A brief revision presentation which outlines the SWOT model of analysis.

1. SWOT
Analysis

2. What is SWOT Analysis?
• A method for analysing a business, its
resources, and its environment
• Often used as part of strategic planning
• Looks at
– Internal strengths
– Internal weaknesses
– Opportunities in the external environment
– Threats in the external environment

3. SWOT Analysis aims to discover
• What the business does better than
the competition
• What competitors do better
• Whether it is making the most of the
opportunities available
• How a business should respond to
changes in its external environment

4. The SWOT Matrix
Positive factors
Negative factors
Internal factors Strengths Weaknesses
External factors Opportunities Threats

5. Internal v External
• Strengths and weaknesses
– Are internal to the business
– Relate to the present situation
• Opportunities and threats
– Are external to the business
– Relate to changes in the environment which
will impact the business

6. What do we mean by strengths?
• Strengths are:
– Things a business is good at
– A characteristic giving it an important capability
– Provide a clear advantage over rivals
– Distinctive competencies and resources that will
help the business achieve its objectives
• Strengths help to build up competitive advantage
and serve as a cornerstone of strategy
• Strengths should be protected and built upon

7. Some possible strengths
• Market share • Technological
• Economies of scale leadership
• Brand reputation
• High quality
• Protected IP
• Leadership &
• Distribution network
management skills
• Employee skills
• Financial resources
• High productivity
• Research and • Flexibility of production
development
capabilities

8. What do we mean by weaknesses?
• Weaknesses are:
– A source of competitive disadvantage
– Things the business lacks or does poorly
– Places the business at a disadvantage
– May hinder or constrain the business in achieving
its objectives
• Management should seek ways to reduce or
eliminate weaknesses before they are exploited
further by the competition
• Weakness should be seen as areas for improvement

9. Some possible weaknesses
• Low market share • Cash flow problems
• Inefficient plant • Undifferentiated
• Outdated technology product
• Poor quality • Inadequate
• distribution
Lack of innovation
• Quality problems
• A weak brand name
• • Low productivity
High costs
• Skills gap
• De-motivated staff

10. What are opportunities?
An opportunity is any feature
of the external environment
which creates positive
potential for the business to
achieve its objectives

11. Possible opportunities
• Technological • Higher economic
innovation growth
• New demand • Trade liberalisation
• Market growth • EU enlargement
• Demographic change • Diversification
• Social or lifestyle opportunity
change • Deregulation of the
• Government spending market
programmes

12. What are threats?
Any external
development that may
hinder or prevent the
business from achieving
its objectives

13. Some possible threats
• New market entrants • Economic downturn
• Change in customer • Rise of low cost
tastes or needs production abroad
• Demographic change • Higher input prices
• Consolidation among • New substitute
buyers products
• New regulations • Competitive price
pressure

14. SWOT is more than a list
• SWOT analysis should be more than a
list
• It is an analytical technique to
support strategic decisions
• Strategy should be devised around
strengths and opportunities
• The key words are: match and convert

15. Match and convert
Match Convert
Strengths Weaknesses
with into
Opportunities Strengths

16. Convert weaknesses into strengths
Weakness Possible Response
Outdated Acquire competitor with leading technology
technology
Skills gap Invest in training & more effective
recruitment
Overdependence on Diversify the product portfolio by entering
a single product new markets
Poor quality Invest in quality assurance
High fixed costs Examine potential for outsourcing or
offshoring

17. Threat or Opportunity?
For every perceived
threat, the same change
presents an opportunity
for business

18. Keep up-to-date with business
stories, resources, quizzes and
worksheets for your business
course. Click the logo!