SWOT Analysis

What is SWOT Analysis?

• Acronym for Strengths, Weaknesses, Opportunities, and Threats.

• Technique is credited to Albert Humphrey who led a research project at

Stanford University in the 1960s and 1970s.

• Planning tool used to identify your business/project Strengths,

Weaknesses, and examining the opportunities and threats which may
affect you.

• Used as framework for organizing and using data and information gained
from situation analysis of internal and external environment.

• You can perform SWOT Analysis Technique Individual, groups, specific

projects and industries.
What is SWOT Analysis?
• SWOT analysis can be used to analyze your organization and its
environment.

• Carrying out a SWOT analysis can help you identify changes that can be
made to improve your business.
Strengths
• Strengths are those features of the business which allow you to
operate more effectively than your competitors.
• Characteristics of the business or a team that give it an advantage
over others in the industry.
• For example, a strength could be your specialist technical knowledge.
You need to consider your strengths from your own point of view and
from that of your customers' and clients'.
• You must be realistic and honest.
• Try answering the following questions:
• What is it that you do well?
• What advantages do you have over your competitors?
• What makes you different from your competitors?
Strengths
• Positive tangible (physical assets such as land, vehicles or
equipments)and intangible(non-physical such as trademarks,
copyrights, patents) attributes, internal to an organization.
• Beneficial aspects of the organization or the capabilities of an
organization, which includes human competencies, process
capabilities, financial resources, products and services, customer
goodwill and brand loyalty.
• Examples - Abundant financial resources, Well-known brand name,
Economies of scale, Lower costs [raw materials or processes],
Superior management talent, Better marketing skills, Good
distribution skills, Committed employees
OPPORTUNITIES
• Can you identify any new opportunities for your business? Are there
any interesting trends which you can take advantage of?
• Examples of opportunities include:
• Changes in technology and markets, e.g., the Internet
• Changes in government policy or regulations / legislation
• Local and global events
• Potential new uses of products and / or services
• Use of marketing or promotional techniques to boost the business
• Social factors, e.g., population fluctuation, lifestyle changes, etc.
OPPORTUNITIES
• Chances to make greater profits in the environment - External
attractive factors that represent the reason for an organization to
exist & develop
• Arise when an organization can take benefit of conditions in its
environment to plan and execute strategies that enable it to become
more profitable.
• Organization should be careful and recognize the opportunities and
grasp them whenever they arise. Opportunities may arise from
market, competition, industry/government and technology.
• Examples - Rapid market growth, Rival firms are complacent,
Changing customer needs/tastes, New uses for product discovered,
Economic boom, Government deregulation, Sales decline for a
substitute product .
WEAKNESSES
• Characteristics that place the firm at a disadvantage relative to
others.
• Detract the organization from its ability to attain the core goal and
influence its growth.
• 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.
• Examples - Limited financial resources, Weak spending on R & D, Very
narrow product line, Limited distribution, Higher costs, Out-of-date
products / technology, Weak market image, Poor marketing skills,
Limited management skills, Under-trained employees.
WEAKNESSES
• Weaknesses are areas capable of improvement. Are you lacking skills
or new products? Do you have a higher cost base or lower
productivity than your competitors? You must face any unpleasant
truths about your business and be realistic.
• Can you do anything better?
• Do you do anything badly?
• What should be avoided?
• What causes problems or complaints?
THREATS
• Threats can be external or internal, and are anything which can
adversely affect your business.
• External threats could be inflation, or a new competitor in your
market.
• Internal threats could include a skill or staff shortage within your
organization.
• Try answering the following questions:
• What obstacles face your business?
• What are your competitors doing?
• Are there any changes in products, services or technology which could
threaten your business?
• Do you have any financial problems such as bad debt or cash-flow difficulties?
 Aim of SWOT Analysis
• To help decision makers share and compare ideas.
• To bring a clearer common purpose and
understanding of factors for success.
• To organize the important factors linked to success
and failure in the business world.
• To analyze issues that have led to failure in the past.
• To aid decision making process by allowing complex
ideas to be presented systematically
Who Needs SWOT
How to Conduct SWOT Analysis
1. Analyse Internal & External Environment
1. Analyse Internal & External Environment
• Carrying out a SWOT analysis
• To carry out a SWOT analysis effectively, it’s a good idea to get a team together,
drawn from across the business, for a brain-storming session. Consider each of the
four SWOT areas in turn, and make note of all the ideas, suggestions and comments
which are made. These can be reviewed and edited after the brain-storming session.

• Brain-storming session
• A good method to use is to take a large sheet of paper, or a whiteboard, and split it
into four sections, as demonstrated in the following table.

Strengths weaknesses Internal Factors

Opportunities Threats External Factors

Now you need to fill the four sections with your ideas.
2. Perform SWOT Analysis & Document
 3. Prepare Action Plan
• Once you have completed your SWOT analysis, it is
essential that you make note of the following:
• What must you address immediately?
• What can be handled now?
• What needs researching further?
• What needs to be planned for the future?
• Once these have been identified, you should create an
action plan to ensure that something is done!
• Assign someone to each point and set deadlines.
• Review the results of your analysis regularly to determine
if anything has changed and what has been achieved.
Starbucks Coffee SWOT Analysis
Strengths
• Strong brand recognition
• Starbucks coffee has a very strong brand recognition as almost everyone
knows it.
• Starbucks is probably the most recognized coffee brand in the World. It is a
huge advantage regarding other companies in the coffee industry.
 Strengths
• Pleasing Environment
• Clients love the atmosphere in starbucks.
• They can use free WiFi while enjoying the coffee drinking (very close to Gelman Library).
Strengths
• All over the world
• Starbucks is present all over the world
• Clients can find starbucks even when traveling overseas. That is a strong
advantage as it ensures loyal clients can remain such even overseas.
Strengths
• Supply Chain Management
• Starbucks supply chain management ensures that the coffee served to the
customers is excellent.
• Starbucks chooses its supplier carefully, which improves the quality of its
products and ensure clients receive its super coffee experience.
Weaknesses
• Product is not customized to local tastes.
• Starbucks offers the same product in all countries, where it operates.
• It does not customize it according to the different taste of people in different
geographies
• For some customers, this is an issue and they prefer competitive products
tailored to their specific geographical preferences.
Weaknesses
• Price
• Starbucks has a premium price policy, which is not in line or not easily
affordable in all countries.
• Not all countries have enough middle and high income class individuals, who
can afford to pay extra for their coffee.
Opportunities
• Easy access to new countries
• Starbucks can access new countries easily. It needs to apply its current
business model to these new geographies.
• Emerging market can be a great source of growth for the company.
Opportunities
• Agreements with movie producers
• Starbucks explores partnership with movie producing companies (agreements
with entertainment industries). Indeed, that can be a great opportunity for
the firm too
Threats
Saturation of the US market
• One of the biggest threats for the Starbucks is saturation of the US market,
which is where most of its outlets are located.
Threats
Healthier lifestyle trends
• Consumers are investing in healthier life style and some substitute products
have better position to capture the attention of health conscious clients.
EXERCISE (Reading Assignment)

• Assume that a car manufacturing company has recently launched its

products. Perform a SWOT analysis for the same.
Harmful
McDonald’s SWOT Analysis