Topic Name- SWOT Analysis

Introduction- In the session students will be acquainted with SWOT Analysis which is a
framework used to evaluate a company's competitive position and to develop strategic planning.
SWOT analysis assesses internal and external factors, as well as current and future potential.It is
designed to facilitate a realistic, fact-based, data-driven look at the strengths and weaknesses of
an organization, initiatives, or within its industry. The organization needs to keep the analysis
accurate by avoiding pre-conceived beliefs or gray areas and instead focusing on real-life
contexts.

Content- SWOT Analysis

SWOT analysis is often used either at the start of, or as part of, a strategic planning exercise. The
framework is considered a powerful support for decision-making because it enables an
organization to uncover opportunities for success that were previously unarticulated and
highlights threats before they become overly burdensome.

As an example, this exercise can identify a market niche in which a business has a competitive
advantage. It can also help individuals plot career success by pinpointing a path that maximizes
their strengths while alerting them to threats that can thwart achievement.

A SWOT matrix is often used to organize the items identified under each of these four elements.
A SWOT matrix is usually a square divided into four quadrants, with each quadrant representing
one of the specific elements. Decision-makers identify and list specific strengths in the first
quadrant, weaknesses in the next, then opportunities and, lastly, threats.

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. By definition,

Strengths (S) and Weaknesses (W) are considered to be internal factors over which you have
some measure of control. Also, by definition, Opportunities (O) and Threats (T) are considered
to be external factors over which you have essentially no control.

An overview of the four factors (Strengths, Weaknesses, Opportunities and Threats) is given
below-

1. Strengths - Strengths are the qualities that enable us to accomplish the organization’s
mission. These are the basis on which continued success can be made and
continued/sustained.
 Strengths can be either tangible or intangible. These are what you are well-versed in or
what you have expertise in, the traits and qualities your employees possess (individually
and as a team) and the distinct features that give your organization its consistency.

Strengths are the beneficial aspects of the organization or the capabilities of an

organization, which includes human competencies, process capabilities, financial
resources, products and services, customer goodwill and brand loyalty. Examples of
organizational strengths are huge financial resources, broad product line, no debt,
committed employees, etc.

2. Weaknesses - Weaknesses are the qualities that prevent us from accomplishing our
mission and achieving our full potential. These weaknesses deteriorate influences on the
organizational success and growth. Weaknesses are the factors which do not meet the
standards we feel they should meet.

Weaknesses in an organization may be depreciating machinery, insufficient research and

development facilities, narrow product range, poor decision-making, etc. Weaknesses are
controllable. They must be minimized and eliminated. For instance - to overcome
obsolete machinery, new machinery can be purchased. Other examples of organizational
weaknesses are huge debts, high employee turnover, complex decision making process,
narrow product range, large wastage of raw materials, etc.

3. Opportunities - Opportunities are presented by the environment within which our

organization operates. These arise when an organization can take benefit of conditions in
its environment to plan and execute strategies that enable it to become more profitable.
Organizations can gain competitive advantage by making use of opportunities.

Organization should be careful and recognize the opportunities and grasp them whenever
they arise. Selecting the targets that will best serve the clients while getting desired
results is a difficult task. Opportunities may arise from market, competition,
industry/government and technology. Increasing demand for telecommunications
accompanied by deregulation is a great opportunity for new firms to enter telecom sector
and compete with existing firms for revenue.

4. Threats - Threats arise when conditions in external environment jeopardize the reliability
and profitability of the organization’s business. They compound the vulnerability when
they relate to the weaknesses. Threats are uncontrollable. When a threat comes, the
stability and survival can be at stake. Examples of threats are - unrest among employees;
ever changing technology; increasing competition leading to excess capacity, price wars
and reducing industry profits; etc.

A SWOT analysis should be used to help an entity, whether it is an organization or an

individual, to gain insight into its current and future position in the marketplace or against
a stated goal.
 The idea is that because entities can see competitive advantages, positive prospects as
well as existing and potential problems, they can develop plans to capitalize on positives
and address deficiencies.

In other words, once the SWOT factors are identified, decision-makers should be better
able to ascertain if an initiative, project or product is worth pursuing and what is needed
to make it successful. As such, the analysis aims to help an organization match its
resources to the competitive operational environment.
Advantages of SWOT Analysis
Applicable to all type of organization:
SWOT analysis can be applied to an organization, organizational unit, individual or team. In
addition, the analysis can support a number of project objectives. For example, the SWOT
method can be used to evaluate a product or brand, an acquisition or partnership, or the
outsourcing of a business function. In addition, SWOT analysis can be beneficial in evaluating a
particular supply source, a business process, a product market or the implementation of a
particular technology.
Application Neutrality
SWOT analysis is conducted by specifying an objective and conducting a brainstorming session
to identify internal and external factors that are favorable and unfavorable to the objective's
achievement. This approach remains the same whether the analysis supports strategic planning,
opportunity analysis, competitive analysis, business development or product development
processes.
Multi-Level Analysis
Valuable information can be obtained about objective's chances by viewing each of the four
elements of the SWOT analysis – strengths, weaknesses, opportunities and threats –
independently or in combination. For example, identified threats in the business environment,
such as new government regulations regarding a product design or the introduction of competing
products, might alert the business owner that a proposed investment in a new manufacturing
production line should be more carefully evaluated.
In addition, an awareness of a company weakness such as a lack of qualified employees might
suggest a need to consider outsourcing particular functions. In turn, opportunities such as the
availability of low-interest loans for startups might encourage the entrepreneur to pursue the
development of a new product to meet a rising customer demand. In contrast, identified
strengths, such as extensive experience in an industry experiencing rapid international growth,
might suggest the need to partner with foreign companies.
Data Integration
SWOT analysis requires the combination of quantitative and qualitative information from a
number of sources. Access to a range of data from multiple sources improves enterprise-level
planning and policy-making, enhances decision-making, improves communication and helps to
coordinate operations.
Simplicity
SWOT analysis requires neither technical skills nor training. Instead, it can be performed by
anyone with knowledge about the business in question and the industry in which it operates. The
process involves a facilitated brainstorming session during which the four dimensions of the
SWOT analysis are discussed. As a result, individual participants’ beliefs and judgments are
aggregated into collective judgments endorsed by the group as a whole. In this way, the
knowledge of each individual becomes the knowledge of the group.
Cost
Because SWOT analysis requires neither technical skills nor training, a company can select a
staff member to conduct the analysis rather than hire an external consultant. In addition, SWOT
is a somewhat simple method that can be performed in a fairly short time.
Disadvantage: No Weighting Factors
SWOT analysis leads to four individual lists of strengths, weaknesses, opportunities and threats.
However, the tool provides no mechanism to rank the significance of one factor versus another
within any list. As a result, it's difficult to determine the amount of any one factor's true impact
on the objective.
Disadvantages of SWOT Analysis
Ambiguity
SWOT analysis creates a one-dimensional model which categorizes each problem attribute as a
strength, weakness, opportunity or threat. As a result, each attribute appears to have only one
influence on the problem being analyzed. However, one factor might be both a strength and a
weakness. For example, locating a chain of stores on well-traveled streets that grant easy access
to customers might be reflected in increased sales. However, the costs of operating high-
visibility facilities can make it difficult to compete on price without a large sales volume.
Subjective Analysis
To significantly impact company performance, business decisions must be based on reliable,
relevant and comparable data. However, SWOT data collection and analysis entail a subjective
process that reflects the bias of the individuals who collect the data and participate in the
brainstorming session. In addition, the data input to the SWOT analysis can become outdated
fairly quickly.

Summary-(In bullets)
  Strengths (S): Strengths are things that your organization does particularly well, or in a
way that distinguishes you from your competitors. Think about the advantages your
organization has over other organizations.
 Weaknesses (W): Weaknesses, like strengths, are inherent features of the organization, so
its focus should be on people, resources, systems, and procedures. The stress should be
given on things that could improve, and the sorts of practices that should be avoided
 Opportunities (O): Opportunities are openings or chances for something positive to
happen for the organization, but they need to claim them for themselves.
 Threats (T) : Threats include anything that can negatively affect the business from the
outside, such as supply-chain problems, shifts in market requirements, or a shortage of
recruits. It's vital to anticipate threats and to take action against them before they become
a victim of them and growth stalls.

Self-Assessment Questions-

1 What Is SWOT Analysis?

2 How to Do a SWOT Analysis

3 How to Use a SWOT Analysis

4 What Are Strengths In a SWOT Analysis?