Free SWOT Analysis Generator SWOT Analysis Examples; Reports on Different Companies

SWOT analysis is also known as TOWS analysis.

Introduction
Environmental opportunities are only potential opportunities unless the organization can utilize resources to take advantage of them and until the strategic leader decides that it is appropriate to pursue the opportunity. It is therefore important to evaluate environment opportunities in relation to the strengths and weaknesses of the organization's resources and in relation to the organizational culture. !eal opportunities e"ist when there is a close fit #etween environment values and resources. $n evaluation of an organization's strengths and weaknesses in relation to environmental opportunities and threats is generally referred to as a SWOT analysis. The following report will look closely into the SWOT's concept its main aspects and criteria for successful and effective SWOT analysis.

ain Aspects of SWOT Analysis

SWOT has a long history as a tool of strategic and marketing analysis. %o one knows who first invented SWOT analysis. It has features in strategy te"t#ooks since at least &'() and can now #e found in te"t#ooks on marketing and any other #usiness disciplines. Its advocates say that it can #e used to gauge the degree of *fit* #etween the organisation's strategies and its environment and to suggest ways in which the organisation can profit from strengths and opportunities and shield itself against weaknesses and threats +$dams ),,-.. /owever SWOT has come under criticism recently. 0ecause it is so simple #oth students and managers have a tendency to use it without a great deal of thought so that the results are often useless. $nother pro#lem is that SWOT having #een conceived in simpler times does not cope very well with some of the su#tler aspects of modern strategic theory such as trade1offs +2e Witt and 3eyer &''4..

Stren!t"s
2etermine an organisation's strong points. This should #e from #oth internal and e"ternal customers. $ strength is a *resource advantage relative to

competitors and the needs of the markets a firm serves or e"pects to serve* +http566www.css.nccu.edu.tw6mepa6mepa7course6),,-6kao6 ),,8,))&7&.ppt9&.. It is a distinctive competence when it gives the firm a comparative advantage in the marketplace. Strengths arise from the resources and competencies availa#le to the firm.

Wea#nesses
2etermine an organisation's weaknesses. This should #e not only from its own point of view #ut also more importantly from those of the customers. $lthough it may #e difficult for an organisation to acknowledge its weaknesses it is #est to handle the #itter reality without procrastination. $ weakness is a *limitation or deficiency in one or more resources or competencies relative to competitors that impedes a firm's effective performance* ;orporate +http566gift.postech.ac.kr6admin6##s6data6summer7session7),,:6 <),Strategy7ver<-0(<-27final+&..ppt..

Opportunities
marketplace. $fter all opportunities are everywhere such as the changes in technology government policy social patterns and so on. $n opportunity is a ma=or situation in a firm's environment. >ey trends are one source of opportunities. Identification of a previously overlooked market segment changes in competitive or regulatory circumstances technological changes and improved #uyer or supplier relationships could represent opportunities for the firm.

T"reats
%o one likes to think a#out threats #ut we still have to face them despite the fact that they are e"ternal factors that are out of our control for e"ample the recent economic slump in $sia. It is vital to #e prepared and face threats even during tur#ulent times. $ threat is a ma=or unfavoura#le situation in a firm's environment. Threats are key impediments to the firm's current or desired position. The entrance of new competitors slow market growth increased #argaining power of key #uyers or suppliers technological changes and new or

revised

regulations

could

represent

threats

to

firm's

success.

0ecause SWOT is such a familiar and comforting tool many students use it at the start of their analysis. This is a mistake. In order to arrive at a proper SWOT appraisal other analyses need to #e carried out first.

Since

opportunities

and

threats

mostly

arise

from

the

environment SWOT analysisneeds to take account of the results of a full environmental analysis.

It is impossi#le to gauge what an organisation's real strengths are until you have assessed its strategic resources 1 in fact strategic resources and strengths are the same thing. There is a tendency for students to put down anything vaguely favoura#le that they can think of a#out a company as a strength. This temptation needs to #e resisted 1 a strength is not a strength unless it makes a genuine difference to an organisation's competitiveness. The same is true of weaknesses.

?or e"ample look at Southwest $irlines and $mazon.com. 0oth companies have important groups of potential customers to whom they offer poor service. Southwest ignores #usiness passengers and will not accept transfers from other airlines. $mazon makes people wait days to receive #ooks that they can o#tain instantly from their neigh#ourhood #ookstores and pay a delivery charge for the privilege. Surely these are ma=or threats.Southwest and $mazon have chosen not to give those customers priority. Serving them would divert resources from the firm's core markets and dilute service to their main customers. %ot serving them is certainly not a weakness@ in a parado"ical way it may #e a strength. The wizardry of SWOT is the matching of specific internal and e"ternal factors which creates a strategic matri" and which makes sense. It is essential to note that the internal factors are within the control of organisation as operations finance marketing economic factors +strengths6threats. technology mini1ma"i and other areas. On the contrary competition such the

e"ternal factors are out of the organisation's control such as political and and other areas. The four and mini1mini com#inations are called the ma"i1ma"i +strengths6opportunities. ma"i1mini +weaknesses6opportunities.

+weaknesses6threats.. Weihrich +&'4). descri#es the four com#inations as follows5 &. 3a"i1ma"i +S6O.. This com#ination shows the organisation's strengths and opportunities. In essence an organisation should strive to ma"imise its strengths to capitalise on new opportunities. ). 3a"i1mini +S6T.. This com#ination shows the organisation's strengths in consideration of threats threats. A. 3ini1ma"i +W6O.. This com#ination shows the organisation's weaknesses in tandem with opportunities. It is an e"ertion to conBuer the organisation's weaknesses #y making the most of any new opportunities. :. 3ini1mini +W6T.. This com#ination shows the organisation's weaknesses #y comparison with the current e"ternal threats. This is most definitely defensive strategy to minimise an organisation's internal weaknesses and avoid e"ternal threats. e.g. from competitors. In essence an organisation should strive to use its strengths to parry or minimise

$o% to Write a Good SWOT Analysis

$ successfully conducted SWOT involves identifying the following5

The things an organisation does particularly well +strengths. or #adly +weaknesses. at present. The factors that in the future may give the organisation potential to grow and increase its profits +opportunities. or may make its position weaker +threats.. Opportunities and threats normally arise from changes in the environment #ut sometimes have their origin inside the organisation 1 for e"ample if key machinery or people functioning very effectively at present are likely to #reak down or retire in a few years' time that is a threat.

It is important to #ear in mind what a SWOT is for. It is intended to summarise a strategic situation with a view to deciding what the organisation should do ne"t.

$ SWOT analysis should contain sufficient information for any reader to #e a#le to see why a particular issue counts as a strength weakness opportunity or threat and what the implications are for the firm that you are analysing. ?or the same reason there is no room for eBuivocation in a SWOT analysis 1 a factor can #e a strength or a weakness #ut not #oth. ?or e"ample a firm's IT system may provide good management reports #ut poor production control information. It is pointless to put this down as #oth a strength and a weakness that partially cancel each other out since managers have only two choices5 either they upgrade the system or they do not +3intz#erg &'',.. This means that you need to come to a definite answer to the Buestion5 On #alance is the IT system a strength or a weaknessC Derhaps the lack of good production information is important in which case the system needs to #e upgraded. Derhaps it is vital to maintain the flow of management information in which case the system should not #e touched +Thompson ),,).. SWOT analysis aims to differentiate factors from #eing #ad or good for the company's performance. In a SWOT analysis the strengths and weaknesses of resources must #e considered in relative and not a#solute terms. It is important to consider whether they are #eing managed effectively as well as efficiently.!esources therefore are not strong or weak purely #ecause they e"ist or do not e"ist. !ather their value depends on how they are #eing managed controlled and used. SWOT analyses should only pick out issues that have a su#stantial effect on a firm's competitive situation. Eou should avoid the temptation to put down under *Strengths* almost everything you can think of that is vaguely favoura#le to the firm and to classify anything remotely unfavoura#le as a weakness. It should #e rare to make a genuine difference to the organisations' profita#ility 1 a strategic resource. $ weakness similarly is something that affects the organisation's cost or differentiation advantage. Old1fashioned eBuipment and authoritarian management styles for instance are only weaknesses if they lead to increased costs poor Buality or #ad customer service +Thompson ),,)@ $dams ),,-.. Fists of strengths and weaknesses should not include factors that are common to every firm in an industry. ?or e"ample you could not count *well1

known #rand* as a strength for a firm in the =eans or cosmetic industries such as F'Oreal since many #rands are eBually famous. Instead of writing that main opportunities of the company are overseas e"pansion and #rand e"tension it is crucial to replace it with a #roader definition and e"planation. The e"ample of a more successful e"planation could #e5 *Eastern European markets with developing spending power and proven appetite for Western consumer #rands represent opportunity. )-< of e"isting sales in airport outlets are to customers travelling to these countries*. $nother e"ample could involve5 *;ompeting firms have e"tended #rands to cosmetics spectacles =eans and stationery. Fikely opportunity for this firm to follow suit* +$dams ),,-.. Instead of saying that the threat of a firm is in e"change rate fluctuations the statements of5 *$ppreciation of euro versus dollar likely to lead to reduced value of GS profits +)-< of total.* or *This is a specific threat that affects this firm #ecause of its high proportion of GS sales* could #e appropriate +2e Witt and 3eyer &''4.. In order to write a good SWOT the following criteria must #e taken into account5

3ake your points long enough and include enough detail to make it plain why a particular factor is important and why it can #e considered as a strength weakness opportunity or threat. Include precise evidence and cite figures where possi#le.

0e as specific as you can a#out the precise nature of a firm's strength and weakness. 2o not #e content with general factors like economies of scale.

$void vague general opportunities and threats that could #e put forward for =ust a#out any organisation under any circumstances. 2o not mistake the outcomes of a strength +such as profits and market share. for strengths in their own right@ Improvement is not the same as strength 1 do not confuse the two@ $void contradicting yourself in the course of the analysis #y having strengths and weaknesses that are essentially different aspects of the same strategy of resource. ;ome to a reasoned conclusion a#out whether the good points outweigh the #ad ones or vice versa.

W"ere to Find Information for SWOT Analysis

Students when finding the essential information for conducting SWOT analysis would have to look at company's #usiness reports annual reviews pu#lished performance data on financial resources marketing and operations including current suppliers and keystakeholders groups. It can also #e helpful to search various =ournals on marketing strategy and human resources to find out more pu#lished and referenced information on the company's past e"perience its current position and future o#=ectives.

SWOT Analysis &imitations

$ key element of strategic option formulation is the matching of organizational strengths and weaknesses with opportunities and threats which e"ist in the marketplace. SWOT analysis is widely recognized in the marketing and strategic management literature as a systematic way of achieving this end. $ num#er of critics however have claimed that the output from a SWOT analysis is often either trivial or so #road as to #e relatively meaningless in the conte"t of making actual marketing decisions. 3intz#erg +&'',. for e"ample states that the assessment of strengths and weaknesses may #e unrelia#le #eing #ound up with aspirations #iases and hopes. Therefore it is important for strengths and weaknesses to #e defined in the conte"t of a situation. $s a conseBuence a creative pro#lem1solving tool such as #rainstorming may thus #e a useful help in overcoming this difficulty. SWOT analysis can #e used in many ways to aid strategic analysis. The most common way is to use it as a logical framework guiding systematic discussion of a firm's resources and the #asic alternatives that emerge from this resource1 #ased view. What one manager sees as an opportunity another may see as a potential threat. Fikewise a strength to one manager can #e a weakness to another. 2ifferent assessments may reflect underlying power considerations within the firm or differing factual perspectives. Systematic analysis of these issues facilitates o#=ectives internal analysis +/ill and West#rook &''(@

3arkides &'''.. Gnderstanding the key opportunities and threats facing a firm helps its managers identify realistic options from which to choose an appropriate strategy and clarifies the most effective niche for the firm. One of the historical deficiencies of SWOT analysis was the tendency to rely on a very general categorical assessment of internal capa#ilities. The resource1 #ased view came to e"ist in part as a remedy to this void in the strategic management field. It is an e"cellent way to identify internal strengths and weaknesses and use that information to enhance the Buality of a SWOT analysis. Similarly value chain analysis identifies elements of a company's capa#ilities and operations that are useful in conducting a SWOT analysis.

Conclusion
SWOT helps a company to see itself for #etter and for worse. ;ompanies are inherently insular and inward looking SWOTs are a means #y which a company can #etter understand what it does very well and where its shortcomings are. SWOTs will help the company size up the competitive landscape and get some insight into the vagaries of the marketplace. SWOT analysis has #een a framework of choice among many managers for along time #ecause of its simplicity and its portrayal of the essence of sound strategy formulation 1 matching a firm's opportunities and threats wit its strengths and weaknesses. ;entral to making SWOT analysis effective is accurate internal analysis 1 the identification of specific strengths and weaknesses around which sound strategy can #e #uilt. If you found this article useful please have a look at the other articles we have written5DEST analysis Dorter's - ?orces analysis $nsoff analysis 0;H Hrowth1Share 3atri" Dorter's Heneric Strategies Scenario Dlanning Ialue chain Success analysis 0$F$%;E2 ?actors Industry S;O!E;$!2 ;ompetitor Fifecycle 3arketing $nalysis ;ritical (S 3i" 3c>insey

?ramework and Droduct Fife ;ycle.

References
$dams J. +),,-. $nalyze Eour ;ompany Gsing SWOTs Supply /ouse Times Iol. :4 Issue ( pp. )81)4.

2e Witt 0. and 3eyer !. +&''4. Strategy5 Drocess ;ontent ;onte"t )nd ed. O"ford5 International Thompson 0usiness Dress. /ill T. and West#rook !. +&''(. SWOT $nalysis5 It's Time for a Droduct !ecall Fong !ange Dlanning Iol. A, Issue & pp.&A1&8. 3arkides ;. +&'''. Si" Drinciples of 0reakthrough Strategy 0usiness Strategy !eview July1$ugust pp.A,1A:. 3intz#erg /. +&'',. The 2esign School5 !econsidering the 0asic Dremises of Strategic 3anagement Strategic 3anagement Journal Iol. && pp.&(&1&'-. Thompson J. +),,). Strategic 3anagement :th Edition Fondon5 Thomson. Weihrich /. +&'4). The TOWS matri"5 a tool for situational analysis Journal of Fong !ange Dlanning Iol. &- Issue ) pp.&)1&:.

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