to its market
• A local business unit
• A strategic option, such as entering a new market or the launch of
a new product.
• A potential acquisition
• A potential society
• An investment opportunity

Make sure that the subject of the analysis is clearly described, so that those
contribute to it, and those who see the finished analysis, understand its purpose
same and its implications.

PEST analysis template

Outside of the main titles, the questions and topics mentioned in the template are
simple examples and they are not exhaustive. Add your own questions, or modify
those mentioned according to the needs, experience, and skill level of
who carries it out, as well as according to their objectives.

If environmental factors are more relevant than economic ones, replace it.
Remember to consider the three additional factors of PESTELI: ecological, legislative, and
Industry.

The analysis can become a more scientific measure by assigning it a rating.

to each item. This is particularly useful when analyzing more than one market, with the
objective of deciding which of the two market opportunities has greater potential or
more obstacles; for example, when deciding between developing market A or
Option B, focus on local distribution or export, or acquire company X or Y.

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Subject of the PEST analysis: (define the point of view and the market)

Politicians Economic

• Ecological Issues
environmental
• current legislation in the • local economic situation
market • trends in the local economy
• economy and trends in others
local
countries
• general tax matters
• future legislation
• international legislation • specific taxes of
• processes and entities the products and services
• seasonality and climate issues
regulatory
• market cycles
• specific industry factors
• government policies
• market routes and trends
• government period and
of distribution
changes
• motivators of the
• trade policies
clients/users
exterior
the
• financing and initiatives
• interests y exchange rates
• lobbying groups and of
pressure
• pressure groups
ional
international
is

Social Technological

• Lifestyletrends
• Demography
• Opinion and attitude of the • technological developments
consumer competitors
• financing for the
• media perspective research
• changes in laws that • technologies
social factors affect associated/dependent
• image of the brand
• substitute technologies/solutions
technology and the company • maturity of technology
• capacity and maturity of
the manufacturing
7
 • purchase patterns of the • information and communication
consumer • purchase mechanisms/technology
• fashion and role models • technological legislation
• big events and • innovation potential
influences • access to technology,
• access and trends of licensing, patents
purchase • intellectual property matters
• ethnic and religious factors
• advertising and relationships
public

Differences and relationship between PEST and SWOT

PEST is useful before SWOT - generally, not vice versa. The PEST surely
it will help identify SWOT factors. Although they may have common areas (factors
similar ones can appear in both), they remain distinct perspectives:

PEST: evaluates a market, including competitors, from the perspective of

a particular proposal or business.

SWOT: evaluates a business or business proposal, yours or your competitor's.

Strategic planning is not a precise science, and no tool is

mandatory. It is a matter of pragmatic choice, deciding which helps best to
identify and explain the relevant issues.

The PESE becomes more useful and relevant as the business or proposal becomes
are becoming more complex; but even for a small local company, the PEST analysis
can shed one or two important factors that otherwise would have been overlooked
for high.

The four quadrants of the PEST vary in significance depending on the type of
company. For example, social factors are more important for a company of
mass consumption or for a B2B company located in the supply chain very
close to the consumer. Political factors, on the other hand, would be more relevant for
a global supplier of ammunition or a manufacturer of aerosols.

All companies benefit from SWOT analysis, and it is useful for all to make a
analysis of this type of its main competitors. This, in turn, can feedback-
feed the economic aspects of the PEST analysis.

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 The origins of the analysis model
SWOT

This piece of history, about the origin of SWOT analysis, was provided by Albert S
Humphrey, one of the founding fathers of it. We owe him for
such a fascinating contribution.

The SWOT analysis emerged from the research conducted by the Stanford Research Institute.
between 1960 and 1970. Its origins stem from the need to discover why the failure
corporate planning. The research was funded by Fortune companies.
500, to find out what could be done about these failures. The team of
the research consisted of Marion Dosher, Dr. Otis Benepe, Albert Humphrey, Robert
Stewart and Birger Lie.

It all started as a trend, corporate planning, which apparently

it first appeared in DuPont in 1949. By 1960, all the companies of
Fortune 500 had a 'corporate planning manager' (or equivalent position);
associations of "long-term corporate planners" began to emerge due to
all of the United States and Great Britain.

However, a unanimous opinion was developed across all companies regarding

that corporate planning, in the form of long-term planning, was not
It was not paying off, and it was a costly and futile expense.

It was thought that managing change and setting realistic goals that reflected the
convictions of those responsible, it was difficult and generally resulted in compromises
questionable.

The reality remained that, despite the long-term planners, the only
the missing link was how to get the management team to approve and commit
with a series of action programs.

To create this link, starting in 1960, Robert F. Stewart from SRI in Menlo Park,
California led a team of researchers to try to find out what was
bad in corporate planning, and then find some solution, or create a
system that would allow management teams to approve and commit to the
development work, something we call today "change management."

The research was developed between 1960 y 1969. 1100 company y

Organizations were interviewed, and a questionnaire of 250 questions was designed.
to be completed by about 5000 executives. Seven key findings led to the
conclusion that, in corporations, the chief executives should be the leaders
of planning, and that their immediate functional directors should be their team.
of planning. Dr. Otis Benepe defined a 'Chain of logic', which became
in the medullary system designed to fix the necessary link to obtain
the approval and commitment.

Values
2. Evaluate
3. Motivation
4. Search
5. Selection
6. Program

Instructor: Yasmy Castañeda Vasquez 9

 7. Act

Teacher: Yasmy Castañeda Vasquez 9

 8. Monitor and repeat steps 1, 2, and 3

We found that we could not change the team's values, nor set the
objectives for it, so we start as the first step, making the
question of 'evaluation', that is
What is good and bad about operations? What is good and
A little about the present and the future? What is good in the present is Satisfactory,
Good in the future is Opportunity, bad in the present is Lack, and bad in the future is
Threat. This is called SOFA analysis (SOFT in English).

When this was presented to Urick and Orr in 1964, at the planning seminar
long term at the Dolder Grand in Zurich, Switzerland, they changed the F to W, and it
denominating SWOT analysis.

The SWOT was then promoted in Great Britain by Urick and Orr as an exercise.
But as such, it was not useful. What was needed was to organize the matters in the
planning categories:

1.Product (what we are selling)

2. Process (how we are selling it)
Client (to whom we are selling)
4. Distribution (how we deliver it)
5.Finanzas(cuales son los precios, costos e inversiones)
6. Management (and how we manage all this)

The second step was then 'what the team must do' about the issues in each
category. The planning process was then designed through trial and error, and
finally resulted in the 17-step process, starting with the SOFT/SWOT, with
each matter registered separately on a page, called "subject of
planning.

The first prototype was tested and published in 1966, based on the locking.
made at 'Erie Technological Corp' in Erie Pennsylvania. In 1970 the prototype
was taken to Great Britain, under the sponsorship of W H Smith & Sons plc, and completed
around 1973. The operational program was used to merge the business of
milling and baking of CWS with that of J W French Ltd.

The process has been successfully used since then. By 2004, this
the system has been completely developed, and it has been tested on the problems
establish and approve realistic annual objectives without relying on consultants
external or costly resources.

The seven findings of the

research

The fundamental findings were never published because they were believed to be too ...
controversial. This is what we found:

A company is divided into two parts: the core business plus the development business.

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Teacher: Yasmy Castañeda Vasquez 10

 This was re-discovered by Dr. Peter Senge from MIT in 1998, and published in
his book The Fifth Dimension. The amount of business in development that is
convert to operational, it is greater than or equal to what the books reflect, in a
a period of 5 to 7 years. This was a great surprise and created the need for
discover a better method to plan and manage change.
Dr. Hal Eyring published his findings on 'Distributed Justice', which indicated that all

11

Teacher: Yasmy Castañeda Vasquez 10

UNPRG Course: Strategic Planning UNPRG

a person measures what they get from their work and divides it by what they contribute to it.
This ratio compares it with other people; if it is not equal, the person comes first.
re-perceives, and secondly, slows down if its additional demands are not met.
3. The introduction of a corporate planner distorts the sense of 'play.
just"at the high management levels, making the work of
corporate planner.
4. The gap between what the organization can do and what it actually does is
about
35%.
5. The highest executive supervises more in the area from which he comes. Thus, if the executive in
The boss comes from the finance department, he will supervise that department much more.
6. There is
3 factors that separate excellence from the
mediocrity
Special attention to procurement (acquisition, purchase)
Departmental plans to improve in the short term, in writing.
Continuing education for senior executives
A formal form of documentation is required to obtain approval.
for development work. In other words, the problem cannot be solved
by simply stopping planning.

In
conclusion

When organizing the SWOT issues into the 6 planning categories, one can
obtain a system that presents a practical way to assimilate information
internal and external about the business unit, outlining the short-term priorities
long term, and allowing a simple way to build a work team
that can achieve the profit growth objectives.

This method captures the approvals and collective commitments of those who
ultimately they have to do the work to reach or exceed the
established objectives. It allows the team leader to define and develop actions
coordinates y oriented a the objectives that support the objectives
generally approved among the different levels of the company's hierarchy.

Albert S
Humphrey
August 2004

Teacher: Yasmy Castañeda Vasquez

1
 CUFF FOR THE ANALYSIS PEST

It is an analysis of the external strategic macro environment in the

what the organization works .onPEST is an acronym for the factors:
Political, Economic, Social and
Technologicalfactorsofthecontext.Theseexternalfactorsaregenerally
outside of of the organization y, many times co
threats and see as opportunities.
a la
Many macro factors are specific to a country, region, city or
sector, for the such an analysis PEST will have what to take to
specifically cable for the organization in question
with the due aggregation. The number of macrofactors
it is practically unlimited. In the practice
the organization must prioritize and control the factors what
influence their sector.

Next it sample a matrix example

with elements that must be considered in each
factor

POLITICIANS ECONOMIC SOCI TECHNOLOGICAL

Regulations and Growth Distribution of Spending on
pro protection savings
mico lare nta research
environmental Din o graphy of the
to Types of Administraction

Policies interest and Labor mobility and Priority granted

fscales policies for the industry a
Normativity monetary socialChanges en the advances

overcommerce Expense theestilo

international y of New
restrictions on ésyou co Policies
public vida invent
Legislation s y
in Attitudes development
overcompliance regarding the
work the Tas a of
de subject carrer a transfer ncia
contra tos y of Unemployment professional and the Ttechnological
a
protection de the o cI
consu midores Yes o of life and
Tax Educac
ion bicycle
cage of the
Legislation in esciencia
obsolete
ción
To carry out the analysis to develop a list of factors
in each dimension. For this, the use of the
following guides to analyze each one of the factors,
where some questions are found for example for
 carry out the listing and prioritization of the the same.
Likewise, the participants they can carry out a
rain of ideas later decantation is carried out
y prioritization of factors more relevant
or significant for your company or institution.
 FACTORS
QUESTIONS
.. What new laws and/or regulations are likely to be approved and
have an impact on the sector where your company is located or
institution?

.. What budgetary changes can be expected as

reaction the
fiscal deficit delete
government?

.. What incentives could grant the

government to increase the performance of the
economy or of ours sector?

How would we benefit? with all these possibilities

changes?
LIST OF FACTORS  Impa
cto
 FACT R ES ECONOMIC
QUESTIONS
.. What are the main economic trends that are
impacting our Sector?

.. How does it affect an increase of la poverty la inflation or the

unemployment in our sector and in our organization? How
Does it affect us a decrease or an increase in these variables?

.. How do those trends affect the way students

Do you make enrollment decisions?

.. What measures could we adopt to benefit from these?

changes and trends?

¿Qué OF
LIST podríamos
FACTORShacer par
 evitar los cambios que tienen un Impa
cto
 FACTORS
QUESTIONS
.. How is the 'wave' affecting ve rof " to our sector and to our
company and organization?

.. What
é new trends regarding lifestyles are perceived
in the population that benefit or harm our company and
organization ?

.. How do labor sector demands affect our sector?

organization?

.. What
é measures we could introduce for a beneficiaries
e de those changes and
ttrends?

¿Qu podríamos hacer para evitar los cambios qu tienen un impacto

LIST OF FACTORS  Impa
cto
UNPRG Course: Strategic Planning UNPRG

FACT R ES TECHNOLOGICAL
QUESTIONS
.. What impact does the ubiquity of the Internet have on our sector?t for
supresenci a on Cell phones and mobile devices? Whatcloud -‐
computing, web semantics a , automation?

.. What technologies are becoming prevalent among young people?

.. How has the sector assimilated those technologies?

.. What investments should we make to a take advantage of the new ones

technologies and achieve significant and sustainable savings?

.. What technologies can have a disruptive impact on our

sector?
.. What technology could a allow us to carry out aa innovation
disruptive
a and take advantage of our competitors?

LIST OF FACTORS  Impact

Teacher: Yasmy Castañeda Vasquez

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