Swot Analysis

SWOT Analysis

Alan Belasen, Ph.D.

Sizing up a firm's resources and competitive capabilities through SWOT analysis can help managers determine how well the firm is aligned with industry and market conditions. The end result of such analysis is a strategic balance sheet where resource strengths represent competitive assets and resource weaknesses represent competitive liabilities. The ideal situation is when strengths significantly outweigh the deficiencies or relative disadvantages of the firm?an equal balance (50/50) is definitely not a desired goal!

Here are some pointers when conducting SWOT Analysis:

Potential Resource Strengths and Competitive Capabilities:
  • A powerful strategy supported by good skills and expertise in key areas
  • A strong financial condition; ample financial resources to grow the business
  • Strong brand-name image/company reputation
  • A widely recognized market leader and an attractive customer base
  • Ability to take advantage of economies of scale and/or learning and experience curve effects
  • Proprietary technology/superior technological skills/important patents
  • Cost advantages
  • Strong advertising and promotion
  • Product innovation skills
  • Proven skills in improving production processes
  • A reputation for good customer service
  • Better product quality relative to rivals
  • Wide geographic coverage and distribution capability
  • Alliances/joint ventures with other firms
Potential Resource Weaknesses and Competitive Deficiencies:
  • No clear strategic direction
  • Obsolete facilities
  • A weak balance sheet; burdened with too much debt
  • Higher overall unit costs relative to key competitors
  • Missing some key skills or competencies/lack of management depth
  • Subpar profitability because . . .
  • Plagued with internal operating problems
  • Falling behind in R&D
  • Too narrow a product line relative to rivals
  • Weak brand image or reputation
  • Weaker dealer or distribution network than key rivals
  • Subpar marketing skills relative to rivals
  • Short on financial resources to fund promising strategic initiatives
  • Lots of underutilized plant capacity
  • Behind on product quality
Potential Company Opportunities:
  • Serving additional customer groups or expanding into new geographic markets or product segments
  • Expanding the company's product line to meet a broader range of customer needs
  • Transferring company skills or technological know-how to new products or businesses
  • Integrating forward or backward
  • Falling trade barriers in attractive foreign markets
  • Openings to take market share away from rival firms
  • Ability to grow rapidly because of strong increases in market demand
  • Acquisition of rival firms
  • Alliances or joint ventures that expand the firm's market coverage and competitive capability
  • Openings to exploit emerging new technologies
  • Market openings to extend the company's brand name or reputation to new geographic areas
Potential External Threats to a Company's Well-Being:
  • Likely entry of potent new competitors
  • Loss of sales to substitute products
  • Slowdowns in market growth
  • Adverse shifts in foreign exchange rates and trade policies of foreign governments
  • Costly new regulatory requirements
  • Vulnerability to recession and business cycle
  • Growing bargaining power of customers or suppliers
  • Adverse demographic changes
  • Vulnerability to industry driving forces

I am sure this technique will be quite helpful in your case analysis. You could apply it to the organization under study or perhaps, to a specific strategy you are using in your case analysis or report. Another adaption would be to use it for your discussion supporting your position regarding the case. Remember that management operates on a basic rule of NO SURPRISES. This means that "selling" your idea should contain both strengths and deficiencies.

Last modified: Monday, July 17, 2017, 12:25 PM