THE ROLE OF SWOT ANALYSIS

BYMAO

Cavendish University UgandaJUNE 2011

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The Business Environment• Components

Sociocultural

Technological

Demographic

THE

ORGANIZ

ATIO

N GLOBAL

POLITICALLEGAL

ECONOMIC

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S.W.O.T.

Factors Internal to Organization

StrengthsWeakness

OpportunitiesThreatsFactors External to Organization

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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 tool4

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.

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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.

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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 7

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 loyalty8

OpportunitiesExternal 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 9

ThreatsExternal 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.

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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.

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SWOT ANALYSISThe bottom-line

Take advantage of strengths

and opportunities.

Minimize weaknesses and

eliminate threats 12

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. 13

SWOT Analysis…Who needs it?

A CompanyRevenue, cost and expense targets are

not being achieved

Market share is dropping

Industry conditions are unfavorable

Want to launch a new business venture etc 14

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 15

SWOT Analysis…Who needs it?

A Job HolderSupervisors 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

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How to do SWOT Analysis

A SWOT analysis is useful only when action plans and strategies are developed from the results.

1) Prepare Action Plans 2) Analyze Internal & External Environment3) 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

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SWOT Analysis…BENEFITS

1)Solving problems

2)Implementing change and

3)Developing strategies for achieving the organization's objectives and mission

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