ND - SWOT AnalysisLim Sei Kee @ cK

SWOT analysis is a method for analyzing a business, its resources, and its environment.

Internal strengths

Internal weaknesses

Opportunities in the external environment

Threats in the external environment

SWOT is commonly used as part of strategic planning and looks at:

What the business does better than the competition

What competitors do better than the business

Whether the business is making the most of the opportunities available

How a business should respond to changes in its external environment

SWOT can help management in a business discover:

POSITIVE FACTORS NEGATIVE FACTORS

INTERNAL FACTORS Strengths Weaknesses

EXTERNAL FACTORS Opportunities Threats

The result of the analysis is a matrix of positive and negative factors for management to address:

Strengths and weaknesses Are internal to the business Relate to the present situation

Opportunities and threats Are external to the business Relate to changes in the environment which

will impact the business

The key point to remember about SWOT is that:

Strengths are:

Things a business is good at A characteristic giving a business an

important capability Sources of clear advantage over rivals Distinctive competencies and resources that

will help the business achieve its objectives

SWOT Analysis - Strengths

High market share Achieving

economies of scale High quality Leadership &

management skills Research and

development capabilities

Technological leadership

Brand reputation Distribution

network Employee skills High productivity Flexibility of

production

Examples of Potential Business Strengths

Weaknesses are:

A source of competitive disadvantage Things the business lacks or does poorly Factors that place a business at a

disadvantage Issues that may hinder or constrain the

business in achieving its objectives

SWOT Analysis - Weaknesses

Low market share Inefficient plant Outdated

technology Poor quality Lack of innovation A weak brand

name High costs

Cash flow problems Undifferentiated

products Inadequate

distribution Low productivity Skills shortages De-motivated staff Products at the

decline stage of product life cycle

Examples of Potential Business Weaknesses

An opportunity is any feature of the external environment which creates positive potential for the business to achieve its objectives.

SWOT Analysis - Opportunities

Technological innovation

New demand Market growth Demographic

change Social or lifestyle

change

Higher economic growth

Diversification opportunity

Deregulation of the market

Government spending programmes

Potential Business Opportunities

Threats are any external development that may hinder or prevent the business from achieving its objectives.

SWOT Analysis - Threats

New market entrants

Change in customer tastes or needs

Demographic change

New regulations

Economic downturn

Rise of low cost production abroad

Higher input prices New substitute

products Competitive price

pressure

Potential Business Threats

There is no point producing a SWOT analysis unless it is actioned! SWOT analysis should be more than a list - it is an analytical technique to support strategic decisions

Strategy should be devised around strengths and opportunities

Using SWOT analysis

MATCH

STRENGTHS

WITH

OPPORTUNITIES

CONVERT

WEAKNESSES

INTO

STRENGTHS

The key words are match and convert:

Weakness Possible Response

Outdated technology Acquire competitor with leading technology

Skills gap Invest in training & more effective recruitment

Overdependence on a single product

Diversify the product portfolio by entering new markets

Poor quality Invest in quality assurance High fixed costs Examine potential for outsourcing

or offshoring

A key challenge for any business is to convert weaknesses into strengths.  For example:

Form a group of MAXIMUM 6 students. Conduct self SWOT analysis. Present it to the class after 30 mins

discussion.

Activity

A: Takes the initiative in trying to exploit a business opportunity

B: Takes time to understand and calculate the risks involved

C: Makes an investment to set up the business

D: Goes ahead, despite the risk that the business venture might fail

ENTREPRENEUR?

Much research has been done to examine the personality and other characteristics of successful entrepreneurs to see if there is a proven method or route to success.

You will find many lists of “what is takes to be an entrepreneur”, but they tend to say similar things.  So here is a summary of the key findings!

Q&A - What are the characteristics of successful entrepreneurs?

Passionate about their product or service and about getting things right for the customer

Visionary – they have faith in what they are trying to do. 

Energetic and driven – prepared to work consistently long hours, especially in the early stages

Successful entrepreneurs tend to have one or more of the following characteristics:

Calculated risk-takers – not reckless; they are prepared to take a risk in order to maximize the rewards

Multi-tasker – able to take on more than one role (product development, selling, recruitment)

Resilient and determined – able to handle problems and overcome hurdles. Setting up a business is difficult and time-consuming

Results-orientated – take pleasure from achieving targets and setting the bar higher.

Persuasive – entrepreneurs are good at bringing other people and businesses “along with the idea”

Leadership – an entrepreneur leads his or her own business (often working alone in the early stages).  As the business develops, the skills of leading others become even more important

Self-starting and decisive – they don’t wait for others to take decisions. Entrepreneurs tend to take the initiative, spotting opportunities early and taking decisions quickly

Focused – sets clear goals and self-imposed high standards

Lucky – not to be laughed at!  Every business needs some good luck – e.g. being in the right place at the right time. 

The important thing to remember about the list is that an entrepreneur is unlikely to possess all these characteristics!

Anyone who starts a business has strengths and weaknesses.

However, the savvy entrepreneur recognizes where his/her weaknesses lie and takes steps to address them (e.g. recruit someone with the right skills).

Work in a group of MAXIMUM 6 students. Presentation title: “A successful entrepreneur” Presentation date: 9th / 23rd / 30th MAY 2013*MAX 3 GROUPS /SESSION*

Points to remember: Show up early, Proper Introduction, Clear and Concise

Points, Enhance your graphics, Conclude the presentation.

Time: 15 – 20 minutes.

REPORT DUE: 1st JUNE 2013

Assignment #1