1. Organization SWOT Analysis for Quality Improvement Eng. R. L. Nkumbwa

2. This presentation will cover:  SWOT analysis  SWOT analysis framework  Strengths  Weaknesses  Opportunities  Threats  Why is SWOT important?  Identifying SWOT analysis  SWOT analysis, what to look for  Strategy formulation  Tools for strategy formulation  A real example  An exercise

3. SWOT Analysis The SWOT Analysis is a framework for analyzing your company's strengths and weaknesses during the Strategic Planning process. It captures a realistic snapshot of your company today.

4. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and weaknesses relate to internal issues within the company while opportunities and threats relate to the external market in which the company operates.

5. SWOT Analysis The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection.

6. SWOT Analysis Framework Strengths A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Examples of such strengths include:  Exclusive access to high grade natural resources  New technologies and own Patents  Strong brand names  Good reputation among customers and suppliers  Cost advantages from proprietary know-how  Good access to distribution networks

7. SWOT Analysis Framework Weaknesses Poor resources or lack of strengths may be viewed as weaknesses. Examples of weaknesses include:  A weak brand name  Poor reputation among customers  Poor market regulations  High cost structure  Lack of access to the best natural resources  Poor distribution channels

8. SWOT Analysis Framework Opportunities An external analysis may reveal new opportunities for a company’s profit and growth. Examples of opportunities include:  Future good regulations in the market  New technologies and advances  Possibility to make a new product  An unfulfilled customer need  Removal of international trade barriers

9. SWOT Analysis Framework Threats Changes in the external environmental also may present threats to the firm. Examples of threats include:  New competitor enters the market  Emergence of substitute products  Shifts in consumer tastes away from the firm's products  New regulations  Increased trade barriers

10. Why is SWOT Analysis so Important? SWOT Analysis helps an institution or company identify and measure, in an organized way, its internal strengths and weaknesses and at the same time, helps match them with Opportunities and threats in the market.

11. S W O T The strategy for a company must match both,  Taking advantage of its internal strengths while defending against its weaknesses And  Identifying the best market opportunities and minimizing external threats

12. SWOT Every company has certain strengths, such as dominant market share, new technologies and a strong net income. Not every strength is quite as evident, such as a company that is very small but its size allows it to innovate on a much faster pace. Every company, even those which are not experiencing success right now, has strengths.

13. Identifying Strengths A strength is something a firm does well or a characteristic that enhances its competitiveness  Valuable competencies or know-how  Valuable physical assets  Valuable human assets  Valuable organizational assets  Important competitive capabilities  An attribute that places an organization in a position of competitive advantage  Alliances with capable partners

14. How can we determine our company strengths? Questions to answer:  What is the company’s market share?  Are the company’s sales & marketing functions effective?  Does the company have a strong financial position? How is the company raising capital?  What are the company’s major lines of business?  Does the company have skilled employees?  What are the company’s historical successes?  Does the company have the ability to adapt and change?  What do you offer that makes you stand out from the rest?

15. Identifying Weaknesses A weakness is something a firm lacks, does not very well, or has a disadvantage Resource weaknesses relate to:  Deficiencies in know-how or expertise or competencies  Lack of important physical, organizational, or intangible assets  Missing capabilities in key areas

16. How can we determine our Company Weaknesses? Questions to answer:  Is the company’s marketing strategy effective?  What are the company’s least profitable products?  Are there any of the company’s products losing money?  Is the company able to hire and retain talented employees?  Does the company have a strong financial position? Can it raise capital?  Is the company innovative? Has it brought new products or services to market?  Does the company have high levels of corporate governance?

17. How can we determine our Opportunities Questions to answer:  Are there new technologies that the company can use to create a new product?  Are there any good merge or acquisition opportunities?  Are there any possibilities of new technology?  Are there opportunities for strategic alliance with non- competitive businesses?  Are there opportunities to extend brands into related areas?  Are there money-losing ventures that can be divested to increase profitability?

18. How can we determine our Threats Questions to answer:  Does the company have adequate reserves to withstand a down cycle?  Is there trade union activity that could have an adverse effect?  Are competitors eating away market share or driving down prices?  Do new regulations pose a threat to the company?  Does lack of access to capital limit the company’s ability to invest?

19. SWOT Analysis: What to Look For Potential Strengths  Product quality  Good strong strategy  Positive cash flows  Powerful brand name or image  High market share  Proprietary technology  Cost advantages  Good communications  Strong product innovation  Good customer service  Alliances Potential Weaknesses  No clear strategic direction  Obsolete product  High debt ratio  Higher costs than competitors  Missing some key skills  High number of days sales in inventory  Internal operating problems  Competitors are ahead in R&D  Weak communications skills  Weak marketing strategy

20. SWOT Analysis: What to Look For Potential Opportunities  Take market share from Competitors  Serving additional customer  Expanding geographic areas  Expanding product line  Transferring skills to new products or services  Vertical integration  Alliances, acquisitions or merges  Exploit new technologies  Extend brand name and/or image Potential Threats  Reduced buyer needs for product or services  New competitors enter the market  Substitute products  Slow growth of the market  Adverse shifts in political or economic conditions  Costly new regulations or policies  Growing leverage of customers or suppliers  Demographic changes

21. Strategy Formulation Strengths (S)Weaknesses (W) Opportunities (O)SO Strategies WO Strategies Threats (T)ST Strategies WT Strategies

22. Tools for Strategy Formulation SO Strategies: Use strengths to take advantage of Opportunities WO Strategies: Overcome weaknesses to take advantage of opportunities ST Strategies: Use strengths to avoid threats WT Strategies: Minimize weaknesses and avoid threats

23. What can a SWOT analysis be used to assess?  Launching a new product  A company (its position in the market, commercial viability, etc)  Outsourcing a service or a plant  A strategic option, such as entering a new market  A business plan  An opportunity to make an acquisition or a merge  Changing a supplier or distributor  A method of sales distribution  A financing or investment opportunity

24. A real example: DreamWorks DreamWorks SKG is engaged in the development and production of live- action motion pictures and television programming. DreamWorks has an established brand name as a result of its strong product portfolio and market presence. However, piracy of motion pictures could adversely affect the company's revenues. StrengthsWeaknesses Strong brand nameWeak distribution and marketing network Undiversified operations OpportunitiesThreats Growing international demand Growth of DVD segment Growing digital broadcasting segment Increasing cost of production Intense competition Piracy of motion pictures

25. An exercise Construct your own SWOT analysis. Prepare a SWOT chart for your current job career (Examine your current situation)  What are your strengths and weaknesses?  How can you maximize your strengths and at the same time overcome your weaknesses?  What are the external opportunities and threats that you are encountered?

26. StrengthsWeaknesses 1.. 2.. 3.. 4.. 5.. 6.. 1.. 2.. 3.. 4.. 5.. 6.. OpportunitiesThreats 1.. 2.. 3.. 4.. 5.. 6.. 1.. 2.. 3.. 4.. 5.. 6..

27. Summary  SWOT analysis  SWOT analysis framework  Strengths  Weaknesses  Opportunities  Threats  Why is SWOT important?  Identifying SWOT analysis  Strengths  Weaknesses  Opportunities  Threats  SWOT analysis, what to look for  Strategy formulation  Tools for strategy formulation  A real example  An exercise

28. Reading list  Bradford, Robert W., Duncan, Peter J., Tarcy, Brian, Simplified Strategic Planning, A No-Nonsense Guide for Busy People Who Want Results Fast!  Alan Chapman - http://www.businessballs.comhttp://www.businessballs.com  Mission and Vision Statements. Amy McMillan and Deborah Hausler. Encyclopedia of Management. Ed. Marilyn Helms  Dr. Randall Hansen & Katharine Hansen, A Foot in the Door: Networking Your Way into the Hidden Job Market; and Write Your Way to a Higher GPA, all published by Ten Speed Press.  “The Art of War” by Sun Tzu  Bradford, Robert W., Duncan, J., Tarcy, Brian, Simpligied Strategic Planning: a no-nonsense guide for busy people who want results fast.  David, Fred R. (1993). Strategic Management, 4th Ed. New York: Macmillan Publishing Company. (Dr. David also maintains a strategic planning web site, http://www.checkmateplan.comhttp://www.checkmateplan.com