SWOT Analysis

Group 1. Azamu Shahiullah Prottoy

ID 11146018

2. Chandan Sarkar ID 1146003

3. Md. Ashiqur Rahman

ID 11146011

4. Sumayea Kabir Saba

ID 13146068

[BUS 101 SECTION 13]

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Table Of Contents

1. Definition of SWOT Analysis

2. Background and History of the SWOT Analysis

3. Strengths

4. Opportunities

5. Weakness

6. Threats

7. Strategies from SWOT Analysis

8. Addressing of SWOT Analysis

9. When to use SWOT Analysis

10. Importance

11. Benefits and Limitation

12. Case Study

13. References

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1. DEFINITION of 'SWOT Analysis'

A tool that identifies the strengths, weaknesses, opportunities and threats of an organization.

Specifically, SWOT is a basic, straightforward model that assesses what an organization can

and cannot do as well as its potential opportunities and threats. The method of SWOT

analysis is to take the information from an environmental analysis and separate it into

internal (strengths and weaknesses) and external issues (opportunities and threats). Once this

is completed, SWOT analysis determines what may assist the firm in accomplishing its

objectives, and what obstacles must be overcome or minimized to achieve desired results.

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SWOT analysis is a management tool used to identify strategies for success. It may be used

to guide individual thinking, group discussion, or a large, formal planning process. It is

widely utilized by companies as part of their strategic planning process, but it can be used by

any group or individual seeking improvement.

SWOT analysis begins by focusing on each topic to identify and analyze all ideas related to

it. For example, employees might spend 30 to 60 minutes brainstorming and discussing their

company’s strengths. They would repeat this process to discuss the weaknesses,

opportunities, and threats for the company as well. After the analytical phase, they begin a

creative discussion of these topics. In this part of SWOT analysis, they brainstorm new ideas

to take greater advantage of strengths and opportunities, and to minimize weaknesses and

threats. Management might then use these ideas to help build a strategic plan for growth over

the next year. The key to using this process successfully is to foster an open and honest

atmosphere for self-analysis. This can include a group brainstorming session or a personal

self-assessment.

Strengths and weaknesses tend to be ‘Internal’ characteristics of the company, such as

location, price, or brand awareness. Opportunities and threats tend to be ‘External’

characteristics, coming from competitors or customers.

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2. Background & History of the SWOT Analysis

The origins of the SWOT analysis technique is credited by Albert Humphrey, who led a

research project at Stanford University in the 1960s and 1970s using data from many top

companies. The goal was to identify why corporate planning failed. The resulting research

identified a number of key areas and the tool used to explore each of the critical areas was

called SOFT analysis. Humphrey and the original research team used the categories “What

is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present

is a Fault and bad in the future is a Threat.”

In 1964 Urick and Orr at a conference changed the F to a W, and it has stuck as that, soFt to

sWot. Some researchers reference the 1965 publication “business Policy, text and cases” by

Learned, Christensen, Andrews and Guth (from Harvard University) in which a framework is

used which closely resembles a SWOT analysis, however these words are not used and

certainly the framework is not described as succinctly as we know it today. In this book the

terms used are:

a) Opportunities,

b) Risks,

c) Environment &

d) Problems of other industries.

In fact these authors reference a course note from K R Andrews “a concept of corporate

strategy “for much of the strategy framework. On its own, it is said that a SWOT analysis is

meaningless. It works best when part of an overall strategy or in a given context or situation.

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3. Strengths

Questions need to be asked are

What advantages does your organization have?

What do you do better than anyone else?

What unique or lowest-cost resources can you draw upon that others can't?

What do people in your market see as your strengths?

What factors mean that you "get the sale"?

What is your organization's Unique Selling Proposition (USP)?

Consider strengths from both an internal perspective, and from the point of view of

customers and people in market. Also, if having any difficulty identifying strengths, writing

down a list of organization's characteristics. When looking at strengths, thinking about them

in relation to competitors. For example, if all of competitors provide high quality products,

then a high quality production process is not a strength in organization's market, it's a

necessity.

Examples of strength analysis,

1. Strength analysis of a Pharmaceutical company (Botanical Botany)

Consistent Quality – Production of high quality medicinal plants.

Saleable plants – Producing a high ratio of healthy plants.

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Experience – Co owners having a strong combination of business development and

horticulture experience.

2. Strength analysis of NovOculi

NovOculi, Inc. is a start-up company that has designed—and plans to develop and market–

ophthalmological surgical tools and a unique method of incisionless refractive correction

dubbed NICS (Non-Invasive Corneal Sculpting)

Patented Technology – Patents on NICS and two novwl devices.

FDA approval – No need to wait for approval.

Principal Expertise – Principals having extensive experience with refractive

correction techniques.

4.Opportunities

A useful approach when looking at opportunities is to look at company’s strengths and find

out whether these open up any opportunities. Alternatively, looking at their weaknesses and

ask themselves whether they could open up opportunities by eliminating them. And to find

out a company’s opportunities an analyzer must go for the answers of below questions.

a. What good opportunities can you spot?

b. What interesting trends are you aware of?

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Useful opportunities can come from such things as:

a. Changes in technology and markets on both a broad and narrow scale.

b. Changes in government policy related to your field.

c. Changes in social patterns, population profiles, lifestyle changes, and so on.

d. Local events.

Example –

Android OS have some opportunities like –

a. They can easily boost up their sale because all mobile networks support their OS.

b. Their share will be doubled up within next three years from the present state of 35%

market share.

c. Android OS is developer friendly which result in development of advanced apps

compared to other OS.

d. Better handset layout, storage, connectivity, messaging, multiple languages support, web

browser, Java support, Multi touch, tethering, screen capture and some of the highlights

of android OS.

e. Because of their cheaper rate sells increase in developing countries.

f. Android OS is compatible to other devices.

Now these opportunities of Android OS are threats to Apple IOS. If Apple Company can

understand these threats which are rise from the weakness of IOS, they can easily overcome

these threats by converting their weakness into their opportunities.

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5. Weakness

Weaknesses are areas capable of improvement. From weaknesses, we get to know

Whether a business is lacking skills or new products?

Do it has a higher cost base or lower productivity than other competitors?

Can the strategy be better?

What can be avoided?

What causes problems or complains?

Weakness as an (Internal factors)

Absence of important skills

Weak branding and reputation

Poor access to distribution

Low customer retention

Unreliable product/service

No clear strategy

Lack of management depth and talent

Some mega projects which are costly and complex

Online presence of competitors

Limited human resources

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As examples we can mention about

a. “Botanical Bounty” – an Oregon based perennialfarm that grows a variety of botanical

medicinal plants. This family owned farm has been in existence for two years, initially operating

as a hobby for the owners- who have training in planet biology rather than a profit producing

business.

Weakness found in SWOT analysis for Botanical Bounty

1. Lack of funding: They will need to borrow $100,000 in funds for the first year.

2. No reputation yet.We haven’t established ourselves as a reputable grower in the botanical

market.

3. Limited human resources as it is a family owned farm.

4. Less branding of the farm.

5. There are lot of competitors online to reach the customers and here they kept behind.

b. Incepta Pharmaceutical Ltd is a leading pharmaceutical company in Bangladesh established in

the year 1999. SWOT analysis has been done on this company and the weaknesses found are

given below

1. Patent law is not updated to accommodate benefits of LCDs. In Bangladesh patents are more

prohibited under patents and Drugs Act 1911 as amended for time and patents and Drugs Rules

1933. In order to make best use of compulsory licensing and parallel imports, recent patent law

needs to be updated.

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2. A Task Force was created comprising members from EPB , Drug Authority , Ministry of

commerce, NBR, Bangladesh Bank , Income Tax , Customs and so many but unfortunately this

committee could not work up to the level requirement.

3. Dependency on imported raw materials or absence of API plants.

4. Absence of international standard quality control and testing laboratory.

5. Absence of bio-equivalence testing and clinical facilities.

6. Inadequate knowledge on TRIPS and trade related matters.

7. Little research and development on new molecule development etc.

6. Threats

Elements in the environment that could cause trouble for the you to achieve objective or

goal.

External factors, beyond an organization’s control, which could place the organization

mission or operation at risk.

The organization may benefit by having contingency plans to address them if they should

occur.

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Classify them by their “seriousness” and “probability of occurrence”.

Questions to be asked for threat analysis

What obstacles do you face?

What are your competitors doing?

Are quality standards or specifications for your job, products or services changing?

Is changing technology threatening your position?

Do you have bad debt or cash-flow problems?

Could any of your weaknesses seriously threaten your business?

A threat can be

a. Unfavourable regulation changes

b. A new entrant into the market

c. Problems with the economy

d. Market shrinkage

Examples of threat analysis

a. Threat analysis example for a Cosmetics manufacturer might include

New ‘affordable luxury’ entrants to the market threatening to take share from premium

brands

Major competitor planning to integrate vertically and sell direct to the consumer

Rise in popularity of nail spas leading to decline in demand for nail products

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b. Threat Analysis of a Pharmaceutical Company may include

Generally within the main pharmaceutical companies there is a high level of competition

for the generics markets where patents finish and it is the first to entry where success will

generally be determined.

Technological developments with bio-tech concepts will potentially move the traditional

pharmaceutical methods out of the market place in the long term although there is an

economical argument that this form of development can be segregated to run alongside

traditional methods and complement as opposed to replace.

c. Threat analysis for a Carpet company can be

Move towards less carpet and more diverse types of flooring

Consumers are more price conscious in the down economy

Competition from online only stores that don’t have the same overhead costs

Better flooring materials is increasing the time span between flooring changes.

d. Threat analysis of Small Management Consultancy can be

Large consultancies operating at a minor level

Other small consultancies looking to invade the marketplace

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7. Strategies from SWOT analysis or SWOT matrix

Matching strengths to opportunities - S-O or Maxi-Maxi strategy. Indicates using a

strength to maximise an opportunity.

Matching weaknesses to opportunities - W-O or Mini-Maxi strategy, Improving

capability to maximise an opportunity.

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Matching strengths to threats - S-T or Maxi-Mini strategy, Minimising a threat with a

strength.

Matching weaknesses to threats – W-T or Mini-Mini strategy, Minimising weaknesses

and threats at same time.

8. Addressing of SWOT analysis (Beginning of decision making process)

Matching and converting

Traditionally the way to address the weaknesses and threats from a SWOT analysis is to

match and convert them.

Matching

Matching involves taking your strengths and seeing if they line up with any of your

opportunities. For example, one of Wolfram and Harts opportunities is that despite the fact

two competitors have recently relaunched their websites, the general standard of site is very

poor. When matched with Wolfram and Harts lack of budgetary constraints and internal buy

in about improving the site, there is an exciting chance to pass the competition online.

Equally Wolfram and Harts experience in the technology sector, combined with this sectors

heavy use of online tools, creates an opportunity to better engage this audience.

Converting

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The other tactic for addressing weaknesses and threats is to look for chances to convert these

into opportunities or strengths. This is easy to say but not so easy to do. However it is

possible. I can give a real example of this relating to the Wiltshire Farm Foods website. They

had a serious weakness because they used a franchise model. These regional franchises could

set their own prices and so it was impossible to show users a price until they had given the

site their postcode. Users were forced to enter the postcode before seeing anything on the

site. Obviously this was a major weakness. The original Wiltshire Farm Foods site had a

serious weakness in that it required users to enter a postcode before entering the site. Now

this weakness is turned into an opportunity by taking the following steps…

Now it showed the highest price to users when they arrived on the site, allowing them to

immediately see products and a price. Once they enter a postcode and if the price is lower, it

tell the user they have received a lower rate (making them happy).

When they enter a postcode they are given information on their local franchisee, including a

telephone number, name and photo. The elderly audience that buy from Wiltshire Farm

Foods loved this because they worry about dealing with a large faceless organization, but feel

reassured if they know their local supplier. They turned their weakness into strength by using

post code entry as a way of meeting your local franchisee. Obviously, it is not always

possible to change a weakness or threat into an opportunity. Where it is impossible, the

alternative is to minimize its effect.

9. When to use SWOT

A SWOT analysis can be used to:

Explore new solutions to problems

Identify barriers that will limit goals/objectives

Decide on direction that will be most effective

Reveal possibilities and limitations for change

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To revise plans to best navigate systems, communities, and organizations

As a brainstorming and recording device as a means of communication

To enhance “credibility of interpretation” to be utilized in presentation to leaders or key

supporters

10. Importance of SWOT Analysis

The importance of SWOT analysis lies in its ability to help clarify and summarise the key

issues and opportunities facing a business. Value lies in considering the implications of the

things identified and it can therefore play a key role in helping a business to set objectives

and develop new strategies. The ideal outcome would be to maximise strengths and minimise

weaknesses in order to take advantage of external opportunities and overcome the threats.

For example, the environment may present an opportunity for a new product but if the

company does not have the capacity to produce that product it may either decide to invest in

new plant and machinery or to just steer clear.

11. Benefits and limitations of SWOT analysis

SWOT (strengths, weaknesses, opportunities and threats) analysis can help a company

identify and understand key issues affecting their business, but it does not necessarily offer

solutions. So a company should be aware of the limitations as well as the benefits of a SWOT

analysis before they decide to conduct one. Knowing what they can reasonably expect to

achieve will make the SWOT analysis more useful for their business, and will save their

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time. Ultimately, they must be prepared to spend the time to review their SWOT analysis and

use it to determine the best way forward in their business.

Benefits of SWOT analysis

a. The main advantages of conducting a SWOT analysis is that it has little or no cost -

anyone who understands their business can perform a SWOT analysis.

b. A company can also use a SWOT analysis when it doesn't have much time to address a

complex situation. This means that a company can take steps towards improving their

business without the expense of an external consultant or business adviser.

c. Another advantage of a SWOT analysis is that it concentrates on the most important

factors affecting a company’s business. Using a SWOT, one can: understand their

business better address weaknesses deter threats capitalize on opportunities take

advantage of their strengths develop business goals and strategies for achieving them.

Limitations of SWOT analysis

a. While conducting a SWOT analysis, a company should keep in mind that it is only one

stage of the business planning process. For complex issues, business companies usually

need to conduct more in- depth research and analysis to make their decisions.

b. Keep in mind that a SWOT analysis only covers issues that can definitely be considered a

strength, weakness, opportunity or threat. Because of this, it's difficult to address

uncertain or two-sided factors, such as factors that could either be a strength or a

weakness or both, with a SWOT analysis (e.g. a company might have a prominent

location, but the lease may be expensive).

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c. A SWOT analysis may be limited because it doesn't prioritize issues doesn't provide

solutions or offer alternative decisions can generate too many ideas but not help you

choose which one is best can produce a lot of information, but not all of it is useful.

12. Case Study

Below we are showing the SWOT analysis report of Samsung Electronics Co., Ltd. of 2013

Samsung SWOT analysis 2013

Strengths Weaknesses

1. Hardware integration with

many open source OS and

software

2. Excellence in engineering and

producing hardware parts and

consumer electronics

3. Innovation and design

4. Focus on environment

1. Patent infringement

2. Too low profit margin

3. Main competitors are also

largest buyers

4. Lack its own OS and software

5. Focus on too many products

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5. Low production costs

6. Largest share

7. Ability to market the brand

Opportunities Threats

1. Growing India’s smartphone

market

2. Growing mobile advertising

industry

3. Growing demand for quality

application processors

4. Growth of tablets market

5. Obtaining patents.

1. Growing Smart phone markets

in developed countries

2. Rapid technological change

3. Declining margins on hardware

production

4. Breached patents

5. Apple’s iTV launch

6. Price wars

Business description

Samsung Electronics, Co., Ltd., a part of Samsung Group, is the world’s largest technology

company by revenues. The company produces consumer electronics, telecoms equipment,

semiconductors and home appliances. Samsung Electronics business is divided into three

divisions:

Consumer electronics. Visual Display Business, Digital Appliances Business, Printing

Solutions Business and Health & Medical Equipment Business.

IT and Mobile communications. Mobile Communications Business and Networks

Business.

Device solutions. Memory Business, System LSI Business and LED Business.

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The company is the world’s largest mobile phone and smartphone vendor. It is the largest

memory chip maker and the largest TV manufacturer. Company operates in 80 countries,

where it sells more than 100 products.

Strengths

1. Hardware integration with many open source OS and software. Samsung is focused

on producing devices which can be integrated with most of the software and OS. This

gives Samsung products an edge over Apple’s (its arch rival) devices, especially as

Android and other OS are gaining market share when iOS and OS X are losing it.

2. Excellence in engineering and producing hardware parts and consumer

electronics. Samsung is the number 1 by market share in televisions and mobile phones

sales and some of the hardware parts (processors, memory chips, etc.). This was largely

achieved due to excellence in engineering and both efficient and effective production.

3. Innovation and design. In 2011, Samsung ranked second on the list of US top patent

assignees. More patents strengthen Samsung position among its competitors. The firm

also won many awards for the design of its products, proving the superior advanatage

over the competitors.

4. Focus on environment. Samsung focuses on producing environment friendly products

that are free from PVC and BFRs (currently only MP3 and mobile phones). It also

develops various recycling programs that are awarded for their success. Thus, Samsung’s

focus on environment gives it an edge over its competitors in the eyes of its customers.

5. Low production costs. The company has set up its production facilities in low cost

countries. This allows producing goods with low production cost and benefit Samsung as

it can offer lower price and earn higher margins.

6. Largest share in mobile phones and 2 place in smartphones sales in the

world.Samsung Electronics have achieved large market share in many products they sell,

especially in mobile phones, smartphones, semiconductors and television sets. Large

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market share has its advantage, bargaining power, that Samsung can use to further reduce

costs and demand for better contract conditions.

7. Ability to market the brand. Samsung is named as top rising brand by Interbrand and is

the 9th most valuable brand with value nearly $33 billion. It has risen by 40% from 2011

to 2012. This was mainly achieved due to company’s ability to market the brand in

sporting events and social contributions.

Weaknesses

1. Patent infringement. Samsung is infringing Apple’s and some other firms’ patents, thus,

damaging its reputation and having to pay a huge amount of money in damages.

2. Too low profit margin. Samsung Electronics is the largest technology business in the

world in terms of revenues but it has a low gross profit and net profit margins. Although

its smartphones business is quite profitable, Samsung’s profit margin is low due to its

semiconductors sales and aggressive price cuts.

3. Main competitors are also largest buyers. Apple, Sony, Dell, HP are the main buyers

of Samsung Electronics products as well as the firm’s main competitors. Such situation

would be favorable to Samsung (if competitors could not find complementary products

and would form a relatively low share Samsung’s revenues) because it could use its

bargaining power over competitors. Due to reverse conditions (competitors can find

complements and they form a relatively high share of firm’s revenues) Samsung cannot

use its bargaining power over competitors as it can easily lose its customers and sales.

4. Lack its own OS and software. Software and OS production has a high profit margin,

can increase integration of company’s products and brand loyalty. Without strong

software and OS Samsung is at disadvantage over its competitors.

5. Focus on too many products. Samsung Electronics serves 4 different industries with

many different products in them. Samsung is at disadvantage over its competitors

because it loses a focus when competing in too many industries and too many products.

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Opportunities

1. Growing India’s smartphone market. India’s smartphone market is one of the least

penetrated among Asia/Pacific countries. Samsung has a strong presence in India’s

market and could use this opportunity to expand its sales.

2. Growing mobile advertising industry. The company could develop advertising

platform for its mobile devices and significantly benefit from this lucrative market.

3. Growing demand for quality application processors. Samsung is one of the key

manufacturers of application processors for smartphones and tablets. The growing

demand for these products requires more best quality application processors that only

Samsung provide.

4. Growth of tablets market. Tablets market is expected to grow in double digits over the

next few years. Samsung business has a strong position in tablets market and could

expand it by introducing newer, better quality tablet models, such as its current galaxy

line.

5. Obtaining patents through acquisitions. The key to Samsung’s competitive advantage

is the large portfolio of patents. Patents can be discovered by engaging in costly R&D or

through acquisitions of other firms.

Threats

1. Saturated smartphone markets in developed countries. Smartphones market in the

developed economies is saturated and the sales will not be growing at a high rate.

2. Rapid technological change. The serious threat that Samsung and the other tech

companies are facing is a rapid technological change. Companies are under the pressure

to release the new products faster and faster. The one that cannot keep up with the

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competition soon fails. This is especially hard when the business wants to introduce

something new, innovative and successful.

3. Declining margins on hardware production. Samsung is the second largest

semiconductors producer where the profit margins are very thin, thus weakening the

whole company's figures.

4. Breached patents. Samsung Electronics has many patents which are often used by its

many competitors. Such situation makes it hard to find out which companies benefit from

Samsung’s technology but do not pay for the rights to use it.

5. Apple’s iTV launch. Apple’s iTV is the next big lunch from Apple, which may hurt

Samsung’s TV sales.

6. Price wars. Samsung has a very low gross margin on many of its products and is already

selling some of them with significant price cuts. Competitors could follow price cutting

strategy too and induce price wars, which would erode Samsung’s profit margin to 0%!

13. References

1. http://www.investopedia.com/articles/investing/101414/examples-using-swot-analysis-

get-out-thinking-rut.asp

2. http://www.mindtools.com/pages/article/newTMC_05.htm

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3. http://www.investopedia.com/search/default.aspx?q=Swot%20Strength%20Weakness%2

0Opportunities%20and%20Threats&from=related

4. http://www.strategicmanagementinsight.com/swot-analyses/samsung-swot-analysis.html

5. http://www.investopedia.com/search/default.aspx?q=swot

6. Interbrand (2012). Best Global Brands 2012.

Available at: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-

Brands-2012.aspx

7. IDC (2012). China to Overtake United States in Smartphone Shipments in 2012.

Available at: http://www.idc.com/getdoc.jsp?containerId=prUS23668012

8. Guardian (2012). Galaxy sends Samsung profits sky high. Available at:

http://www.guardian.co.uk/technology/2012/oct/26/samsung-galaxy-profit-sharesAsdf

9. Wikipedia (2012). Samsung Electronics. Available at:

http://en.wikipedia.org/wiki/Samsung_Electronics#Business_areas

10. http://www.essay.uk.com/business-resources/swot-analysis-database/johnson-johnson-

swot-analysis.php

11. http://www.investopedia.com/articles/investing/101414/examples-using-swot-analysis-

get-out-thinking-rut.asp

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