SWOT analysis

BACKGROUND TO THE TOOL OF SWOT The origins of the SWOT analysis technique is credited by Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from top companies. (Died 31st October 2005)‫‏‬ The goal was to identify why corporate planning failed. The resulting research identified a number of key areas and the tool used to explore each of the critical areas was called SOFT analysis. Humphrey and the original research team used the categories “What is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present is a Fault and bad in the future is a Threat.” This was called the SOFT analysis. In 1964 Urick and Orr were presented with the analysis at a conference in Dolder Grand (Zurich, Switzerland) and changed the F to a W, and it has stuck as that, soFt to sWot SWOT ANALYSIS Definition: SWOT analysis is a tool or process that helps generate information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates in order to achieve its goals. Objective: setting goals alone is not enough if a company is to achieve maximum effectiveness and efficiency, there is also the need for a company to study its external and internal factors. The external factor has more to do with the opportunities and threats the environment has on the organization while the internal deals with the individual strengths and weakness within an organization. Strengths: Are the internal attributes , capabilities or resources of the organization that is helpful and can be used as a basis for developing a competitive advantage and also to achieving the objective of the organization  What do you do well (sales, marketing, management etc)?  What are your assets(product, service)?  What are your core competences?  Where are you making money?  What experiences do you have? Weaknesses: Are the internal attributes of the organization or group that are harmful to achieving its objective  what do you need (customer service, accounting)?  Where do you lack resources?  What can you do better?  Where are you losing money? Opportunities: Are the external factors or conditions that are helpful to achieving the objective of the organization.  What new needs of customers could you meet?  What are the economic trends that benefit you?  What are the emerging political and social opportunities?  What are the technological breakthroughs?  What niches have your competitors missed? Threats: Are the external factors or conditions that are harmful to achieving the objective of the organization.  What are the negative economic trends?  What are the negative political and social trends?  Where are competitors about to bite you?  Where are you vulnerable? •Change of government in power ECONOMIC •Price wars between competitors •Change in Supply and demand SOCIAL/CULTURAL •Change of lifestyle •Entrant into market with a diverse culture •E-commerce or E-business •Changes in technological gadgets of new entrants • Threat •Threat of substitute goods •Bargaining power of suppliers •Bargaining power of consumers • Rivalry amongst competitors •Market vacated by an ineffective competitor •Monopoly •Free Market •Low production cost •Currency rate  Change of lifestyle  Entrant into market with a div TECHNOLOGICAL MARKET •E-commerce or E-business •Changes in technological gadgets •Global demand for products from each industry AIM OF A SWOT ANALYSIS  Reveal your competitive advantages .  Analyze your prospects for sales, profitability and product development .  Prepare your company for problems .  Allow for the development of contingency plans.  A SWOT analysis is a process to identify where you are strong and vulnerable -- where you should defend and attack. Steps to successful swot analysis Swot matrix  For any organization to be able to develop strategies to achieve competitive advantage, it has to implement the swot matrix. STRENGTHS WEAKNESSES OPPORTUNITIES S-O strategy W-O strategy THREATS S-T strategy W-T strategy  S-O strategy: Pursue opportunities that are a good fit for the organizations strengths.  W-O strategy: Overcome weaknesses to pursue opportunities.  S-T strategy: Identify ways that the organization can use its strength to reduce its external threats.  W-T strategy: Establish a protective plan to prevent the organizations weaknesses from making it highly prone to external threats. 9 8 7 6 5 4 3 2 1 0 Responsible Active Effective Confident Arafat Naufal Raj Yakubu Swot Matrix Strengths Teamwork Weakness Lack of Confidence Not Risk Takers Opportunity Presentation Present as a team Overcome Lack of confidence to present efficiently Consider risk taking to avoid giving competitors an advantage Threats Competition Use the power of teamwork to beat competitors CONCLUSION  Strengths need to be maintained, built upon or leveraged.  Weaknesses need to be remedied, changed or stopped.  Opportunities need to be prioritized, captured, built on and optimized.  Threats need to be countered or minimized and managed.