Strengths, Weaknesses, Opportunities and Threats (SWOT).
SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.
For example:
A strength could be:
- Your specialist marketing expertise.
- A new, innovative product or service.
- Location of your business.
- Quality processes and procedures.
- Any other aspect of your business that adds value to your product or service.
A weakness could be:
- Lack of marketing expertise.
- Undifferentiated products or services (i.e. in relation to your competitors).
- Location of your business.
- Poor quality goods or services.
- Damaged reputation.
In SWOT, opportunities and threats are external factors.
For example:
An opportunity could be:
- A developing market such as the Internet.
- Mergers, joint ventures or strategic alliances.
- Moving into new market segments that offer improved profits.
- A new international market.
- A market vacated by an ineffective competitor.
A threat could be:
- A new competitor in your home market.
- Price wars with competitors.
- A competitor has a new, innovative product or service.
- Competitors have superior access to channels of distribution.
- Taxation is introduced on your product or service.
- Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis.
- SWOT analysis should distinguish between where your organization is today, and where it could be in the future.
- SWOT should always be specific. Avoid grey areas.
- Always apply SWOT in relation to your competition i.e. better than or worse than your competition.
- Keep your SWOT short and simple. Avoid complexity and over analysis
- SWOT is subjective.
Once key issues have been identified with your SWOT analysis, they feed into marketing objectives.
SWOT can be used in conjunction with other tools for audit and analysis, such as
PEST analysis and Porter's
Five-Forces analysis. So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT exercise, list factors in the relevant boxes. It's that simple. Below are some FREE examples of SWOT analysis.
Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical
POWER SWOT.
SWOT as taught is today’s business schools is little more than Scientific Wild Ass Guess (SWAGs) according to Cranfield’s Professor Malcolm McDonald. He makes the point that many threats are the same regardless of the business
environment that is being audited. For example, common-all-garden threats would include the weather, competitors, changes in technology, regulation and deregulation, and the impacts of competing countries. In strengths you’ll get
good products – but that could mean anything. Under weaknesses you get equally general and vacuous points such as the
price is too high. This type of SWOT analysis is too general and is not much use to marketing managers. SWOT needs to be
segment specific. SWOT should look at groups of customers and their
perception of your brand, what
price they will pay, the
place where they buy it, the
products that they buy and so on. Otherwise your SWOT analysis is averaged and not specific.
SWOT analysis should be focused upon a
segment of the market. Then you can ask – what are the Critical Success Factors(CSFs) that are pivotal to the
buyer decision process – in that segment? Then you need to weight the CSFs so that you can separate those drivers that are most important. When considering strengths and weaknesses, in true marketing fashion you need to take the consumers’ perspective when completing the SWOT. You also must factor in the customers’ view of your business in relation to the competition i.e. relative to competitors. So you can match key CSFs to opportunities. You can rank those opportunities that are most profitable or sustainable. Then you need to factor in the impact of threats. Finally you should dovetail SWOT with the rest of your strategic thinking.
Having arrived on this page you have probably surfed the Internet and scoured books and journals in search of the history of SWOT Analysis. The simple answer to the question What is SWOT? is that there is no simple answer, and one needs to demonstrate a little academic wisdom in that nobody took the trouble to write the first definitive journal paper or book that announced the birth of SWOT Analysis. There are a number of contrasting, if not contradictory views on the origin of SWOT. Here are a few of the leading thinkers on the topic (and if you have more please let us know so that we can add them).
More . . .
A summary of FREE SWOT analyses case studies are outlined as follows (those in the table above are far more detailed and FREE!):
Amazon is a profitable organization. In 2005 profits for the three months to June dipped 32% to $52m (£29.9m) from $76m in the same period in 2004. Sales jumped 26% to $1.75bn. Until recent years Amazon was experiencing large losses, due to its huge initial set up costs. The recent dip is due to promotions that have offered reduced delivery costs to consumers.
Apple is a very successful company. Sales of its iPod music player had increased its second quarter profits to $320 (June 2005). The favourable brand perception had also increased sales of Macintosh computers. So iPod gives the company access to a whole new series of segments that buy into other parts of the Apple brand. Sales of its notebooks products is also very strong, and represents a huge contribution to income for Apple.
SWOT Prestigious, established, successful, global operation, with sales in USA, Europe and Asia, which is synonymous with social responsibility and environmentalism. For example, its products are packed in unbleached cardboard containers.
Weaknesses - An often cited original weakness is that when the business was started by Sunil Bharti Mittal over 15 years ago, the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field.
China Mobile Limited was started in 1997. Originally it was called China Telecom (Hong Kong) and then China Mobile (Hong Kong) and finally China Mobile Limited as we know it today. Its public offering in 1997 generated capital of USD $2.5 million, and a further massive investment of global capital (around USD $600 million) was made in 2004.
Crayola (Binney & Smith), a subsidiary of Hallmark, Inc.
Crayola Manufacturing is a 120 year old company that makes safe, dependable art supplies for children. Because most consumers have never heard of Binney & Smith, the Crayola maker changed its name in 2007 to reflect its brand name. Crayola has many different lines of products; as well as services, which vary from just crayons and markers.
Dell is the World's largest PC maker. Profits for the 3 months to July 2005 were in excess of $1 billion US, representing a growth of around 28%. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard). The Dell brand is one of the best known and renowned computer brands in the World.
Electronic Arts (EA) Games, is a global corporation which develops, markets, publishes and distributes video game software, online interactive games, and mobile games. They design games for a number of platforms including Sony PlayStation 3, Microsoft Xbox 360 and Nintendo Wii; handheld game systems, including PlayStation Portable (PSP), Nintendo DS and Apple iPod; personal computers (PCs); and mobile phones. The company distributes games in over 35 countries worldwide.
eBay is the leading global brand for online auctions. The company is a giant marketplace used by more than 100 million people to buy and sell all manner of things to each other. Pierre Omidyar, a French entrepreneur, was just 28 when he sat down over a long holiday weekend to write the original computer code for what eventually became an Internet megabrand. The brand has grown tremendously over the decade or so since its conception.
General Motors is an omnipresent company in the United States, a company so essential to the overall health of the U.S economy that it spawned the phrase “as GM goes, so goes the nation”. Long known for the manufacturing of cars, trucks and automobiles, General Motors has also engaged in finance and insurance. However, most recently the global recession has had a devastating impact on its, cash flows, financial condition and operations.
Strong Market Position - Recently (April 2010), Hewlett-Packard’s shares closed at $53.15. According to NASDAQ, the stock is up 62% in the past year, better than the market at large. This continues a trend that saw the company ease pass the previous global pc leader Dell in 2006. In 2008 Hewlett Packard led Dell with over 17% of the PC Market while Dell settled for second at 14%. In addition Hewlett Packard can boast of a 30% of the global server market.
Brand Awareness - Home Depot is the world’s largest company in the home improvement retail industry with revenues exceeding $70 billion. Specifically, while Home Depot is the fourth largest retailer in the United States, it is the largest in both Canada and Mexico. In addition, it ranks 127th in Forbes Global list of the 2000 largest companies. Such dominance boosts brand awareness for such private brands as Pegasus Faucets, Husky Hand Tools, and Vigoro Lawn Care Products.
Where will you find the Mumbai Indians, the Royal Challengers, the Deccan Chargers, the Channai Super Kings, the Delhi Daredevils, the Kings XI Punjab, the Kolkata Knight Riders and the Rajesthan Royals? In the
Indian Premier League (IPL) - the most exciting sports franchise that the World has seen in recent years, with seemingly endless marketing opportunities (and strengths, weaknesses and threats of course!).
Infosys is one of the largest businesses in India with a turnover in excess of $4 billion in 2008. The company specializes in Information Technology (IT) and consulting. N.R. Narayana Murthy and six others started the company in 1981, and it is now the largest IT company in India with its headquarters in Bangalore (although it was started in Pune). It employs more than 90,000 IT professionals and was famously rated 'Best Employer in India.'
ITC is one of India's biggest and best-known private sector companies. In fact it is one of the World's most high profile consumer operations. Its businesses and brands are focused almost entirely on the Indian markets, and despite being most well-known for its tobacco brands such as Gold Flake, the business is now diversifying into new FMCG (Fast Moving Consumer Goods) brands in a number of market sectors - including cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel, personal care, greetings cards, Information Technology, safety matches
Sturdy Market Position - Kroger has weathered the economic recession with relative success due to the strong market position it had going in. Kroger held number one and number two market share position in 39 out of 42 major markets in 2009. The company competed with 1,418 other supercenters and has achieved at least a number three market share position in 35 of its major markets.
McDonald's has been a thriving business since 1955 and 20 of the top 50 corporate staff employees started as a restaurant level employee. In addition, 67,000 McDonalds restaurant managers and assistant managers were promoted from restaurant staff. Fortune Magazine 2005 listed McDonald's as the "Best Place to Work for Minorities."
Global food producer, located in over 100 countries. Consistently one of the world's largest producers of food products, with sales in the USA in 2008 of $10 billion; sales and earnings in 2008 were better than expected, even in a downturned economy. Global sales in 2008 topped $101 billion.
Branding - One of PepsiCo’s top brands is of course Pepsi, one of the most recognized brands of the world, ranked according to Interbrand. As of 2008 it ranked 26th amongst top 100 global brands. Pepsi generates more than $15,000 million of annual sales. Pepsi is joined in broad recognition by such PepsiCo brands as Diet Pepsi, Gatorade Mountain Dew, Thirst Quencher, Lay’s Potato Chips, Lipton Teas (PepsiCo/Unilever Partnership), Tropicana Beverages, Fritos Corn, Tostitos Tortilla
Sandals (Beaches) is a Caribbean Based Resort Hotel Chain, that was only recently established, but has proved to be highly successful, based on their innovative marketing concepts. In Montego Bay, Jamaica, in 1981, Gordon "Butch" Stewart, took notice of an old hotel sitting on Jamaica's largest private white sand beach, bought it, fixed it up and opened the hotel doors for business.
Smith & Wesson Holding Corporation, a global leader in safety, security, protection and sport, is parent company to Smith & Wesson Corp., one of the world's largest manufacturers of quality firearms and firearm safety/security products and parent company to Smith & Wesson is based in Springfield, Massachusetts with manufacturing facilities in Springfield, Houlton, Maine, and Rochester, New Hampshire.
Strengths - Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets. 'Weaknesses - The organization does have a diversified range of sports products. Opportunities - Product development offers Nike many opportunities. Threats - Nike is exposed to the international nature of trade.
The company began in 1945 and has produced more than 4 million vehicles. Tata Motors Limited is the largest car producer in India. It manufactures commercial and passenger vehicles, and employs in excess of 23,000 people.
Time Warner is not only a dominant US company it is one of the world’s largest media companies. Its pre-eminence in the US market is evident in the publication of 23 magazines, such as, Sports Illustrated, Time, InStyle, Real Simple, People, Fortune and Southern Living. The company also boasts nearly 50 websites internationally, such as People.com, SI.com and CNN Money.com.
New investment by Toyota in factories in the US and China saw 2005 profits rise, against the worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn; £5.85bn), while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that this is because the company has the right mix of products for the markets that it serves. This is an example of very focused segmentation, targeting and positioning in a number of countries.
Toys "R" Us has in excess of 1500 superstores in the United States and Worldwide. It also owns the baby brand, Babies R Us which adds another 200 + stores. Toys "R" Us also markets successfully on the Web (in collaboration with Amazon.com). It has a huge distribution network that benefits from advanced logistical systems. Having so much shelf space means that the company has a strong bargaining position when it comes to buying prices from manufacturers. It turned over more than $11 billion in 2005.
Trojan (Church and Dwight Company)
Trojan is owned by Church & Dwight Company, Incorporated, also known as, Arm & Hammer. The company is headquartered in Princeton, New Jersey and employed about 3,700 people as of December 2008. Church & Dwight Co., Inc., founded in 1846, is the leading U.S. producer of sodium bicarbonate, popularly known as baking soda. Church & Dwight's consumer products business is organized into two segments
Strengths - Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004. Weaknesses - Starbucks has a reputation for new product development and creativity. Opportunities - New products and services that can be retailed in their cafes, such as Fair Trade products. Threats - Starbucks are exposed to rises in the cost of coffee and dairy products.
Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store. Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control. Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats - Being number one means that you are the target of competition, locally and globally.
In 1980 twenty-five year old college dropout John Mackey and twenty-one year old Rene Lawson Hardy created the Whole Food Company (WFC) in Austin, Texas. It was born with the idea to provide a grocery store featuring good, wholesome food; not a "health food" store filled with pills and potions. Sales doubled each year for the first four years.
Yahoo!'s Overture is a tremendously profitable Internet advertising business. It focuses on affiliate advertising for large advertising accounts, in the same way as Google's Adsense programme. This is an important income stream for Yahoo!
by Mkt Teachers
