Situational Analysis SWOT Analysis

What is SWOT Analysis? A structured assessment of the fit between what an organization can (strengths) and cannot (weaknesses) presently do, and the environmental conditions working for (opportunities) and against (threats) the firm.

Major Benefits Simple to use. Reduces costs of strategic planning. Flexible. Integrates and synthesizes diverse information. Fosters collaboration among managers of different functional areas.

To be effective: Stay focused on specific product/market. Don’t overlook any information. Collaborate with other functional areas. Examine issues from customers’ perspective. Separate internal issues from external issues.

Potential Strengths Abundant financial resources Any distinctive competence Market leader Economies of scale Proprietary knowledge Patented processes Lower costs Good marketing image Superior mgr. talent Better mkt skills Product quality Partnerships with other firms Distribution skills Committed employees

Potential Weaknesses Lack of strategic direction Weak spending on R&D Very narrow product line Limited distribution Higher costs Out-of-date products Internal operating problems Weak market image Poor marketing skills Limited mgmt skills Undertrained employees

Potential Opportunities Rapid market growth Rival firms are complacent Changing customer needs/tastes Opening of foreign markets Mishap of rival firm New product uses Economic boom Deregulation New technology Demographic shifts Other firms seeking alliances High brand switching Sales decline for a substitute New distribution methods

Potential Threats Entry of foreign competition Introduction of new substitutes Product life cycle in decline Changing customer needs/tastes Rival firms adopt new strategies Increased regulation Recession New technology Demographics shifts Foreign trade barriers Poor performance of ally firm

An example….

Analysis of SWOT Matrix

Matching Strengths to Opportunities Creates competitive advantage. Operational excellence Product leadership Customer intimacy Provides guidance on how the firm might structure marketing strategy to convert weaknesses and threats and minimize/avoid those weaknesses and threats that cannot be converted.