SWOT

Analysis
Identifying Strengths, Weaknesses, Opportunities and
Threats. Explanation of SWOT analysis.
 What is a SWOT analysis? Description

A SWOT analysis is a tool, used in management and strategy formulation. It can help to
identify the Strengths, Weaknesses, Opportunities and Threats of a particular company.

Strengths and weaknesses are internal factors that create value or destroy value. They
can include assets, skills, or resources that a company has at its disposal, compared to its
competitors. They can be measured using internal assessments or external benchmarking.

Opportunities and threats are external factors that create value or destroy value. A
company cannot control them. But they emerge from either the competitive dynamics of
the industry/market or from demographic, economic, political, technical, social, legal or
cultural factors (PEST).

Typical examples of factors in a SWOT Analysis diagram:

Strengths Weaknesses

Specialist marketing expertise • Lack of marketing expertise

Exclusive access to natural resources
New, innovative product or service
Location of your business
Cost advantage through proprietary know-how
Quality processes and procedures
• Undifferentiated products and service (i.e. in relation to
your competitors)
• Location of your company
• Competitors have superior access to distribution
channels
• Poor quality of goods or services

Strong brand or reputation • Damaged reputation

Opportunities Threats

Developing market (China, the Internet) • A new competitor in your own home market
Mergers, joint ventures or strategic alliances • Price war
Moving into new attractive market segments • Competitor has a new, innovative substitute product or
A new international market service
Loosening of regulations • New regulations
Removal of international trade barriers • Increased trade barriers

A market that is led by a weak competitor • A potential new taxation on your product or service
 Any organization must try to create a fit with its external environment. The SWOT
diagram is a very good tool for analyzing the (internal) strengths and weaknesses of a
corporation and the (external) opportunities and threats. However, this analysis is just the
first step. To really create the fit with the external environment is often the most difficult
work.

Confrontation Matrix

A tool to combine the internal factors with the external factors is the Confrontation
Matrix.

Opportunities Threats

Offensive Adjust
Strengths
make the most of these restore strengths

Defensive Survive
Weaknesses
watch competition closely turn around

Often in reality the two columns of the SWOT diagram are pointing in opposite
directions. Strategists must still deal with the paradox of creating alignment. This can be
done via Outside-in strategy formulation (market-driven strategy) or Inside-out strategy
formulation (resource-driven).

Note: you can also apply a SWOT analysis to competitors, often providing interesting
new perspectives.
Fred SWOT "Here's a list of typical phases in a medium size
Moran - USA Process Steps SWOT process (modify as needed).
1. Determine clear objective(s)
2. Determine SWOT team (size, level, find good
facilitator and contributors (mix of experts and
creative people)
3. Gather Information / Research (who does
what)
4. Prepare SWOT workshop (timing, find a
suitable room, create a free open atmosphere,
agenda with times, send invitations)
5. Workshop - Brainstorm and list the Strengths
6. Workshop - Brainstorm and list the
Weaknesses
7. Workshop - Brainstorm and list the
Opportunities
8. Workshop - Brainstorm and list the Threats
9. Workshop - Evaluate and Prioritize (use
objectives)
10. Communicate the Results
11. Implement the Results
12. Monitor the Results"