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THE ROLE OF SWOT ANALYSIS

THE ROLE OF SWOT ANALYSIS

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THE ROLE OF SWOT ANALYSIS

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  1. THE ROLE OF SWOT ANALYSIS BY MAO Cavendish University Uganda JUNE 2011

  2. Demographic Sociocultural Technological The Business Environment ECONOMIC • Components THE ORGANIZATION POLITICAL LEGAL GLOBAL

  3. S.W.O.T. Factors Internal to Organization Strengths Weakness Opportunities Threats Factors External to Organization

  4. S.W.O.T. ANALYSIS1 • A technique that enables a group, an organization or individual to move from everyday problems and traditional strategies to a fresh perspective. • It is a problem solving tool • It is a re-engineering tool • It is a re-energizing/revitalizing tool

  5. S.W.O.T. ANALYSIS 2 • A SWOT analysis generates information that is helpful in matching an individual, organization or group’s • goals, • programs, and • capacities to the social environment in which it operates.

  6. S.W.O.T. ANALYSIS 3 • Factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), • Factors external to the firm can be classified as opportunities (O) or threats (T). • It is an instrument within strategic planning.

  7. Strength • Positive tangible and intangible attributes, internal to an organization. They are within the organization’s control • Any existing or potential resources or capability within the organisation that provides a competitive advantage in the market. • Strong distribution network • Intense Staff commitment and loyalty • Increasing profit margin

  8. Weakness • Any existing or potential force which could serve as a barrier to maintaining or achieving the core goal. • Which areas might the organization improve? Examples: • Lack of a clear company strategy • Lack of training opportunities for using a new software • Lack of loyalty

  9. Opportunities • External attractive factors that represent the reason for an organization to exist and develop. • What opportunities exist in the environment, which will propel the organization? Identify them by their time frames • Organizational geographic location • New technology • Emerging customer needs • Quality Improvements • Expanding local or global markets

  10. Threats • External factors, beyond an organization’s control, which could place the organization’s mission or operation at risk. It’s a danger to the company’s well-being • Classify them by their “seriousness” and “probability of occurrence”. • Possible Threats: • New entry by competitors • Changing demographics/shifting demand • Emergence of cheaper technologies • Regulatory requirements • The organization may benefit by having contingency plans to address them if they should occur.

  11. Opportunities and Threats form a basis for EXTERNAL analysis • By examining opportunities, you can discover untapped markets, and new products or technologies, or identify potential avenues for diversification. • By examining threats, you can identify unfavorable market shifts or changes in technology, and create a defensive posture aimed at preserving your competitive position.

  12. SWOT ANALYSISThe bottom-line • Take advantage of strengths and opportunities. • Minimize weaknesses and eliminate threats

  13. Simple Rules for SWOT Analysis • Be realistic about the strengths and weaknesses of your organization or group. • Distinguish between where your organization is today, and where it could be in the future • Be specific: Avoid gray areas. • Always analyze in relation to your core mission. • Keep your SWOT short and simple. Avoid complexity and over analysis • Empower SWOT with a logical conceptual framework.

  14. SWOT Analysis…Who needs it? A Company • Revenue, cost and expense targets are not being achieved • Market share is dropping • Industry conditions are unfavorable • Want to launch a new business venture etc

  15. SWOT Analysis…Who needs it? A Department/Business Unit: • When the team has not met its targets • Customer service can be better • A new business unit to pursue a new business • A new team leader is appointed etc

  16. SWOT Analysis…Who needs it? A Job Holder • Supervisors are not meeting work output targets • Assigned to a new job • New financial year – fresh targets • Job holder seeks to improve performance on the job

  17. How to do SWOT Analysis A SWOT analysis is useful only when action plans and strategies are developed from the results. • Prepare Action Plans • Analyze Internal & External Environment • Perform SWOT Analysis and Document SWOT analysis will be useful if: • You are thinking outside the box. • You need varied perspectives – group discussion • Liberty to say your mind • Willingness to break away from traditional methods • Appetite for change

  18. SWOT Analysis…BENEFITS • Solving problems • Implementing change and • Developing strategies for achieving the organization's objectives and mission