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SWOT
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in practice
A SWOT analysis can be a useful way of summarising the
relationship between environmental influences and core competencies and
hence framing the agenda for developing new strategies. It can be simply
understood as the examination of an organisation's or a strategy's
internal Strengths and Weaknesses, and its external Opportunities and
Threats.
How to use SWOT
Identify the external factors acting upon the
organisation or policy area using tools and methods such as PESTLE
and market analysis (including five forces).
Undertake the same process in terms of internal resources and
competencies, using tools such as organisational
analysis.
Use the SWOT framework, as shown below, to summaries
the findings of these exercises.
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Internal |
Strengths |
Weaknesses |
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1
2
3
4
5
6 |
1
2
3
4
5
6 |
|
External |
Opportunities |
Threats |
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1
2
3
4
5
6 |
1
2
3
4
5
6 |
List specific items related to the issue at hand under
the appropriate heading in the table. It is best to limit the list to 10
or fewer points per heading and to avoid over-generalisations. Use
evidence to answer the following, or similar, questions:
Strengths
- What are the/our advantages?
- What does the strategy/policy/service/sector do well?
- What do other people see as its/our strengths?
Weaknesses
- What could be improved?
- What does the strategy/policy/service/sector do badly?
- What do other people see as its weaknesses?
- What should be avoided?
- Are there other similar services, strategies, policies etc that are
doing better?
Opportunities
- Where are the good opportunities?
- What are the interesting trends that you are aware of?
Useful opportunities can come from such things as
changes in technology and markets on both a broad and narrow scale,
changes in social patterns, population profiles, lifestyle changes and
local events
Threats
- What are the obstacles to improving performance/delivery etc?
- Are the required specifications for the service/strategy/policy
changing?
- Is the strategy/policy/service sector under pressure as a result of
changes in circumstances, demand/expectations? Is changing technology
threatening your position?
This analysis should provide some useful insights that
will help to ensure that the strategy capitalises on identified strengths
and minimises or eliminates weaknesses, takes advantage of opportunities
and avoids or lessens threats.
Strengths
- A useful way of summarising and combining previous analyses.
- Can be used as framework for a "quick and dirty"
brainstorming of a situation.
Weaknesses
- Definition of factors as opportunities or threats is not always
clear: choice of strategic direction may influence whether external
factors are threats or opportunities. Separation of strategic analysis
from strategic choice is therefore somewhat artificial.
- SWOT analysis is sometimes used to brainstorm ideas at the beginning
of analysis rather than as a tool for summarising findings of
analysis. Using the tool in this way can be very subjective and should
therefore not be relied on heavily, as two people or groups rarely
come-up with the same final version of SWOT. If SWOT analysis is used
in this way it should be revisited following further analysis.
- Bear in mind that while the SWOT model helps summarise external opportunities
and threats, opportunities and threats can also be internal.
References
S Tilles, 'Making strategy explicit' in I Ansoff, Business
Strategy, Penguin 1968
Exploring Corporate Strategy, Gerry Johnson and
Kevan Scholes
Structuring the thinking - SWOT
In Practice: SU Alcohol Project
The team constructed a SWOT analysis following some
preliminary research and discussions with key stakeholders in order to:
- Summarise the assessment of the strengths, weaknesses, opportunities
and threats within the UK drinks industry
- Provide an easily accessible framework for identifying the relevant
commercial issues affecting the UK drinks industry
- Build a picture of the general business drivers within the UK drinks
industry
- Crystallise key trends, issues and considerations
| Internal |
Strengths |
Weaknesses |
- Strong brand awareness, powerful international brands
- Multi-nationals have developed profitable scale economics
- Drinks brands are flexible and can be adjusted to reflect
changing tastes
- Greater diversity of catering outlets and venues with bars
have opened up to new markets for drinks
- Multiple grocers can give drinks large areas of display in the
superstores
|
- Near monopolies or duopolies exist in many segments, making
barriers to entry high
- Large multiple retailers have increasing buying power
- Production costs are relatively low leading to low cost
imitations
- Exports for traditional British products are weak
- Pressure from
|
| External |
Opportunities |
Threats |
- Consumption of some drinks is still lower in the UK than in
other countries, leaving room for increases in per capita
consumption Young consumers' thirst for novelty presents an
opportunity for continuos innovation
- Further de-regulation of the licensing laws will extend the
opportunities for distributing drink in the on-trade
|
- Since production costs are low and marketing costs are high,
drinks brands are always under threat from own label products
and other brands
- Alcopop's cannibalising beer and cider
- Flavoured water cannibalising carbonates
- Contraband and legitimate products bought across borders and
present a threat to profitability
- Smaller companies are constantly faced with the threat that
their launches might be overshadowed by large multi-national
marketing budgets
- Mergers will be heavily supervised by government as the
industry continues to consolidate
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