THE ROLE OF SWOT ANALYSIS BY MAO Cavendish University Uganda JUNE 2011

The Business Environment ECONOMIC Components Demographic Sociocultural THE ORGANIZATION POLITICAL LEGAL GLOBAL Technological

S.W.O.T. Factors External to Organization Factors Internal to Organization Strengths Weakness Opportunities Threats Factors External to Organization

S.W.O.T. ANALYSIS1 A technique that enables a group, an organization or individual to move from everyday problems and traditional strategies to a fresh perspective. It is a problem solving tool It is a re-engineering tool It is a re-energizing/revitalizing tool

S.W.O.T. ANALYSIS 2 goals, programs, and capacities A SWOT analysis generates information that is helpful in matching an individual, organization or group’s goals, programs, and capacities to the social environment in which it operates.

S.W.O.T. ANALYSIS 3 Factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), Factors external to the firm can be classified as opportunities (O) or threats (T). It is an instrument within strategic planning.

Strength Positive tangible and intangible attributes, internal to an organization. They are within the organization’s control Any existing or potential resources or capability within the organisation that provides a competitive advantage in the market. Strong distribution network Intense Staff commitment and loyalty Increasing profit margin

Weakness Any existing or potential force which could serve as a barrier to maintaining or achieving the core goal. Which areas might the organization improve? Examples: Lack of a clear company strategy Lack of training opportunities for using a new software Lack of loyalty

Opportunities External attractive factors that represent the reason for an organization to exist and develop. What opportunities exist in the environment, which will propel the organization? Identify them by their time frames Organizational geographic location New technology Emerging customer needs Quality Improvements Expanding local or global markets

Threats External factors, beyond an organization’s control, which could place the organization’s mission or operation at risk. It’s a danger to the company’s well-being Classify them by their “seriousness” and “probability of occurrence”. Possible Threats: New entry by competitors Changing demographics/shifting demand Emergence of cheaper technologies Regulatory requirements The organization may benefit by having contingency plans to address them if they should occur.

Opportunities and Threats form a basis for EXTERNAL analysis By examining opportunities, you can discover untapped markets, and new products or technologies, or identify potential avenues for diversification. By examining threats, you can identify unfavorable market shifts or changes in technology, and create a defensive posture aimed at preserving your competitive position.

SWOT ANALYSIS The bottom-line Take advantage of strengths and opportunities. Minimize weaknesses and eliminate threats

Simple Rules for SWOT Analysis 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.

SWOT Analysis…Who needs it? A Company Revenue, cost and expense targets are not being achieved Market share is dropping Industry conditions are unfavorable Want to launch a new business venture etc

SWOT Analysis…Who needs it? A Department/Business Unit: When the team has not met its targets Customer service can be better A new business unit to pursue a new business A new team leader is appointed etc

SWOT Analysis…Who needs it? A Job Holder Supervisors are not meeting work output targets Assigned to a new job New financial year – fresh targets Job holder seeks to improve performance on the job

How to do SWOT Analysis SWOT analysis will be useful if: A SWOT analysis is useful only when action plans and strategies are developed from the results. Prepare Action Plans Analyze Internal & External Environment Perform SWOT Analysis and Document SWOT analysis will be useful if: You are thinking outside the box. You need varied perspectives – group discussion Liberty to say your mind Willingness to break away from traditional methods Appetite for change

SWOT Analysis…BENEFITS Solving problems Implementing change and Developing strategies for achieving the organization's objectives and mission