SWOT Analysis

SWOT Analysis:

Strengths, Weaknesses, Opportunites and Threats (SWOT).

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.

At the bottom of this page are FREE SWOT examples – so please read on.

In SWOT, strengths and weaknesses are internal factors. For example:

A strength could be:

  • Your specialist marketing expertise.
  • A new, innovative product or service.
  • Location of your business.
  • Quality processes and procedures.
  • Any other aspect of your business that adds value to your product or service.

A weakness could be:

  • Lack of marketing expertise.
  • Undifferentiated products or services (i.e. in relation to your competitors).
  • Location of your business.
  • Poor quality goods or services.
  • Damaged reputation.

In SWOT, opportunities and threats are external factors. For example:

An opportunity could be:

  • A developing market such as the Internet.
  • Mergers, joint ventures or strategic alliances.
  • Moving into new market segments that offer improved profits.
  • A new international market.
  • A market vacated by an ineffective competitor.

A threat could be:

  • A new competitor in your home market.
  • Price wars with competitors.
  • A competitor has a new, innovative product or service.
  • Competitors have superior access to channels of distribution.
  • Taxation is introduced on your product or service.

A word of caution, SWOT analysis can be very subjective. Do not rely on SWOT too much. Two people rarely come-up with the same final version of SWOT. TOWS analysis is extremely similar. It simply looks at the negative factors first in order to turn them into positive factors. So use SWOT as guide and not a prescription.

Simple rules for successful SWOT analysis.

  • Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis.
  • SWOT analysis should distinguish between where your organization is today, and where it could be in the future.
  • SWOT should always be specific. Avoid grey areas.
  • Always apply SWOT in relation to your competition i.e. better than or worse than your competition.
  • Keep your SWOT short and simple. Avoid complexity and over analysis
  • SWOT is subjective.

Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. SWOT can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter’s Five-Forces analysis. So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT exercise, list factors in the relevant boxes. It’s that simple. Below are some FREE examples of SWOT analysis – click to go straight to them

Do you need a more advanced SWOT Analysis?

Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical POWER SWOT.

SWOT Analysis Examples

A summary of FREE SWOT analyses case studies are outlined as follows (those in the table above are far more detailed

Example 1

Wal-Mart SWOT Analysis. Strengths – Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.Weaknesses – Wal-Mart is the World’s largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.Opportunities – To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats – Being number one means that you are the target of competition, locally and globally.

Example 2

Starbucks SWOT Analysis. Strengths – Starbucks Corporation is a very profitable organisation, earning in excess of $600 million in 2004.Weaknesses – Starbucks has a reputation for new product development and creativity. Opportunities – New products and services that can be retailed in their cafes, such as Fair Trade products. Threats – Starbucks are exposed to rises in the cost of coffee and dairy products.

Example 3

Nike SWOT Analysis. Strengths – Nike is a very competitive organisation. Phil Knight (Founder and CEO) is often quoted as saying that ‘Business is war without bullets.’Weaknesses – The organisation does have a diversified range of sports products. Opportunities – Product development offers Nike many opportunities. Threats – Nike is exposed to the international nature of trade.

SWOT Analysis Starbucks.

Strengths.

  • Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004.The company generated revenue of more than $5000 million in the same year.
  • It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries.
  • Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. The company is a respected employer that values its workforce.
  • The organization has strong ethical values and an ethical mission statement as follows, ‘Starbucks is committed to a role of environmental leadership in all facets of our business.’
  • Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.
  • The organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk.
  • The organization is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.
  • Starbucks are very good at taking advantage of opportunties.
  • In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD.
  • New products and services that can be retailed in their cafes, such as Fair Trade products.
  • The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge.
  • Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.
  • Who knows if the market for coffee will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee in the future?
  • Starbucks are exposed to rises in the cost of coffee and dairy products.
  • Since its conception in Pike Place Market, Seattle in 1971, Starbucks’ success has lead to the market entry of many competitors and copy cat brands that pose potential threats.

Weaknesses.

  • Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.
  • The organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk.
  • The organization is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.

Opportunities.

  • Starbucks are very good at taking advantage of opportunties.
  • In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD.
  • New products and services that can be retailed in their cafes, such as Fair Trade products.
  • The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge.
  • Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.

Threats.

  • Who knows if the market for coffee will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee in the future?
  • Starbucks are exposed to rises in the cost of coffee and dairy products.
  • Since its conception in Pike Place Market, Seattle in 1971, Starbucks’ success has lead to the market entry of many competitors and copy cat brands that pose potential threats.

‘Starbucks’ mission statement is ‘Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.’ The following six guiding principles will help us measure the appropriateness of our decisions’ more? Then go to Starbucks.

Disclaimer: This case study has been compiled from information freely available from public sources. It is merely intended to be used for educational purposes only.

SWOT Analysis Wal-Mart.

Strengths.

  • Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.
  • Wal-Mart has grown substantially over recent years, and has experienced global expansion (for example its purchase of the United Kingdom based retailer ASDA).
  • The company has a core competence involving its use of information technology to support its international logistics system. For example, it can see how individual products are performing country-wide, store-by-store at a glance. IT also supports Wal-Mart’s efficient procurement.
  • A focused strategy is in place for human resource management and development. People are key to Wal-Mart’s business and it invests time and money in training people, and retaining a developing them.
  • Wal-Mart is the World’s largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.
  • Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.
  • The company is global, but has has a presence in relatively few countries Worldwide.
  • To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region.
  • The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets, such as China and India.
  • New locations and store types offer Wal-Mart opportunities to exploit market development. They diversified from large super centres, to local and mall-based sites.
  • Opportunities exist for Wal-Mart to continue with its current strategy of large, super centres.
  • Being number one means that you are the target of competition, locally and globally.
  • Being a global retailer means that you are exposed to political problems in the countries that you operate in.
  • The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing cost have fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat.

Weaknesses.

  • Wal-Mart is the World’s largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.
  • Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.
  • The company is global, but has has a presence in relatively few countries Worldwide.

Opportunities.

  • To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region.
  • The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets, such as China and India.
  • New locations and store types offer Wal-Mart opportunities to exploit market development. They diversified from large super centres, to local and mall-based sites.
  • Opportunities exist for Wal-Mart to continue with its current strategy of large, super centres.

Threats.

  • Being number one means that you are the target of competition, locally and globally.
  • Being a global retailer means that you are exposed to political problems in the countries that you operate in.
  • The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing cost have fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat.

‘Wal-Mart Stores, Inc. is the world’s largest retailer, with $256.3 billion in sales in the fiscal year ending Jan. 31, 2004. The company employs 1.6 million associates worldwide through more than 3,600 facilities in the United States and more than 1,570 units

Disclaimer: This case study has been compiled from information freely available from public sources. It is merely intended to be used for educational purposes only.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s