SWOT analysis is a method for analyzing a business, its resources, and its environment.
Internal strengths Internal weaknesses Opportunities in the external environment Threats in the external environment
What the business does better than the competition What competitors do better than the business Whether the business is making the most of the opportunities available How a business should respond to changes in its external environment
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
Strengths are: Things a business is good at A characteristic giving a business an important capability Sources of clear advantage over rivals Distinctive competencies and resources that will help the business achieve its objectives
High market share Achieving economies of scale High quality Leadership & management skills Research and development capabilities Technological leadership Brand reputation Distribution network Employee skills High productivity Flexibility of production
Weaknesses are: A source of competitive disadvantage Things the business lacks or does poorly Factors that place a business at a disadvantage Issues that may hinder or constrain the business in achieving its objectives
Low market share Inefficient plant Outdated technology Poor quality Lack of innovation A weak brand name High costs Cash flow problems Undifferentiated products Inadequate distribution Low productivity Skills shortages De-motivated staff Products at the decline stage of product life cycle
An opportunity is any feature of the external environment which creates positive potential for the business to achieve its objectives.
Technological innovation New demand Market growth Demographic change Social or lifestyle change Higher economic growth Diversification opportunity Deregulation of the market Government spending programmes
Threats are any external development that may hinder or prevent the business from achieving its objectives.
New market entrants Change in customer tastes or needs Demographic change New regulations Economic downturn Rise of low cost production abroad Higher input prices New substitute products Competitive price pressure
There is no point producing a SWOT analysis unless it is actioned! 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
MATCH STRENGTHS WITH OPPORTUNITIES CONVERT WEAKNESSES INTO STRENGTHS
WeaknessPossible Response Outdated technologyAcquire competitor with leading technology Skills gapInvest in training & more effective recruitment Overdependence on a single product Diversify the product portfolio by entering new markets Poor qualityInvest in quality assurance High fixed costsExamine potential for outsourcing or offshoring
Form a group of MAXIMUM 6 students. Conduct self SWOT analysis. Present it to the class after 30 mins discussion.
A : Takes the initiative in trying to exploit a business opportunity B : Takes time to understand and calculate the risks involved C : Makes an investment to set up the business D : Goes ahead, despite the risk that the business venture might fail
Much research has been done to examine the personality and other characteristics of successful entrepreneurs to see if there is a proven method or route to success. You will find many lists of “what is takes to be an entrepreneur”, but they tend to say similar things. So here is a summary of the key findings!
Passionate about their product or service and about getting things right for the customer Visionary – they have faith in what they are trying to do. Energetic and driven – prepared to work consistently long hours, especially in the early stages
Calculated risk-takers – not reckless; they are prepared to take a risk in order to maximize the rewards Multi-tasker – able to take on more than one role (product development, selling, recruitment) Resilient and determined – able to handle problems and overcome hurdles. Setting up a business is difficult and time-consuming
Results-orientated – take pleasure from achieving targets and setting the bar higher. Persuasive – entrepreneurs are good at bringing other people and businesses “along with the idea” Leadership – an entrepreneur leads his or her own business (often working alone in the early stages). As the business develops, the skills of leading others become even more important
Self-starting and decisive – they don’t wait for others to take decisions. Entrepreneurs tend to take the initiative, spotting opportunities early and taking decisions quickly Focused – sets clear goals and self-imposed high standards Lucky – not to be laughed at! Every business needs some good luck – e.g. being in the right place at the right time.
The important thing to remember about the list is that an entrepreneur is unlikely to possess all these characteristics! Anyone who starts a business has strengths and weaknesses. However, the savvy entrepreneur recognizes where his/her weaknesses lie and takes steps to address them (e.g. recruit someone with the right skills).
Work in a group of MAXIMUM 6 students. Presentation title: “A successful entrepreneur” Presentation date: 9 th / 23 rd / 30 th MAY 2013 *MAX 3 GROUPS /SESSION* Points to remember: Show up early, Proper Introduction, Clear and Concise Points, Enhance your graphics, Conclude the presentation. Time: 15 – 20 minutes. REPORT DUE: 1 st JUNE 2013