SWOT Analysis
(Strengths, Weaknesses,
Opportunities & Threats)
By: Atef Khayat, MD, MBA
2009
What is a SWOT Analysis?
• It is a scanning of external and internal environment of the
business.
• Environmental factors internal to the firm (within your
control) usually can be classified as strengths (S) or
weaknesses (W), and
• Those external to the firm (you can’t control) can be
classified as opportunities (O) or threats (T).
Purpose
• As a basic tool its mastery is a fundamental requirement
for the marketer, entrepreneur or business person.
• It can be used in:
1. Strategic planning
2. Prepare contingency plan
3. Product evaluation
4. Competitor evaluation
5. Personal developmental plan
6. Decision Making
7. Problem solving
SWOT Analysis
Helpful Harmful
(to achieve the objectives) (to achieve the objectives)
S
Strengths
W
Weaknesses Internal Origin
(Attributes of the firm)
O
Opportunities
T
Threats External Origin
(Attributes of the environment)
Strengths
• What do we do well?
• One’s strength is another’s weakness.
• A firm's strengths are its resources and capabilities that can be
used for developing a competitive advantage.
• Examples of such strengths include:
1. Patents
2. Strong brand names
3. Good reputation among customers
4. Cost advantages from proprietary know-how
5. Exclusive access to natural resources
6. Good access to distribution networks
7. skills, education or connections do you have that others don't have
Weaknesses
• What is wrong now?
• What should you avoid?
• One’s strength is another’s weakness.
• Be truthful so that weaknesses may be overcome as quickly as
possible.
• The absence of certain strengths are a weakness. For example,
the following may be considered weaknesses:
• Lack of patent protection
• A weak brand name
• Poor reputation among customers
• High cost structure
• Lack of access to best natural resources
• Lack of access to key distribution channels
Weaknesses - Continued
• In some cases, a weakness may be the flip side of a strength.
• For example, a firm has a large amount of manufacturing
capacity. While this capacity may be considered a strength that
competitors do not share, it also may be a considered a
weakness if the large investment in manufacturing capacity
prevents the firm from reacting quickly to changes in the
strategic environment.
• Some organizations use the framework PRIMO-F as the
structure for capturing SW factors: People, Resources ,Ideas/
Innovation, Marketing, Operations (products services etc), and
Finance
Opportunities & Threats
• The opportunity and threat analysis is carried out by
examining external factors in your domestic and export
markets. This is usually broken down into environmental
factors and Competitors:
1. Environmental Factors:
Demographics, Economic, Political/legal, Sociological,
Environmental, Technology, Cultural
2. Competitors:
Capability, Resources, Ownership, New entrants, Market
segments, Products, Prices, Promotion, Distribution,
Substitute products, Suppliers customers, Product life
cycle, Risk and cost of intellectual property violation
of your product
Opportunities
• The external environmental analysis may reveal certain
new opportunities for profit and growth. Some examples
of such opportunities include:
1. An unfulfilled customer need
2. Arrival of new technologies
3. Loosening of regulations
4. Removal of international trade barriers
Threats
• Changes in the external environment also may present
threats to the firm. Some examples of such threats include:
1. shifts in consumer tastes away from the firm's products
2. emergence of substitute products
3. new regulations
4. increased trade barriers
5. other ongoing research or commercialization efforts
6. a large existing competitor
7. market volatility (because we are new market entrants)
8. market access (for supplies or customers)
9. a competitor has a new, innovative product or service
10. competitors have superior access to channels of
distribution
The SWOT Matrix
• A firm should not necessarily pursue the more lucrative
opportunities (overextending).
• Rather, it may have a better chance at developing a competitive
advantage by identifying a fit between the firm's strengths and
upcoming opportunities.
• In some cases, the firm can overcome a weakness in order to
prepare itself to pursue a compelling opportunity.
SWOT / TOWS Matrix
• To develop strategies that take into account the SWOT profile,
a matrix of these factors can be constructed.
• The SWOT matrix, can be changed into what is known as the
TOWS Matrix that is shown on the next slide:
SWOT / TOWS Matrix
TOWS Analysis Strengths Weaknesses
Opportunities S-O Strategies W-O Strategies
W-T
Threats S-T Strategies
Strategies
SWOT / TOWS Matrix
• S-O strategies pursue opportunities that fit well the company's
strengths.
• W-O strategies overcome weaknesses to pursue opportunities.
• S-T strategies identify ways that the firm can use its strengths
to reduce its vulnerability to external threats.
• W-T strategies make a defensive plan to prevent the firm's
weaknesses from making it susceptible to external threats.
SWOT Interactions
Important Tips
• Be realistic about the strengths and weaknesses of your organization
or group.
• Distinguish between where your organization is today, and where it
could be in the future.
• Be specific: Avoid gray areas.
• Always analyze in relation to your core mission.
• Keep your SWOT short and simple. Avoid complexity and over
analysis.
• Empower SWOT with a logical conceptual framework.
Common Mistakes
• Failure to lay the analysis out as a grid.
• Not identifiable sources for external aspects (like a STEEP or Five Forces
analysis).
• Confusing internal aspects with external aspects i.e, confusing strengths with
opportunities and weaknesses with threats.
• Not using bullet points
• Too many bullet points
• Failure to make links (between strengths and opportunities and, weaknesses
and threats)
Caution!
• SWOT analysis can be very subjective.. Two people rarely
come-up with the same final version of SWOT. Do not rely on it
too much.
• Use it as guide and not a prescription.
• SWOT analysis can be very subjective.
• Be realistic; no need to inflate strengths or be in denial about
shortcomings.
• Be specific. Avoid grey areas.
• Always analyze in the context of your competitive environment.
Thanks,
Kindly send me your comments on
dr.atefkhayyat@gmail.com
