SWOT Analysis: Lesson

Strengths, Weaknesses, Opportunities and Threats (SWOT).

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of
planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses,
opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and
threats are external factors.

In SWOT, strengths and weaknesses are internal factors. For example:A strength could be:

Your specialist marketing expertise.

A new, innovative product or service.

Location of your business.

Quality processes and procedures.

Any other aspect of your business that adds value to your product or service.

A weakness could be:

Lack of marketing expertise.

Undifferentiated products or services (i.e. in relation to your competitors).

Location of your business.

Poor quality goods or services.

Damaged reputation.

In SWOT, opportunities and threats are external factors. For example: An opportunity
could be:

A developing market such as the Internet.

Mergers, joint ventures or strategic alliances.

Moving into new market segments that offer improved profits.

A new international market.

A market vacated by an ineffective competitor.

A threat could be:

A new competitor in your home market.

Price wars with competitors.

A competitor has a new, innovative product or service.

Competitors have superior access to channels of distribution.

Taxation is introduced on your product or service.

A word of caution, SWOT analysis can be very subjective. Do not rely on SWOT too much. Two
people rarely come-up with the same final version of SWOT. TOWS analysis is extremely
similar. It simply looks at the negative factors first in order to turn them into positive factors. So
use SWOT as guide and not a prescription.
Simple rules for successful SWOT analysis.

Be realistic about the strengths and weaknesses of your organization when conducting
SWOT analysis.

SWOT analysis should distinguish between where your organization is today, and where
it could be in the future.

SWOT should always be specific. Avoid grey areas.

Always apply SWOT in relation to your competition i.e. better than or worse than your
competition.

Keep your SWOT short and simple. Avoid complexity and over analysis

SWOT is subjective.

Once key issues have been identified with your SWOT analysis, they feed into marketing
objectives. SWOT can be used in conjunction with other tools for audit and analysis, such as
PEST analysis and Porter's Five-Forces analysis. So SWOT is a very popular tool with marketing
students because it is quick and easy to learn. During the SWOT exercise, list factors in the
relevant boxes. It's that simple. Below are some FREE examples of SWOT analysis - click to go
straight to them
Do you need a more advanced SWOT Analysis?
Some of the problems that you may encounter with SWOT are as a result of one of its key
benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be
flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis
can be addressed using a more critical POWER SWOT.

SWOT Analysis Examples

A summary of FREE SWOT analyses case studies are outlined as follows (those in the table
above are far more detailed and FREE!):
Example 1 - Wal-Mart SWOT Analysis. Strengths - Wal-Mart is a powerful retail brand. It has a
reputation for value for money, convenience and a wide range of products all in one store.
Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite
its IT advantages, could leave it weak in some areas due to the huge span of control.
Opportunities - To take over, merge with, or form strategic alliances with other global retailers,
focusing on specific markets such as Europe or the Greater China Region. Threats - Being
number one means that you are the target of competition, locally and globally.
Example 2 - Starbucks SWOT Analysis. Strengths - Starbucks Corporation is a very profitable
organization, earning in excess of $600 million in 2004.Weaknesses - Starbucks has a reputation
for new product development and creativity. Opportunities - New products and services that can
be retailed in their cafes, such as Fair Trade products. Threats - Starbucks are exposed to rises in
the cost of coffee and dairy products.
Example 3 - Nike SWOT Analysis. Strengths - Nike is a very competitive organization. Phil
Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.

'Weaknesses - The organization does have a diversified range of sports products. Opportunities Product development offers Nike many opportunities. Threats - Nike is exposed to the
international nature of trade.
Swot Analysis Infosys
Infosys is one of the largest businesses in India with a turnover in excess of $4 billion in 2008.
The company specializes in Information Technology (IT) and consulting. N.R. Narayana Murthy
and six others started the company in 1981, and it is now the largest IT company in India with its
headquarters in Bangalore (although it was started in Pune). It employs more than 90,000 IT
professionals and was famously rated 'Best Employer in India.' It operates in a number of
business sectors from banking to retail, and its services tend to encompass end-to-end IT
solutions which includes a whole bundle of added-value solutions from infrastructure to software
engineering.
Strengths

Since the company is based in India its competitive advantage is enhanced. The Indian
economy, despite weak economic indicators such as relatively high rates of inflation, has
low labor costs. The workforce has relatively high skills levels in Information
Technology. Couple these two elementstogether and you have an operational basis that
offers low-cost based, highly skilled competitive advantage. Trained Indian personnel
often speak very good English and are sensitive to Western culture, underpinned by
India's colonial past.

Infosys is in a strong financial position. The business turned over more than $4 billion in
2008. This means that it has the capital to expand, and also the basis to leverage potential
investors.

The company has bases in 44 global development centres, most of which are located in
India, although the company has offices in many developed and developing nations. This
means not only that Infosys is becoming a global brand but also that it has the capability
to support the global operations of multinational clients.

Weaknesses

Infosys on occasion struggles in the US markets, and has particular problems in securing
United States Federal Government contracts in North America. Since these contracts are
highly profitable and tend to run for long periods of time, Infosys is missing out on
lucrative business. Added to this is the fact that its competitors do well in terms of
securing the same Federal business (and one should also take into account that many of
its competitors are domiciled in the US and there could be political pressure on the US
Government to award contracts to domestic organizations).

Despite being a huge IT company in relation to its Indian competitors, Infosys is much
smaller than its global competitors. As discussed above, Infosys generated $4 billion in

2008, which is relatively low in comparison with large global competitors such as
Hewlett-Packard ($91 billion), IBM ($91 billion), EDS ($21 billion) and Accenture ($18
billion).

It is sometimes argued that Infosys is weaker when it comes to high-end management

consultancy, since it tends to work at the level of operational value creation. Competitors
such as IBM and Accenture tend to dominate this space.

Opportunities

At a time of recession in the global economy, it may appear that some companies will
reduce take up of services that Infosys offers. However, in tough times clients tend to
focus upon cost reduction and outsourcing - with are strategies that Infosys offers. So
hard times could be profitable for Infosys.

There is a new and emerging market in China as the country undergoes a huge industrial
revolution.

The strategic alliance between Infosys and Schlumberger gives the IT company access to
lucrative business in the gas and oil industries.

There has been a trend over recent years for European and North American companies to
base some or all of their operation in India. This is called an offshore service. Essentially
there is a seamless link between domestic operations and services hosted in India.
Examples include telecommunications companies such as British Telecom and banks
such as HSBC that have customer service and support centres based in India. Think about
the times that you have made calls to a support line to find that the adviser is in Mumbai
or Bangalore and not in your home market.

Threats

India is not the only country that is undergoing rapid industrial expansion. Competitors
may come from countries such as China or Korea where there are large pools of low-cost
labor, and developing educational infrastructures such as universities and technology
colleges.

Customers may switch to other offshore service companies in other countries such as
China or Korea.

Other global players have realised that India has the benefit of low-cost, highly-skilled
labor that often speaks English and is culturally sensitive to Western practices. As with all
global IT players, Infosys has to compete for skilled labor and this may have the effect of
driving up wage levels, and making it more difficult to recruit and retain staff.