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SWOT analysis SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, 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 Stanford University in the 1960s and 1970s using data from Fortune 500 companies. A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning has been the subject of much research.[citation needed] Strengths: characteristics of the business or team that give it an advantage over others in the industry. Weaknesses: are characteristics that place the firm at a disadvantage relative to others. Opportunities: external chances to make greater sales or profits in the environment. Threats: external elements in the environment that could cause trouble for the business. 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. The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats.[citation needed] It is particularly helpful in identifying areas for development.[citation needed]Contents [hide] 1 Matching and converting 1.1 Evidence on the use of SWOT 2 Internal and external factors 3 Use of SWOT analysis 4 SWOT - landscape analysis 5 Corporate planning 5.1 Marketing 6 See also 7 References 8 External links [edit] Matching and converting Another way of utilizing SWOT is matching and converting.

Matching is used to find competitive advantages by matching the strengths to opportunities. Converting is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities. An example of conversion strategy is to find new markets. If the threats or weaknesses cannot be converted a company should try to minimize or avoid them.[1] [edit] Evidence on the use of SWOT SWOT analysis may limit the strategies considered in the evaluation. J. Scott Armstrong notes that "people who use SWOT might conclude that they have done an adequate job of planning and ignore such sensible things as defining the firm's objectives or calculating ROI for alternate strategies." [2] Findings from Menon et al. (1999) [3] and Hill and Westbrook (1997) [4] have shown that SWOT may harm performance. As an alternative to SWOT, Armstrong describes a 5-step approach alternative that leads to better corporate performance.[5] [edit] 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 4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and sociocultural 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. [edit] 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. [edit] SWOT - landscape analysis The SWOT-landscape systematically deploys the relationships between overall objective and underlying SWOT-factors and provides an interactive, query-able 3D landscape. The SWOT-landscape grabs different managerial situations by visualizing and foreseeing the dynamic performance of comparable objects according to findings by Brendan Kitts, Leif Edvinsson and Tord Beding (2000).[6] Changes in relative performance are continually identified. Projects (or other units of measurements) that could be potential risk or opportunity objects are highlighted. SWOT-landscape also indicates which underlying strength/weakness factors that have had or likely will have highest influence in the context of value in use (for ex. capital value fluctuations). [edit] Corporate planning As part of the development of strategies and plans to enable the organization to achieve its objectives, then that organization will use a systematic/rigorous process known as corporate planning. SWOT alongside PEST/PESTLE can be used as a basis for the analysis of business and environmental factors.[7] Set objectives defining what the organization is going to do Environmental scanning Internal appraisals of the organization's SWOT, this needs to include an assessment of the present situation as well as a portfolio of products/services and an analysis of the product/service life cycle Analysis of existing strategies, this should determine relevance from the results of an internal/external appraisal. This may include gap analysis which will look at environmental factors Strategic Issues defined key factors in the development of a corporate plan which needs to be addressed by the organization Develop new/revised strategies revised analysis of strategic issues may mean the objectives need to change

Establish critical success factors the achievement of objectives and strategy implementation Preparation of operational, resource, projects plans for strategy implementation Monitoring results mapping against plans, taking corrective action which may mean amending objectives/strategies.[8] [edit] Marketing Main article: Marketing management In many competitor analyses, marketers build detailed profiles of each competitor in the market, focusing especially on their relative competitive strengths and weaknesses using SWOT analysis. Marketing managers will examine each competitor's cost structure, sources of profits, resources and competencies, competitive positioning and product differentiation, degree of vertical integration, historical responses to industry developments, and other factors. Marketing management often finds it necessary to invest in research to collect the data required to perform accurate marketing analysis. Accordingly, management often conducts market research (alternately marketing research) to obtain this information. Marketers employ a variety of techniques to conduct market research, but some of the more common include: Qualitative marketing research, such as focus groups Quantitative marketing research, such as statistical surveys Experimental techniques such as test markets Observational techniques such as ethnographic (on-site) observation Marketing managers may also design and oversee various environmental scanning and competitive intelligence processes to help identify trends and inform the company's marketing analysis. Using SWOT to analyse the market position of a small management consultancy with specialism in HRM.[8]Strengths Weaknesses Opportunities Threats Reputation in marketplace Shortage of consultants at operating level rather than partner level Well established position with a well defined market niche Large consultancies operating at a minor level Expertise at partner level in HRM consultancy Unable to deal with multidisciplinary assignments because of size or lack of ability Identified market for consultancy in areas other than HRMOther small consultancies looking to invade the marketplace [edit] See also Enterprise planning systems Six Forces Model VRIO Porter's Four Corners Model [edit]

References ^ See for instance: Mehta, S. (2000) Marketing Strategy ^ ManyWorlds.com: Dont do SWOT: A Note on Marketing Planning ^ Menon, A. et al. (1999). "Antecedents and Consequences of Marketing Strategy Making". Journal of Marketing (American Marketing Association) 63 (2): 1840. doi:10.2307/1251943. JSTOR 1251943. ^ Hill, T. & R. Westbrook (1997). "SWOT Analysis: Its Time for a Product Recall". Long Range Planning 30 (1): 4652. doi:10.1016/S0024-6301(96)00095-7. ^ J. Scott Armstrong (1982). "The Value of Formal Planning for Strategic Decisions". Strategic Management Journal 3 (3): 197211. doi:10.1002/smj.4250030303. ^ Brendan Kitts, Leif Edvinsson and Tord Beding (2000) Crystallizing knowledge of historical company performance into interactive, query-able 3D Landscapes http://de.scientificcommons.org/534302 ^ Armstrong. M. A handbook of Human Resource Management Practice (10th edition) 2006, Kogan Page , London ISBN 0-7494-4631-5 ^ a b Armstrong.M Management Processes and Functions, 1996, London CIPD ISBN 085292-438-0

Importance of SWOT Analysis A SWOT analysis is a tool for companies to assess the industry and to develop strategies to remain competitive. This is a simple way to focus aspects of the company and business sector and to organize the findings to evaluate the current status of the business, future prospects and the economic climate. A SWOT analysis promotes critical and specific thinking to enhance strategic plans and objectives. The SWOT analysis has been used as a business concept since the 1960s and has shown its value when applied to organizations, management structure and marketing.

History Albert Humphrey from Stanford University is credited as the developer of the Strengths, Weaknesses, Opportunities and Threats--or SWOT--analysis, which derived from the Team Action Model research project. TAM is a business concept that supports executives in effectively managing change. SWOT extends from the TAM concept. George Albert Smith Jr. and C. Roland Christiensen from Harvard Business School are credited with the acronym during the 1950s and 1960s to evaluate gaps and resources within companies as an organizational strategy. The SWOT concepts were refined over the years to become one of today's marketing tools. Significance The SWOT analysis is a key component in strategic planning. The analysis subjectively evaluates the impact of internal and external factors for a business objective. Internal processes and resources are considered strengths and weaknesses (S and W, respectively). External factors affecting the business and industry are considered opportunities and threats (O and T, respectively). An evaluation of these factors develops a strategic perspective that includes the competitive landscape and current market conditions. Features SWOT analysis can include: Strengths: Experience and expertise; new and current products; quality and reputation; resources and access to distributors; location Weaknesses: Deficiencies in access and experience; brand name recognition and reputation; perceived value; costs Opportunities: Emerging markets and technologies; strategic partnerships and alliances; changes in regulations and policies; expansion into other geographic areas or industries; diminishing competition Threats: Generic or updated products or technologies; increased scrutiny and tighter regulations; competitors entering the marketplace; increased costs for resources Considerations A SWOT analysis is subjective yet concise. Overanalysis and generalizations have limited value in preparing a strategic perspective. The factors in the SWOT analysis should reflect the actual internal status of the business and its future prospects, as well as external forces within the industry so that an action plan can be prepared. Other tools such as Porter's Five Force analysis can supplement information in a SWOT. Misconceptions Strategy should not be based solely on a SWOT analysis. The value of a SWOT analysis is to prepare a snapshot of the current competitive landscape and to identify areas that can be improved, internally. A SWOT analysis can provide companies with discrete insight regarding prioritizing strategies and tactics to gain an advantage. Preparing a SWOT analysis is not complicated; it should be revisited on a regular basis to evaluate the impact of strategies in an ever-changing economy.

Advantages & Disadvantages of SWOT Analysis A SWOT analysis is a tool used for strategic planning that looks at the strengths, weaknesses, opportunities and threats for a project. This type of analysis can be applied to a variety of different projects, and looks at favorable, unfavorable, internal and external factors involved with achieving specific objectives. There are both advantages and disadvantages to performing this type of analysis. Advantage: Clarity One of the greatest advantages of SWOT analysis is that it helps to summarize and clarify whatever opportunities and issues are facing a business or project. For this reason, a SWOT analysis is often advantageous and can play a key role in how a business sets its objectives and develops strategies for achieving goals. Advantage: Cost Another advantage of SWOT analysis is that the primary cost involved in the process is time. A SWOT analysis makes it possible for new ideas to be generated without costing the business much in the process. Hiring a business strategist or a marketing team would cost time and resources, but a SWOT analysis can be performed by anyone with time available and an understanding of how the business is run. Advantage and Disadvantage: Simplicity A SWOT analysis is simple to conduct, which poses both advantages and disadvantages. The advantage lies in the fact that anyone with a basic understanding of the business can perform this analysis. The disadvantage to the simplicity of this type of analysis is that it usually creates a very simple list that is not presented critically. If a company is focused only on the creation of a list, then it may not be focusing its attention sufficiently or deeply enough on how it can actually achieve all of its objectives. Disadvantage: Further Research Required In order for a SWOT analysis to be truly successful, it should extend beyond a simple list of strengths, weaknesses, opportunities and threats. For example, a business should consider what degrees of strengths and weaknesses it possesses in comparison to competitors in order to determine how strong those strengths actually are. A thorough SWOT analysis should also look at an opportunity or threat's size in order to see how it is related with the company's strengths and weaknesses. While a SWOT analysis can be simple and straightforward, more research and analysis is usually needed in order to obtain a comprehensive picture.