SWOT ANALYSIS

SWOT ANALYSIS is the strategic thinking which requires the evaluation of Strength, Weakness, Opportunity & Threats.
It provides information that is helpful in matching the resources of the firm to face the environmental competition.
It creates a logical framework for strategic alternatives and selecting the best one.
It guides the strategist in strategy identification and formulation.
Strength & Weakness are internal analysis of business whereas Opportunity & threat are external environmental analysis.
Strength : It is an inherent capacity of the organization which provides strategic advantage over its competitors.
Weakness: It is an inherent limitation or constraint of the organization which creates disadvantage to the organization.
Opportunity: It is a favorable condition of the environment which enables the business to strengthen its position.
Threat: It is an unfavorable condition of the environment which causes risk or damage to the position of the organization
SWOT Matrix creates a scope for identifying the best fit between firm’s strength with its opportunities.
It also states that how to overcome a weakness and threat.
Matrix is the combination of rows and columns. The SWOT analysis profile consists of combinations of
S-O
WO
S-T
W-T

1. SWOT ANALYSIS BY: Dr. Debajani palai Faculty : imit

2. MEANING SWOT ANALYSIS is the strategic thinking which requires the evaluation of Strength, Weakness, Opportunity & Threats. It provides information that is helpful in matching the resources of the firm to face the environmental competition. It creates a logical framework for strategic alternatives and selecting the best one. It guides the strategist in strategy identification and formulation. Strength & Weakness are internal analysis of business whereas Opportunity & threat are external environmental analysis.

3. CONT… Strength : It is an inherent capacity of the organization which provides strategic advantage over its competitors. Weakness: It is an inherent limitation or constraint of the organization which creates disadvantage to the organization. Opportunity: It is a favorable condition of the environment which enables the business to strengthen its position. Threat: It is an unfavorable condition of the environment which causes risk or damage to the position of the organization

4. Strengths A firm’s strengths are its resources & capabilities that can be used as a basis for developing a competitive advantage. Examples of strengths: Patents Brand names Good-will Customer loyalty Technical-know-how Strong distribution network Competent personnel

5. CONT… Powerful strategy with valuable skill. Strong financial condition to avail resources timely. Company image & reputation. Attractive customer base. Market leader Superior intellectual capacity. Strong advertisement & promotion. Product innovation skill Use of e-commerce Wide geographic coverage Expansion of the organization

6. Weaknesses The absence of certain strengths create weaknesses. Examples Lack of patent protection Weak brand name Poor reputation among customers High cost structure Lack of access to resources Lack of access to key distributors Lack of skilled HR

7. CONT… No clear strategic direction. A weak balance sheet with high debt. Higher overall unit cost relative to key competitors. Calk of intellectual capital. Lack of cost control measures and cost accounting practices. Internal operating problems. Facing problems from rivals. Lack of e-commerce or global distribution channel. Weak reputation. Narrow product line. Shortage of resources & underutilization of resources. Lack of adaptability of technology & expansion of the organization.

8. Opportunities The external environmental analysis reveal certain new opportunities for the growth of the organization. Examples Liberal policies and regulations Unfulfilled customer needs Adaptive with new technology Removal of international trade barriers

9. CONT… Expansion with new product line with broader range of customer needs. Technological up gradation to enter in new business line. Integrating forward & backward. Falling trade barriers in attractive foreign markets. Opening to take market share away from rivals. Acquisition of rivals Joint venture New market expansion.

10. Threats Changing environment invite threats for business. Example New rules and regulations Change in consumer tastes away from firm’s products Availability of substitute Increased barrier Strong rivalry

11. CONT… Loss of sales to Entry of new competitors H igh cost of production with low technological innovation. Slowdown market growth. Adverse shift in foreign exchange rate. New policies and regulations. High bargaining power of customers. High bargaining power of suppliers. Adverse demographic change.

12. SWOT Matrix SWOT Matrix creates a scope for identifying the best fit between firm’s strength with its opportunities. It also states that how to overcome a weakness and threat. Matrix is the combination of rows and columns. The SWOT analysis profile consists of combinations of S-O WO S-T W-T

13. Cont… STRENGTHS WEAKNESSES OPPORTUNITIES S-O-STRATEGIES W-O-STRATEGIES THREATS S-T-STRATEGIES W-T-STRATEGIES

14. CONT… S-O-STRATEGIES- Strategies pursue opportunities that are a good fit to the company’s strength. W-O-STRATEGIES- Overcome weaknesses to pursue opportunities. S-T-STRATEGIES- Identify ways that the firm can use its strengths to reduce its vulnerability to external threats. W-T-STRATEGIES- Establish a defensive plan to prevent the firm’s weakness from making it highly susceptible to external threats.

15. IMPORTANCE OF SWOT ANALYSIS SWOT analysis presents the information about both internal & external environment in a structured form. It compares external opportunities & threats with internal strength & weaknesses. The strategist can be able to choose a suitable strategy by analyzing SWOT profile which consists of combination of: high opportunity with high strength, high opportunity with low strength, high threats with high strength & high threats with low strength. It helps the managers to craft business model that will allow the company to gain competitive advantage. Potential strength and competitive advantage, potential weakness & competitive deficiencies, potential opportunities & threats to company’s wellbeing.