SWOT Analysis

Growth for a tourism firm seldom occurs all on its own. Very few tourism
firms are in the position of being in exactly the right place at the right time. More
often, growth is a persistent dedication to striving for pre-established goals and
objectives. In order for these goals be to realized, a tourism firm dedicates itself to
rigorous planning with the goal set constantly in mind. The plan, then, is the engine
that drives the marketing department (and the rest of the firm) towards its goals.
But the plan is not functional unless it is based on a reasonable set of assumptions
and premises. In other words, it is hardly reasonable to develop a plan that will not
be attainable due to existing competitive pressures or environmental situations.
The first thing that many tourism firms do in the planning process is to
complete a SWOT analysis. SWOT stands for Strengths, Weaknesses,
Opportunities and Threats, and may also be known as the strategic audit or
situational analysis. It is a methodical examination and evaluation of the internal
and external operating environment of the firm. A strong SWOT analysis is derived
basically by asking numerous questions about the factors that may affect the
tourism firm. The main focus point of a SWOT analysis is illustrated by the
questions in Table 10.2, the results of which would then be used to ascertain the
implications these different factors have for the business strategy.

Internal analysis

Internal factors of the strategic audit are the factors that can be most readily
influenced by the firm. Funding available for investments, capabilities,
technologies, knowledge and capabilities of personnel, tourist product line and
assortment, strength of the marketing plan, sales-force ability and corporate
reputation are all variables which the tourism firm can control. A SWOT analysis
should above all be realistic: it is easy to come up with an analysis that assuages
everyone’s ego by telling them what they want to hear. In fact, it is human nature to
rationalize that all of last year’s effort resulted in success. But covering up areas of
weakness only hurts the tourism firm in the long run. By accurately assessing the
strengths and weaknesses, opportunities and threats, the tourism firm can then best
determine how to allocate necessary resources and to locate areas of potential
vulnerability.
The internal analysis leads us towards building a tourism company profile.
This profile is a snapshot of where the tourism firm stands at that particular time. It
is an easy-to-understand graphic representation of the internal situation of the
tourism firm and how it compares with the competition. You can quickly gauge
how potentially successful this particular tourism company can be in its market
(Poon, 1993).

External analysis: the world outside the tourism firm

After the tourism firm takes a long look in the mirror at itself, it must turn its
focus on the outside world. This is important since marketing strategies and plans
are derived based partially on what the competitive and regulatory environment
allow a tourism firm to reasonably accomplish. The external analysis should focus
on identifying the trends of the environment and how they influence or affect the
tourism firm. Hope- fully, trends or market movements will emerge that will allow
the firm to be pre- pared in advance (being proactive). For instance, a tourism firm
interested in moving into tourist product line A should certainly be aware of any
changes in consumer behavior that may have an impact on the long-term demand
for tourist product A. Watching trends in consumer behavior, competitive
movements and regulatory actions allow tourism firms to avoid or take advantage
of certain situations that may have not been apparent to the casual observer, thereby
increasing the tourism firm’s competitive position or minimizing its exposure to
potential problems. Recognizing the trends that are vital to a successful SWOT
analysis is much easier if the mission of the firm is more clearly defined, since the
corporate mission more narrowly focuses the arena of analysis. In other words, it is
clearly easier to find some- thing if we have been told just where to look in general,
plus it prevents us from getting side-tracked and devoting too much time and
energy to considering areas that are not important to the tourism firm.
While our internal search centered around the identification of internal,
tourism firm- specific capabilities and development (‘internal trends’ to a certain
degree), the external search will look more closely at (environmental) opportunities
that may exist. By looking outwards, tourism firms may see gaps (opportunities) in
the market that other firms have not covered, or gaps that are about to open due to
regulatory changes, competitor action or social or economic movements. For
instance, the tourism firm that can spot a coming recession may begin to focus on
value-based promotions and tourist products sooner than its competitors. Also, it is
interesting how a potential threat can quickly be turned into an opportunity for the
tourism firm based on swift ‘proaction’, a skill which will be of increasing
importance as tourist product life cycles shrink (time-wise) and competition
intensifies.
Once the SWOT analysis has been completed, a tourism firm has a strong
picture of what its capabilities and vulnerable areas are, where it stands in the
market when compared with the competition and what potential trends and
opportunities may impact the tourism firm. On this information, a marketing plan
can then be more accurately formulated.
 Goal Formulation
Once the tourism firm has determined where they stand in the market based
on an evaluation of their strengths and weaknesses, they can more readily set goals.
The tourism firm’s goals are basically the level of achievement that they want to
attain in a certain area. Not only does the tourism firm itself have goals, but the
individual departments within the firm will have goals as well, in fact, as we reach
deeper into the organization, we find that the goals become more specific and
detailed (going from a more strategic nature to a more tactical nature). For instance,
a major tourism holding company may have a goal to grow by 12% within the next
calendar year. This may translate into a goal for Division A to grow by 12% within
their tourist product market, and the resulting marketing- department goal may be
to grow by 12% within a certain tourist product line targeted at a certain group of
customers. The sales goals of this corporation may also hinge on the overall goal.
Not only would the sales department have a specific goal, but each sales market
and each sales representative within the territory may have individual goals for
individual customers.
Goals are effective only in certain cases, and many goals, if formulated
incorrectly, may even detract from the success of the operation. For a goal to be
effective, a few things should be kept in mind.
1. The goals should be measurable in enough detail to give meaning and
direction to those attempting to achieve the goal.
2. The goals should be achievable. No one benefits from goals that are set
beyond reasonable attainment. When goals are known to be unreasonably
high or even ‘impossible’ to obtain, then people will sometimes even work
less at trying to achieve them because of their impossible nature.
3. Both long-term goals and short-term goals should be developed. Although
the present is important, tourism firms must constantly know down which
path they are travelling to the future, and make sure present goals and actions
are working towards the realization of the future ones.
4. The goals should be ordered in terms of priority to the tourism company. If
different divisions are all chasing widely divergent goals, inefficiencies
through a lack of coordination may be experienced as a result. This is the
case where one department (i.e. finance) puts its goals first and ignores the
needs of other

Examples of badly formulated goals

Long term
Our goal is to develop a leading tourist product development position in the
industry
Short term
Our goal is to increase sales in 2000

Examples of well-formulated goals

Long term
Our goal is to devote at least 20% of gross profit to research between 2000 and
2002, resulting in at least five new tourist products introduced in the market by the
end of 2002.
Short term
Our goal is to broaden our market share in 2000 from 21% to 25% by opening 22
new travel agencies and increasing our advertising budget by 15% departments (i.e.
marketing) which is detrimental to the tourism firm’s overall well-being in the end.
STRENGTHS WEAKNESSES
Differentiation possibilities? No clear strategic orientation?
Sufficient financial resources? Worsening competitive position?
Appropriate competitive strategy? Ageing facilities?
Good reputation with your clients? Insufficient profit from . . . ?
A known market leader? Lack of management insight and experience?
Brilliant strategy for each functional area? Shortage of specific skills?
Possible scale advantages? Bad experience with the implementation of the
Protected (so far as possible) from strong strategy?
competitive pressure? Plagued by internal operational problems?
Unique technology cost advantages? Vulnerable to competitive pressure?
Competitive advantages? Bad image in the market?
Capacity for product innovation? Disadvantages compared with competitors?
Proven management skills? Less-than-average marketing skills?
Other strong points? Not in a position to finance the necessary
changes in strategy?
Attractions - Castles, River Suir, Heritage Other weak points?
Centres, Mountains
Access - Roads, Rail (some areas) Marketing
Airports Litter
Central Location Signage - Directional, Place names, attractions,
Crafts amenities
Accommodation Architectural landscape of villages and towns –
Activities - Golf, walking, racing, equestrian, being lost
fishing?) Lack of coordination between the people /
Not Overdeveloped Local
Friendliness Authorities / Tourism groups / Tourism
Hospitality providers
Rural Inconsistent implementation of Planning
Heritage towns regulations - unfinished walls
Ribbon Development
Input of County Council into the Tidy Towns
Dependence on voluntary labour
Undependable provision of materials through
local authorities for voluntary groups
Poor roads
Number of unregistered providers
No Conference centre
Underdevelopment of waterways
Effluent - Farm, Industrial, domestic
Poor food culture
Insurance for walking amenities
Hotel accommodation
Corridor tourism
Lack of full time to
Local authority lack of commitment to tourism
No tourism leadership
 Public conveniences
Unapproved operators in the tourism industry

OPPORTUNITIES THREATS
Potential new markets or segments to enter? Possible entrance of new competitors?
Expansion of the tourist product assortment? Decreasing market growth?
Diversification into related products? Negative government influence?
Vertical integration? Growing competitive pressure?
Possibilities to move towards a better strategic Vulnerable to recessions and other economic
group composition? trends?
Contact with competitors? Strengthening in the negotiation position of
Fast(er) growth in the market? customers and suppliers?
Other opportunities? Changing wants and desires of buyers?
Threatening demographic changes?
Develop Food Culture Other threats?
New Roads, bypasses
Coordinated planning Other counties getting stronger
County Development Plan New road system
County Tourism Committee Tourism industry fails to act
Marketing the county/Branding Competition
Other areas of the country strengthening at a
faster rate
Euro ease of comparison of cost with other EU
countries
Insurance