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 ANALYSISDefinition: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?

POLITICAL • Introduction or increase in Tax on products or services

•Change of government in power

•Change in policies, E.g tariffs, tax, imports and exports

•Change of government in power

ECONOMIC •Price wars between competitors

•Change in Supply and demand

•Low production cost

•Currency rate

SOCIAL/CULTURAL •Change of lifestyle

•Entrant into market with a diverse culture

Change of lifestyle

Entrant into market with a diverse culture

TECHNOLOGICAL •E-commerce or E-business

•Changes in technological gadgets

•E-commerce or E-business •Changes in technological gadgetsMARKET • Threat of new entrants

•Threat of substitute goods

•Bargaining power of suppliers

•Bargaining power of consumers

• Rivalry amongst competitors

•Global demand for products from each industry

•Market vacated by an ineffective competitor

•Monopoly

•Free Market

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 matrixFor 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.

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Responsible Active Effective Confident

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Swot MatrixStrengths

Teamwork

WeaknessLack of ConfidenceNot Risk Takers

OpportunityPresentation

Present as a team Overcome Lack of confidence to present efficiently

ThreatsCompetition

Use the power of teamwork to beat competitors

Consider risk taking to avoid giving competitors an advantage

CONCLUSIONStrengths 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.