Meaning /Introduction : SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats

involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at the Stanford Research Institute (nowSRI International) in the 1960s and 1970s using data from Fortune 500 companies Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization. Strengths: characteristics of the business, or project team that give it an advantage over others Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative to others Opportunities: external chances to improve performance (e.g. make greater profits) in the environment Threats: external elements in the environment that could cause trouble for the business or project Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs. First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated. Users of SWOT analysis need to ask and answer questions that generate meaningful information for each category (strengths, weaknesses, opportunities, and threats) in order to maximize the benefits of this evaluation and find their competitive advantage.

Purpose/Need : Its central purpose is to identify the strategies that will create a firm-specific business model that will best align, fit, or match a companys resources and capabilities to the demands of the environment in which it operates. Strategic mangers compare and contrast the various alternative possible strategies against each other with respect to their ability to achieve major goals and superior profitability. Thinking strategically requires mangers to identify the set of strategies that will create and sustain a competitive advantage:

Functional-level strategy, directed at improving the effectiveness of operation within a company, such as manufacturing, marketing, materials, management, product development, and customer service. Business-level strategy, which encompasses the businesss overall competitive theme, the way it position; itself in the marketplace to gain a competitive advantage, and the different positioning strategies that can be used in different industry settings-for example, cost leadership, differentiation, focusing on a particular niche or segment of the industry, or some combination of these.

Global strategy, addressing how to expand operations outside the home country to grow and prosper in a world where competitive advantage is determined at a global level.

Corporate-level strategy, which answers the primary questions. What business or businesses should we be in to maximize the long-run profitability of the organization, and how should we enter and increase our presence in these businesses to gain a competitive advantage?

The organizations performance in the marketplace is significantly influenced by the three factors The organizations correct market position The nature of environmental opportunities and threat The organizations resource capability to capitalize the opportunities and its ability to protect against the threat.

Significance of SWOT analysis lies in the following points: It provides a logical framework SWOT analysis provides us with a logical framework for systematic and sound thrashing of issues having bearing on the business situation, generation of alternative strategies and the choice of a strategy. Variation in managerial perceptions about organizational strengths and weaknesses and the environmental opportunities and threats lead to differences in approaches to specific strategies and finally the choice of strategy that takes place through an interactive process in dynamic backdrop.

It presents a Comparative Account: SWOT analysis presents the information about both external and internal environment in a structured form where it is possible to compare external opportunities and threats with internal strengths and weaknesses. The helps in matching external and internal environments so that a strategist can come out with suitable strategy by developing certain patterns of relationship. The patterns are combinations says, high opportunities and high strengths, high opportunities and low strengths, high threats and high strengths, high threats and low strengths. In case a different strategy is needed, a situation varies.

It guides the strategist in strategy identification: it is natural that a strategist faces a problem when his organization cannot be matched in the four patterns. It is possible that the organization may have several opportunist and same serious threats. It is equally, true that the organization may have powerful strengths coupled with major weaknesses in the light of critical success factors. In such situation, SWOT analysis guides the straight to think of overall position of the organization that helps to identify the major purpose of the strategy under focus.

SWOT analysis helps mangers to craft a business model (or models) that will allow a company to gain a competitive advantage in its industry (or industries). Competitive advantage leads to increased profitability, and this maximizes a companys chances of surviving in the fast-changing, global competitive environment that characterizes most industries today.

Faced with constantly changing environment, each business unit needs to develop a marketing information system to track trends and developments, which can be categorized as an opportunity or a threat. The company has to review its strength and weakness in the background of environments opportunities and threat, i.e. an organizations SWOT analysis.

Potential resource strengths and competitive capabilities

Potential weaknesse s and competitive deficiencies

Figure: SWOT analysis: What to look for in sizing up a companys strengths, weaknesses, Opportunities and threats. A. Potential Resources Strengths and competitive capabilities:

A strong financial condition; ample financial resources to grow the business. A powerful strategy supported by competitively valuable skills and experience in key areas Strong brand name, image/company reputation.

A widely recognized market leader and an attractive customer base. Ability to take advantage of economies of scale and/or learning and experience curve effects. Proprietary technology/superior technological skills/important patents. Superior intellectual capital relative to key rivals.

Cost advantages. Strong advertising and promotion. Product innovation skills.

Proven skills in improving product processes. Sophisticated use of e-commerce technologies and processes. Superior skills in supply chain management.

A reputation for good customer service. Better product quality relative to rivals. Wide geographic coverage and/or strong global distribution capability. Alliances/joint ventures with other firms that provide access to valuable technology, competencies, and/or attractive geographic markets.

B.

Potential Resource Weaknesses and competitive deficiencies: No clear strategic direction. Obsolete facilities. A weak balance sheet, burdened with too much debt.

Higher overall unit costs relative to key competitors. Missing some key skills or competencies/lack of management depth/ a deficiency of intellectual capital relative to leading rivals.

Sub par profitability; no cost control measures or cost accounting practices. Plagued with internal operating problems.

Falling behind rivals in putting e-commerce capabilities and strategies in place. Too narrow a product line relative to rivals.

Weak brand image or reputation. Weaker dealer network than they rivals and/or lack of adequate global distribution capability. Sub par e-commerce systems and capabilities relative to rivals. Short on financial resources to find promising strategic initiatives.

Lots of underutilized plant capacity. Behind on product quality and/or R & D and/ or technological know-how. Not attracting new customers as rapidly as rivals.

C.

Potential company opportunities:

Serving additional customer groups or expanding into new geographic markets or product segments. Expanding the companys product line to meet a broader range of customer needs. Utilizing existing company skills or technological know-how to enter new product lines or new businesses. Using the internet and e-commerce technologies to dramatically cut costs/ or to pursue new sales growth opportunities. Integrating forward or backward. Falling trade barriers in attractive foreign markets. Openings to take market share away from rivals. Ability to grow rapidly because of sharply rising demand in one or more market segments. Acquisition of rival firms or companies with attractive technological expertise. Alliances or joint ventures that expand the firms market coverage or boost its competitive capability. Openings to exploit emerging new technologies. Market openings to extend the companys brand name or reputation to new geographic areas. Potential External Threats to Companys Well-being:

D.

Likely entry of potent new competitors. Loss of sales to substitute products. Mounting competition from new internet start-up companies pursuing e-commerce strategies. Increasing intensity of competition among industry rivals-may cause squeeze on profit margins. Technological changes or product innovations that undermine demand for the firms product. Slowdowns in market growth. Adverse shifts in foreign exchange rates and trade policies of foreign governments. Costly new regulatory requirements. Growth bargaining power of customers or suppliers. A shift in buyer needs and tastes away from the industrys product. Adverse demographic changes that threaten to curtail demand for the firms product. Vulnerability to industry driving forces.

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories: Internal factors The strengths and weaknesses internal to the organization. External factors The opportunities and threats presented by the external environment to the organization. The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4Ps; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix. SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is actually important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats. It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.

Use of SWOT analysis

The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include: non-profit organizations, governmental units, and individuals. SWOT analysis may also be used in pre-crisis planning and preventive crisis management. SWOT analysis may also be used in creating a recommendation during a viability study/survey.

Criticism of SWOT
Some findings from Menon et al. (1999) and Hill and Westbrook (1997) have shown that SWOT may harm performance. Other complementary analyses have been proposed, such as the Growth-share matrix.

Nokia Corporation (NYSE: NOK) is one of the worlds largest telecommunications equipment manufacturers. It has since established a leading brand presence in many local markets, and business has expanded considerably in all areas to support customer needs and the growth of the telecommunications industry. Nokia also produces mobile phone infrastructure and other telecommunications equipment for applications such as traditional voice telephony, ISDN, broadband access, professional mobile radio, voice over IP, wireless LAN and a line of satellite receivers. Nokia provides mobile communication equipment for every major market and protocol, including GSM, CDMA, and WCDMA.

SWOT Analysis of the Company: Nokia

Strengths: Nokia has largest network of distribution and selling as compared to other mobile phone company in the world. It is backed with the high quality and professional team in the HRD Dept. The financial aspect is very strong in case of Nokia as it has many more profitable business. The product being user friendly and have all the accessories one want that is why is in great demand making it No-1 selling mobile phones in the world. Wide range of products for all class. The re-sell value of Nokia phones are high compared to other companys product. Weakness: Nokia has many strengths and some weakness. Some of the weakness includes the price of the product offered by the company. Some of the products are not user friendly. Not concern about the lower class of the society people. Not targeting promotion toward them. The price of the product is the main issue. The service centers in India are very few and scare. So after sales service is not good.

Opportunity : Nokia has ample of opportunity to expand its business. With the wide range in products,features and different price range for different people, it has an advantage over the competitors around. With the opportunity like Telecom penetration in Indiabeing at the peak time, Nokia has an opportunity to increase its sales as well as the market share. As the standard of living in India has increased the

purchasing power of the people as increased as well, so Nokia has to target right customer at right time to gain the most out of the situation. Threats: Nokia has many threats to tackle to maintain its position as market leader. The threats like emerging of other mobile companies in the market. The companies like Motorola, Sony Ericsson, Cingular (U.S) etc. these companies have come to the stand of tough competition with Nokia in the field of Mobile Phones. Threats can be like providing cheap phones, new features, new style and type, good after sales service etc. So, Nokia has to keep in mind the growing competition around. Nokia has to make strategies to tackle problems in the present and the near future. The growing demand of WLL network can cause drop in sales for Nokia, as Nokia provides many less CDMA phones to the customer.