Detailed SWOT Analysis

Detailed SWOT Analysis

SWOT Analysis Overview What is SWOT Analysis? A SWOT (Strengths, Weaknesses, Opportunities, and Threats) is a tool used to provide a general or detailed snapshot of a company's health. Think of your SWOT as a tune-up that every business needs periodically to diagnose and fix what’s a bit worn, what’s on the verge of breaking down, or what’s already broken and needs replacement--so that you can keep the business humming—even better than it has in the past. 9 SWOT offers professional managers an effective evaluative technique to aid the decision making process. 9 It can not find the solution for you, but it will ensure that issues are: identified, classified and prioritized clearly, showing the problem in terms of key underlying issues. Decision makers can then see the answer. 9 It's a four-part approach to analyzing a company's overall strategy or the strategy of its business units. All four aspects must be considered to implement a long-range plan of action. Remember, It’s Virtually Impossible To Focus Too Much On What You Do Well And What Creates Profits For Your Business. © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Example Strengths: ¾ We are able to respond very quickly as we have no red tape, no need for higher management approval, etc. ¾ We are able to give really good customer care, as the current small amount of work means we have plenty of time to devote to customers ¾ Our lead consultant has strong reputation within the market ¾ We can change direction quickly if we find that our marketing is not working ¾ We have small overheads, so can offer good value to customers Weaknesses: ¾ Our company has no market presence or reputation ¾ We have a small staff with a shallow skills base in many areas ¾ We are vulnerable to vital staff being sick, leaving, etc. ¾ Our cash flow will be unreliable in the early stages Opportunities: ¾ Our business sector is expanding, with many future opportunities for success ¾ Our local council wants to encourage local businesses with work where possible ¾ Our competitors may be slow to adopt new technologies Threats: ¾ Will developments in technology change this market beyond our ability to adapt? ¾ A small change in focus of a large competitor might wipe out any market position we achieve ¾ The consultancy might therefore decide to specialize in rapid response, good value services to local businesses. Marketing would be in selected local publications, to get the greatest possible market presence for a set advertising budget. The consultancy should keep up-to-date with changes in technology where possible. A start-up small consultancy business might carry out the

following SWOT analysis

© Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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Why Use SWOT? In any business, it is imperative that the business be its own worst critic. A SWOT analysis forces an objective analysis of a company's position via its competitors and the marketplace. Simultaneously, an effective SWOT analysis will help determine in which areas a company is succeeding, allowing it to allocate resources in such a way as to maintain any dominant positions it may have. SWOT Analysis is a very effective way of identifying your Strengths and Weaknesses, and of examining the Opportunities and Threats you face. Carrying out an analysis using the SWOT framework will help you to focus your activities into areas where you are strong, and where the greatest opportunities lie. Why Bother to SWOT? The economy stinks. So why take the time to bang your company over the head doing a SWOT analysis when so much is out of your control? No question that the current downturn is impacting some businesses more traumatically than others, and a lot of disappointing business results can be blamed primarily on the general economic climate. But look around. A high percentage of U.S. businesses are surviving the pain, and many are even thriving. Winners typically win not by sticking with their past game plans--but rather by focusing on some new thing(s) that are under their control. During depressed economic times, there are still lots of winners © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis The Basics You can develop the basic analysis in a brainstorming session with members of your company, or by yourself if you are a one-person shop. The business of management today is characterised by complex issues and continuous change. Frequently the related decisions and actions are characterised by trying to understand the complexity of the issues involved so that an appropriate decision can be made. While this kind of applied decision making is not an exact science, SWOT analysis is internationally known as a method of understanding the issues which are involved. In doing so, ideas can be shared between managers and even integrated into a wider picture for subsequent analysis. Use SWOT analysis to help you and your team reach the best solution by: 9 Helping decision makers share and compare ideas 9 Bringing about a clearer common purpose and understanding of factors for success 9 Organizing the important factors linked to success and failure in the business world. 9 Analyzing issues that have led to failure in the past 9 Providing linearity to the decision making process allowing complex ideas to be presented systematically. SWOT analysis is a dynamic process of decision making with many applications in organizations and other applied fields © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis How Does SWOT Analysis Work? 9 The strategy is to look at the organizations current performance (strengths and weaknesses) and factors in the external environment (opportunities and threats) that might affect the organizations future. 9 Once the attributes for each section have been identified it is possible to determine the point of balance. Eventually the points of balance of strengths versus weaknesses and opportunities versus threats can be plotted together. 9 For example, an information technology department needs to determine the strengths and weaknesses of its people and its technology. It also needs to make sure the IT strategy complements the company's business goals. The department head needs to ask: What is each staff member good at? What are they not good at? 9 Project leaders also must consider opportunities and threats -- or customers and competitors. How attractive is the market or direction they're considering? What's their market share and cost structure?

POSITIVE

INTERNAL Strengths

NEGATIVE

Weaknesses

EXTERNAL Opportunities Threats © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Example Delta Air Lines Inc., chose to invest in a multibillion-dollar customer service system that addresses the flight delay problems experienced by 20% of its passengers. Although some companies might think the move was excessive considering 80% of customers have no problems, Delta believed customer service was an important area for increasing market share and that competitors could pose a threat if Delta didn't address the problem. Another example is Dell Computer Corp., which is a great example of how an IT company can use a SWOT analysis to carve out a strong business strategy, according to Glazer. Dell recognized that its strength was selling directly to consumers and keeping its costs lower than those of other hardware vendors. As for weaknesses, the company acknowledged that it lacked solid dealer relationships. Identifying opportunities was an easier task. Dell looked at the marketplace and saw that customers increasingly valued convenience and one-stop shopping and that they knew what they wanted to purchase. Dell also saw the Internet as a powerful marketing tool. On the threats side, Dell realized that competitors like IBM and Compaq Computer Corp. had stronger brand names, which put Dell in a weaker position with dealers. Dell put together a business strategy that included mass customization and just-in-time manufacturing (letting customers design their own computers and custom-building systems). Dell also stuck with its direct sales plan and offered sales on the Internet.

Clarity in strategy works. Fuzzy strategies fail. Most strategies fail because they don't have a clear direction © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Internal and External Analysis To get a better look at the big picture, consider both internal and external forces when uncovering opportunities and threats. What better source than the group of participants composed of stakeholders, staff, Internal Analysis: volunteers, and/or community residents? Examine the capabilities of your organization. This can be done by analyzing your organization's strengths and weaknesses. External Analysis: Look at the main points in the environmental analysis, and identify those points that pose opportunities for your organization, and those that pose threats or obstacles to performance. Key points: Once the SWOT analysis has been completed, mark each point with: 9 Things that MUST be addressed immediately. 9 Things that can be handled now. 9 Things that should be researched further. 9 Things that should be planned for the future. A SWOT session is a participatory group process which produces output valuable for annual planning © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis The Basics (Cont.) 9 Now that each point has been prioritized, set an action point for each and assign it to a person, add a deadline. 9 Although the SWOT analysis will assist in identifying issues, the action plan will ensure that something is done about each one. With complicated issues, a further brainstorming session might be done to analyze it further & decide what action to take. 9 The SWOT analysis results should be reviewed every few months to determine if anything has changed and what has been achieved. 9 The "Brainstorm" is best used when setting up a new project or organization, works best in smaller groups than a SWOT session, and can be effectively used in the transformation process when the participants are a smaller group of managers. 9 The observations generated by the participants should not include any major surprises to the organizers and coordinators of the program and the administrators of the organization. 9 It can be used in a conference where the participants come from different locations and organizations. A SWOT session is also useful for deciding upon a major transformation of a program © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Additional Notes 9

Do realize that any analysis requires data and information. If you do not have adequate information, the results of your analysis are likely to be less reliable. However, an experienced manager knows that complete information is never available. In the real world, you end up making business decisions with incomplete information. That is where things like common sense, gut feel and experience kick in. Expanded SWOT Analysis 9 You can take an additional step beyond a traditional "text book" SWOT analysis by delving deeper into industry dynamics. A more in-depth SWOT analysis can help you better understand your company's competitive situation. 9 One way to step beyond a traditional SWOT analysis is to include more detailed competitor information in the analysis. Note Internet-related activities such as trade organization participation, search engine inclusion, and outside links to the sites. This will better help you spot opportunities for and threats to your company. 9 You can also take a closer look at the business environment. Often, opportunities arise as a result of a changing business environment. Some examples are: 9 * A new trend develops for which demand outstrips the supply of quality options. Early on, the trend toward healthy eating coupled with an insistence on good-tasting food produced a shortage of acceptable natural food alternatives, for example. 9 * A customer segment is becoming more predominant, but their specific needs are not being fully met by your competitors. The U.S. Hispanic population experienced this phenomenon in the late 1990’s and early 2000’s. 9 * A customer, competitor, or supplier goes out of business or merges with another company. With the demise of many pure-play "dot coms", examples of this abound. As each went out of business, opportunities arise to gain the defunct business’ customers. 9 You can also expand the reach of a SWOT analysis through surveys. You can learn more about your own as well as competitor’s sites and businesses. Areas to consider researching include 9 customer awareness, interest, trial, and usage levels, 9 brand, site, and/or company image, 9 importance of different site or product attributes to your customers, and 9 product and/or site performance. 9 Whether using a basic or more advanced approach to SWOT analysis, you are sure to come away with newfound insights. Use these to increase your company's effectiveness and as input into your business or marketing plan

The SWOT framework offers a good starting point for analysis © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Operational Definitions A STRENGTH is something that you truly do well, excel at versus the competition, can build on; something that truly differentiates your business, a key metric that is improving, etc. Most companies do surprisingly bad job of identifying what they are really good at doing. Every company has strengths. A strength can be something very concrete like a large, growing customer base or less measurable: a well-run customer service department that keeps customers satisfied (thus helping both retention and new sales). Note that a STRENGTH can also be a weakness: e.g. you’re Number One in your market is a STRENGTH, but if you are taking that for granted—that’s also a weakness. A Weakness is a real gap, a deficiency, a problem, or a key metric that is going south; something you’re not doing very well and that you should be doing better; something that’s dated that no longer applies—even though it used to; something important that you really don’t know or aren’t sure about. In fact, one good outcome of a SWOT is to discover what you really don’t know and then do something about it. A weakness can be very tangible and concrete or it can be an attitude: e.g. a complete unwillingness to invest in any marketing initiatives or a lack of understanding what to do. The best way to identify STRENGTHS, WEAKNESSES, OPPORTUNITIES & THREATS is to ask the right questions © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Operational Definitions (Cont.) An OPPORTUNITY is a favorable external condition; something (that you haven’t acted on or taken advantage yet) that could impact you positively. Opportunities are new ways that your exploit your STRENGTHS, WEAKNESSES & THREATS--new things that that you can do to potentially improve your business—that turn into recommendations and actions. This list becomes the most important part of your SWOT for prioritizing and determining what next steps to take. A THREAT is something external to your business that can potentially impact you negatively: competitors (actually doing specific things vs. just being there), changing conditions in your particular marketplace, the overall economy, government regulations, etc. Threats are part of the playing field that you can’t ignore. They are part of the context of your business. Some threats, though, are internal: e.g. hanging onto the status quo when change is required or the impact on remaining if you decide to cut costs (maybe an OPPORTUNITY). You should also make an ongoing list of Issues and questions that inevitably pop-up as a result of developing the STRENGTHS, WEAKNESSES, OPPORTUNITIES & THREATS lists—for further analysis and discussion—and possible incorporation into your SWOT. Generally, STRENGTHS & WEAKNESSES are current in timeframe, and OPPORTUNITIES & THREATS are in the future— starting with tomorrow. The purpose of strategy is to be really clear before you take the direction. The point of a SWOT analysis is to have the best shot at a grounded plan © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Strengths Every organization has some strength. In some cases this is obvious, for example, dominant market shares. In other cases, it is a matter of perspective, for instance, a company is very small and hence has the ability to move fast. It is important to note that companies that are in a bad position also have strengths. Whether these strengths are adequate is an issue for analysis. Define areas you excel in, such as the company’s core competency and resource analysis Consider strengths from your own point of view and from the point of view of the people you deal with. Don't be modest - be realistic. If you are having any difficulty with this, try writing down a list of your characteristics. Some of these will hopefully be strengths! Strengths will include the wisdom and experiences learned by the staff. Some of their skills may be valuable for continuing in the same way, but may be a hindrance to making an organizational or program change. SWOT will help you to focus on your strengths, minimize weaknesses, and take the greatest possible advantage of opportunities available © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Strengths Questions 9 What makes you stand out from your competitors? 9 What advantages do you have over other businesses? 9 What are the major sources of a company's revenue and profit? 9 What is the market share of the company in its various product lines? 9 Does the company have strong brands? 9 Is the marketing/advertising effective? 9 What is the major focus are of the company? 9 Does the company have a pool of skilled employees? 9 Is the morale of the employees high?

9 Are there rewards in place to create an atmosphere conducive to excellence? 9 What is the cost of capital? 9 What is the stock price track record? 9 Does the company harness information technology effectively? 9 Does the company manage its inventories efficiently? 9 Has the company demonstrated the ability to adapt and change? 9 Is the company able to innovate? 9 How has the company withstood international competition?

Think about what your company does well. Some questions to help you get started © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Weaknesses Every organization also has some weakness. In some cases, this is obvious; say for example, a stricter regulatory environment. In other cases, it is a matter of perspective, for example, a company has 99% market share and is open to attack from every new player. It is important to note that companies that are extremely competent in what they do, also have weaknesses. How badly these weaknesses will affect the company is a matter of analysis. Consider this from an internal and external basis: 9 Do other people seem to perceive weaknesses that you do not see? 9 Are your competitors doing any better than you? It is best to be realistic now, and face any unpleasant truths as soon as possible.

Think of a SWOT as a Cliffs Notes version of deconstructing your business, taking a fresh look, and jumpstarting your company to steer it a new direction to grow your business © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Weakness Questions 9 What do your customers complain about? 9 What are the unmet needs of your sales force? 9 What are the least profitable product lines for the company? 9 In what areas is the company not able to recover costs? 9 Which are the weak brands? 9 Is the marketing/advertising effective? 9 Is the company not focused? 9 Is the company able to attract talent? 9 What are the biggest expenditures of the company?

9 Is the company able to raise money when it needs to? 9 Does the stock price history inspire confidence? 9 Will the company be able to stand price pressure from competitors? 9 Has the company been able to bring new ideas and products to the market place? 9 Do employees feel facilitated to perform their best? 9 Do employees have faith in management? 9 Are the corporate governance standards high enough? 9 Is the company losing out to competitors on the technology front?

List the areas that are a struggle for your company. Here are some questions to help you get started © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Opportunities All organizations have some opportunities that they can gain from. These could range from diversification to sale of operations. Identifying hidden opportunities is the mark of an astute analyst. Opportunities - Traditionally, a SWOT looks only at the external environment for opportunities. I suggest you look externally for areas your competitors are not fully covering, then go a step further and think how to match these to your internal strengths. Try to uncover areas where your strengths are not being fully utilized. Apart from the kinds of responses desired, the SWOT can be used in other contexts than transformation of a program, and is recommended to be used in annual or biannual review meetings. The aim is to provide a non-threatening situation for participants to contribute as freely and without inhibitions as feasible, all the strengths, weaknesses, opportunities and threats that they can recall. If SWOT is based upon verifiable observations of the conditions and attributes that will contribute to success, and is realistic in identifying what may stand in the way of success, then it is more likely to succeed. SWOT analysis highlights the key issues, and the links between issues, which are related to a problem © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Opportunity Questions Analyze your customers and market attractiveness 9 Are there emerging trends that fit with your company's strengths? 9 What are the interesting trends? Is your company positioned to take on those trends? 9 Is there a product/service area that others have not yet covered? 9 What favorable circumstances are you facing? 9 Is your company entering new markets? 9 Is your company advanced in technology?

Similarly, opportunities for some actions may be threats for others © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Threats No organization is immune to threats. These could be internal, such as falling productivity. Or they could be external, such as lower priced international competition Threats - As with opportunities, threats in a traditional SWOT analysis are considered an external force. By looking both inside and outside of your company for things that could damage your business, however, you may be better able to see the big picture. In a variation of the method, the facilitator may divide the whole group into smaller groups of four to six individuals, provide them with blank newsprint and markers, and ask them to come up with small group contributions. In this case, the small groups are best chosen randomly. One drawback to this is that some individuals might be reticent at contributing in front of friends, people with whom they work closely, their supervisors or persons they supervise; the advantage is that the total number of contributions is reduced because there is less duplication, and some persons contribute more in a small group discussion than they would alone in front of a piece of paper. Carrying out this analysis will often be illuminating - both in terms of pointing out what needs to be done, and in putting problems into perspective. It is by understanding the key issues that a solution to a problem can be achieved © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Threat Questions Check out what your competitors are doing and assess other potential challenges 9 Are your competitors becoming stronger? 9 Are there emerging trends that amplify one of your weaknesses? 9 Do you see other external threats to your company's success? 9 Internally, do you have financial, development, or other problems? 9 What obstacles do you face? 9 What is your competition doing? 9 Are the required specifications for your products or services changing? 9 Is changing technology threatening your position? 9 What policies are local and federal lawmakers backing? Do they affect your industry?

Here are some questions to get you started © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Focusing On Your Organization “Concentrating” or “focusing” in a business sense does NOT literally mean concentrating or focusing on a single miniscule product or service; nor clinging to one “winner” forever; nor not revamping an already successful (profitable) product/service to make it even better; nor marketing it the same way it’s always been done. It does mean honing in on a relatively narrow product/ service/market set where the company has best chance of making a profit into the foreseeable future. Focus and avoid becoming a BADD company by doing the following: 1. Learn to say NO when appropriate: No, we don’t do that at this point. We do this. No, we aren’t ever going to do that. Others do that already. These are the tough decisions that enable you to grow your business a step at a time. 2. Dare to assess how much time and effort you devote to what your business is really good at and where you make the most money/have the most short term upside. 3. Significantly narrow your business focus for the next 6 months. Yup, it can be painful to admit you can’t do it all. In parallel, narrow your marketing messages and make them match your products and services (very unusual but very differentiating). SWOT Enables A Focus On Your Business That Will Promote Team Discussion and Actions! © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Focusing On Your Organization (Cont.) 4. Then invest 75% or more of your business aggregate time, resources and energies in that key thing that you do best and generates the most profits. 5. Tell the truth and the good stories about your business to your customers and markets. In appealing to all types of markets that you do virtually anything, your messages usually become mush, you lose credibility, you lose attention (despite any level of marketing funding)—you create your own marketing and sales nightmare. All things to all people is not a position. It is a death sentence. 6. Grow organically for the foreseeable future. Sure there are business cases to consider to purchase highly complementary or directly competitive businesses, but those are the exceptions versus the rules. Try it the old fashioned way for a while. 7. Execute, execute, execute. This is the bane of BADD executives—who would rather go after that next windmill, do that next deal, and look busy--versus executing, which is a lot harder work. Have a sense of urgency but don’t hurry your business. It always takes longer than you think it will © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Template SWOT Analysis Internal Strengths

Weaknesses

Writing alone on a piece of paper, without a name, provides some protection of anonymity, & some observations about sensitive issues can be revealed this way

External Oppurtunities

Threats

The SWOT Template is a Simple Worksheet © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Tips 9 Traditionally, a SWOT confines strengths and weaknesses to your company's internal workings while opportunities and threats refer only to the external environment. 9 Put someone in charge of spearheading it—ideally a knowledgeable consultant (see below) or objective insider who will take the time and be objective. 9 Take one or two weeks, not one or two months—to complete your SWOT. 9 Make big lists, but right-off-the bat start, prioritizing your lists—digitally, so that that they are easy to change and modify (and you may want to take the step of weighting the importance of each STRENGTH, WEAKNESS, OPPORTUNITY & THREAT); keep prioritizing and then weed the lowest priority items at the end. 9 Aim for about five pages: a page for each STRENGTH, WEAKNESS, OPPORTUNITY & THREAT as well as a page for Issues/Questions. 9 Focus on the present and recent past for your STRENGTHS & WEAKNESSES — and not very far into the future for your OPPORTUNITIES & THREATS: 90 to 180 days, maximum. 9 Review your key Marketing & Sales materials like you’ve never seen them before. Get input from at least 3-5 key people who have varying views & opinions © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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SWOT Analysis Tricks 9 Minimize the “group grope” and meeting stuff while developing your SWOT — meet to discuss the SWOT, modify it as necessary, and develop one or more action steps. 9 Ask the hard questions and challenge all of your basic assumptions — none are sacred. 9 Be objectively critical but also don’t undersell yourself. 9 Get the key facts but don’t get paralyzed with analysis and fact-finding. You may need to do some other fact-finding and analysis before implementing your recommendations, but don’t get bogged down at the micro-level of detail. 9 Keep “personal” issues off the list — and handle those separately. 9 This is important, especially if there are to be major changes in the organization and the content of the program; all members should feel comfortable that this is a group process, not dominated by factions or individuals. “Its what you learn after you know it all that counts!” - John Wooden © Copyright 2006 - Advanced Integrated Technologies Group, Inc., All rights reserved.

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About The Author Steven Bonacorsi is a Senior Master Black Belt instructor and coach. Steven Bonacorsi has trained hundreds of Master Black Belts, Black Belts, Green Belts, and Project Sponsors and Executive Leaders in Lean Six Sigma DMAIC and Design for Lean Six Sigma process improvement methodologies. The AIT Group, Inc. Steven Bonacorsi, Solution Provider Lean Six Sigma Master Black Belt 3135 South Price Road, Suite 115 Chandler, AZ 85248-3549 Phone: +(1) 888.826.2484 E-mail: [email protected] http://www.theaitgroup.com

http://blog.theaitgroup.com/?tag=change

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About The AIT Group

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