SWOT Analysis

Summary of SWOT Analysis. Abstract

Identifying Strengths, Weaknesses, Opportunities and Threats

A SWOT analysis is an instrumental framework in Strategy Formulation and VBM to identify the strengths, weaknesses, opportunities and threats for a particular company.

Strengths and Weaknesses are internal value creating (or destroying) factors such as assets, skills or resources a company has at its disposal relatively to its competitors. They can be measured using internal assessments or external benchmarking.

Opportunities and Threats are external value creating (or destroying) factors a company cannot control, but emerge from either the competitive dynamics of the industry/market or from demographic, economic, political, technical, social, legal or cultural factors.

Typical examples of factors in a SWOT Analysis are:

Strengths

- Specialist marketing expertise
- Exclusive access to natural resources
- Patents
- New, innovative product or service
- Location of your business
- Cost advantage through proprietary know-how
- Quality processes and procedures
- Strong brand or reputation

Weaknesses

- Lack of marketing expertise
- Undifferentiated products and service (i.e. in relation to your competitors)
- Location of your business
- Competitors have superior access to distribution channels
- Poor quality goods or services
- damaged reputation

Opportunities

- Developing market (China, the Internet)
- Mergers, joint ventures or strategic alliances
- Moving into new attractive market segments
- A new international market
- Loosening of regulations
- Removal of international trade barriers
- A market led by a weak competitor

Threats

- A new competitor in your home market
- Price war
- Competitor has a new, innovative substitute product or service
- New regulations
- Increased trade barriers
- A taxation is introduced on your product or service

Any organization must try to create a fit with its external environment. The SWOT diagram is a very good tool for analyzing the (internal) strengths and weaknesses of a corporation and the (external) opportunities and threats. However, this analysis is just the first step. Actually creating alignment is often a more hazardous job, because in reality the two sides of the SWOT analysis often point in opposite directions, leaving strategists with the paradox of creating alignment either from the outside-in (market-driven strategy) or from the inside-out (resource driven strategy).

👀	TIP: On this website you can find much more about SWOT Analysis!

Tip: One can also apply a SWOT analysis to competitors. This may reveal some interesting insights...

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