Biz Strategies Note 3:SWOT

Strength, Weakness, Opportunities, Threats

Situation Analysis
/	\
Internal Analysis	External Analysis
/ \	/ \
Strengths Weaknesses	Opportunities Threats
|
SWOT Profile

the SWOT analysis is useful when a very limited amount of time is available to address a complex strategic situation.
The SWOT analysis can serve as an interpretative filter to reduce the information to a manageable quantity of key issues.

Internal Analysis

• Company culture
• Company image
• Organizational structure
• Key staff
• Access to natural resources
• Position on the experience curve
• Operational efficiency
• Operational capacity
• Brand awareness
• Market share
• Financial resources
• Exclusive contracts
• Patents and trade secrets

External Analysis

• Customers
• Competitors
• Market trends
• Suppliers
• Partners
• Social changes
• New technology
• Economic environment
• Political and regulatory environment

The last four items in the above list are macro-environmental variables, and are addressed in a PEST analysis.

Multiple Perspectives Needed

The quality of the analysis will be improved greatly if interviews are held with a spectrum of stakeholders such as employees, suppliers, customers, strategic partners, etc.

Limitations

the SWOT framework has a tendency to oversimplify the situation by classifying the firm's environmental factors into categories in which they may not always fit.
Perhaps what is more important than the superficial classification of these factors is the firm's awareness of them and its development of a strategic plan to use them to its advantage.