01 SWOT Analysis by Dr. Jones

8/2/2019 01 SWOT Analysis by Dr. Jones

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SWOT(Strengths, Weaknesses,

Opportunities & Threats)Analysis

By Dr. Kevin Lance Jones


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SWOT Analysis

The SWOT Analysis framework is avery important and useful tool to use inmarketing Management and other

business applications. As a basic tool its mastery is a

fundamental requirement for the

marketer, entrepreneur or businessperson.

A clear understanding of SWOT is

required for business majors.


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What is a SWOT Analysis?

A scan of the internal and externalenvironment is an important part of thestrategic planning process.

Environmental factors internal to the firmusually can be classified as strengths (S) orweaknesses (W), and those external to thefirm can be classified as opportunities (O) or

threats (T). Such an analysis of the strategic

environment is referred to as a SWOTanalysis.


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The SWOT Matrix


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SWOT Analysis

The SWOT analysis providesinformation that is helpful in matchingthe firm's resources and capabilitiesto the competitive environment inwhich it operates.

As such, it is instrumental in strategyformulation and selection.

The following diagram shows how aSWOT analysis fits into anenvironmental scan:


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The SWOT Framework

SWOT Analysis FrameworkEnvironmental Scan

/ \

Internal Analysis External Analysis

/ \ / \Strengths Weaknesses Opportunities Threats

SWOT Matrix


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Strengths

A firm's strengths are its resources andcapabilities that can be used fordeveloping a competitive advantage.Examples of such strengths include:

Patents Strong brand names Good reputation among customers

Cost advantages from proprietaryknow-how Exclusive access to natural resources Good access to distribution networks


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Weaknesses

The absence of certain strengths are aweakness. For example, the followingmay be considered weaknesses:

Lack of patent protection A weak brand name

Poor reputation among customers

High cost structure Lack of access to best natural resources

Lack of access to key distributionchannels


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Weaknesses - Continued

In some cases, a weakness may be theflip side of a strength.

For example, a firm has a large amount

of manufacturing capacity. While this capacity may be considered a

strength that competitors do not share, italso may be a considered a weakness if

the large investment in manufacturingcapacity prevents the firm from reactingquickly to changes in the strategic

environment.


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Opportunities

The external environmental analysis mayreveal certain new opportunities for profitand growth. Some examples of suchopportunities include:

An unfulfilled customer need

Arrival of new technologies

Loosening of regulations

Removal of international trade barriers


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Threats

Changes in the external environmentalalso may present threats to the firm.Some examples of such threatsinclude:

shifts in consumer tastes away from thefirm's products

emergence of substitute products

new regulations

increased trade barriers


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The SWOT Matrix

A firm should not necessarily pursue themore lucrative opportunities (overextending).

Rather, it may have a better chance at

developing a competitive advantage byidentifying a fit between the firm'sstrengths and upcoming opportunities.

In some cases, the firm can overcome aweakness in order to prepare itself topursue a compelling opportunity.


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SWOT / TOWS Matrix

To develop strategies that take intoaccount the SWOT profile, a matrixof these factors can be constructed.

The SWOT matrix, can be changedinto what is known as the TOWS

Matrix that is shown on the nextslide:


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SWOT / TOWS Matrix

TOWSAnalysis

Strengths Weaknesses

Opportunities S-OStrategies

W-OStrategies

Threats S-T

Strategies

W-T

Strategies


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SWOT / TOWS Matrix

S-O strategies pursue opportunities thatfit well the company's strengths.

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 make a defensive plan to

prevent the firm's weaknesses frommaking it susceptible to external threats.


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SWOT Interactions

01 SWOT Analysis by Dr. Jones

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