ND - SWOT Analysis Lim SeiKee @ cK
SWOT analysis is a method for analyzing a business, its resources, and its environment.
SWOT is commonly used as part of strategic planning and looks at: • Internal strengths • Internal weaknesses • Opportunities in the external environment • Threats in the external environment
SWOT can help management in a business discover: • What the business does better than the competition • What competitors do better than the business • Whether the business is making the most of the opportunities available • How a business should respond to changes in its external environment
The result of the analysis is a matrix of positive and negative factors for management to address:
The key point to remember about SWOT is that: • Strengths and weaknesses • Are internal to the business • Relate to the present situation • Opportunities and threats • Are external to the business • Relate to changes in the environment which will impact the business
SWOT Analysis - Strengths Strengths are: • Things a business is good at • A characteristic giving a business an important capability • Sources of clear advantage over rivals • Distinctive competencies and resources that will help the business achieve its objectives
Examples of Potential Business Strengths • Technological leadership • Brand reputation • Distribution network • Employee skills • High productivity • Flexibility of production • High market share • Achieving economies of scale • High quality • Leadership & management skills • Research and development capabilities
SWOT Analysis - Weaknesses Weaknesses are: • A source of competitive disadvantage • Things the business lacks or does poorly • Factors that place a business at a disadvantage • Issues that may hinder or constrain the business in achieving its objectives
Examples of Potential Business Weaknesses • Cash flow problems • Undifferentiated products • Inadequate distribution • Low productivity • Skills shortages • De-motivated staff • Products at the decline stage of product life cycle • Low market share • Inefficient plant • Outdated technology • Poor quality • Lack of innovation • A weak brand name • High costs
SWOT Analysis - Opportunities • An opportunity is any feature of the external environment which creates positive potential for the business to achieve its objectives.
Potential Business Opportunities • Higher economic growth • Diversification opportunity • Deregulation of the market • Government spending programmes • Technological innovation • New demand • Market growth • Demographic change • Social or lifestyle change
SWOT Analysis - Threats • Threats are any external development that may hinder or prevent the business from achieving its objectives.
Potential Business Threats • Economic downturn • Rise of low cost production abroad • Higher input prices • New substitute products • Competitive price pressure • New market entrants • Change in customer tastes or needs • Demographic change • New regulations
Using SWOT analysis • There is no point producing a SWOT analysis unless it is actioned! SWOT analysis should be more than a list - it is an analytical technique to support strategic decisions • Strategy should be devised around strengths and opportunities
A key challenge for any business is to convert weaknesses into strengths. For example:
Activity • Form a group of MAXIMUM 6 students. • Conduct self SWOT analysis. • Present it to the class after 30 mins discussion.
ENTREPRENEUR? A: Takes the initiative in trying to exploit a business opportunity B: Takes time to understand and calculate the risks involved C: Makes an investment to set up the business D: Goes ahead, despite the risk that the business venture might fail
Q&A - What are the characteristics of successful entrepreneurs? • Much research has been done to examine the personality and other characteristics of successful entrepreneurs to see if there is a proven method or route to success. • You will find many lists of “what is takes to be an entrepreneur”, but they tend to say similar things. So here is a summary of the key findings!
Successful entrepreneurs tend to have one or more of the following characteristics: • Passionate about their product or service and about getting things right for the customer • Visionary – they have faith in what they are trying to do. • Energetic and driven– prepared to work consistently long hours, especially in the early stages
Calculated risk-takers– not reckless; they are prepared to take a risk in order to maximize the rewards • Multi-tasker – able to take on more than one role (product development, selling, recruitment) • Resilient and determined– able to handle problems and overcome hurdles. Setting up a business is difficult and time-consuming
Results-orientated – take pleasure from achieving targets and setting the bar higher. • Persuasive – entrepreneurs are good at bringing other people and businesses “along with the idea” • Leadership – an entrepreneur leads his or her own business (often working alone in the early stages). As the business develops, the skills of leading others become even more important
Self-starting and decisive – they don’t wait for others to take decisions. Entrepreneurs tend to take the initiative, spotting opportunities early and taking decisions quickly • Focused – sets clear goals and self-imposed high standards • Lucky – not to be laughed at! Every business needs some good luck – e.g. being in the right place at the right time.
The important thing to remember about the list is that an entrepreneur is unlikely to possess all these characteristics! • Anyone who starts a business has strengths and weaknesses. • However, the savvy entrepreneur recognizes where his/her weaknesses lie and takes steps to address them (e.g. recruit someone with the right skills).
Assignment #1 • Work in a group of MAXIMUM 6 students. • Presentation title: “A successful entrepreneur” • Presentation date: 9th / 23rd / 30th MAY 2013 *MAX 3 GROUPS /SESSION* • Points to remember: • Show up early, Proper Introduction, Clear and Concise Points, Enhance your graphics, Conclude the presentation. • Time: 15 – 20 minutes. • REPORT DUE: 1st JUNE 2013