SWOT Analysis

SWOT Analysis
 Meaning and History
 It is an important planning tool for auditing the overall strategic position of a
business and its environment.

 It helps to identify internal & external factors that affect achievement of

business objectives.

 The SWOT framework was described in the 1960’s by Edmund P.

Learned,C.Roland Christiansen,Kenneth Andrews & William Guth in Business
Policy,Text & Cases.

 This technique is credited to Albert Humphrey.

 SWOT PROFILE
Situation Analysis

Internal Analysis External Analysis

Strengths Weaknesses Opportunities Threats

SWOT Profile
 Factors of Analysis
Strengths & weaknesses Opportunities and threats
• Resources: financial, • Takeovers
intellectual, location • Market Trends
• Cost advantages from • Economic condition
proprietary know-how
• Mergers
• Exclusive access to high
grade natural resources • Joint ventures
• Favorable access to • Strategic alliances
distribution networks • Expectations of stakeholders
• Govt.rule and regulation • Technology
regarding the business • Public expectations
• Product width and length • Competitors and competitive
actions
• Bad PR
• Criticism (Editorial)
• Global Markets
• Environmental conditions
 Benefits of SWOT Analysis
• It can act as a filter to reduce information to a
manageable quantity of key issues.

• It can be used in a pre-crisis planning and in preventive

crisis management.

• It helps to leverage strengths, correct or stop weakness,

capitalize on golden opportunities, deter or defend
potentially devastating threats.
 SWOT Analysis Limitations
 Oversimplification - It may oversimplify the situation by classifying the firm’s environmental
factors into categories into which they may not always fit.

 Arbitrary classification - The classification of some factors as strengths etc might be arbitrary,
more important is the company’s awareness about these and development of a strategic
plan.

 Multiple perspectives needed rather than one person being interviewed and a SWOT being
created.

 Opportunities external to the company are many a times confused with internal strengths.

 SWOT is just a description of condition,while strategies define actions.(opportunity analysis-

auspicious condition)
Used to assess: ?
• a company (its position in the market, commercial viability, etc)

• a method of sales distribution

• a product or brand

• a business idea

• a strategic option, such as entering a new market or launching a new product

• a opportunity to make an acquisition

• a potential partnership

• A changing a supplier

• outsourcing a service, activity or resource

• an investment opportunity