SWOT analysis

Source

Internal situation
(controllable)

External situation
(uncontrollable)

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 SWOT analysis - definition

A SWOT analysis is a structured approach

( a technique ) to evaluating the strategic
position of e.g. 1) a company or 2) launching
your adjusted product on a new market or
3) your supply chain management
department etc. (= remember who is our unit of
analysis?) by identifying its strengths,
weaknesses, opportunities and threats.
 SWOT analysis
(an example for a specialist, low-volume US sports car manufacturer)

•Strengths •Weaknesses
1. Reliable products 1. Production limited to 20 cars per
2. Well-respected brand name week, resulting in six-month
worldwide waiting lists
3. Competitive prices 2. Outdated production methods
•4. Tightly focused on a •3. Lack of marketing expertise
specialist niche market 4. Limited marketing research
information
•5. Only distributed in UK ( mainly)
and USA
•6. Low profit margin

•Opportunities •Threats
1. Growing marketing in USA 1. Volume manufacturers could
2. High market potential in target specialist niche market
Germany, France, Benelux and •2. Increasing number of specialist
Scandinavia car manufacturers setting up in
3.Untapped market potential in the Europe
UK •3. Tough European legislation
• on exhaust emission standards
likely

3
 Tool to develop S/W: Value chain analysis

Ma
•Firm infrastructure

rg
in t
Support •Human resource management

hro
activities
•Technology development

ug h
valu
•Procurement/sourcing

e
h va
ro u g
Primary •Inbound •Outbound •Marketing
•Operations •Services .

th
activities logistics logistics & Sales

gin
Ma r
Up Stream Down stream
Figure : A simplified version of the value chain
Tool to develop O/T: Five forces / PEST
analysis

•New entrants
•Political and Legal •Economic
Forces Forces

•Suppliers •Intensitivity •Buyers

of rivalry

•Social/Cultural •Technological
Forces Forces

•Substitutes
 The Porter model of competitive
Industry structure
•Entry barriers •Rivalry determinants
•New entrants
•Economies of scale •Industry growth
Proprietary product differences •Fixed (or storage) costs/value added
•Brand Identity •Intermittent overcapacity
•Switching costs •Threat of new entrants •Product differences
•Capital requirements •Brand identity
•Access to distribution •Switching costs
•Absolute cost advantages •Concentration and balance
• Proprietary learning curves
•Industry •Informal complexity
• Access to necessary inputs •Diversity of competitors
• Proprietary low-cost product design
Competitors
•Corporate stakes
•Government policy •Exit barriers
•Expected retaliation

•Insensitivity
•of rivalry •Buyers
•Bargaining power of suppliers •Bargaining power of buyers
•Suppliers

•Threat of substitutes
•Determinants of supplier
•Determination of buyer power
power •Bargaining Leverage •Price Sensitivity
•Differentiation of inputs •Substitutes •Buyer concentration •Price/total purchases
•Switching costs of suppliers and
• versus firm concentration •Product differences
firms in the industry
•Buyer volume •Brand identity
•Presence if substituent costs
•Determinants of •Buyer switching costs relative •Impact on
•Supplier concentration
•Importance of volume to supplier
substitution threat • to firm switching costs quality/performance
•Relative price performance of •Buyer information •Buyer profits
•Cost relative to total purchases in the industry
substitutes •Ability to backward- integrate •Decision-makers’ incentives
•Impact of inputs on cost or differentiation Switching costs •Substitute products
•Threat of forward integration •Buyer propensity to substitute •Pull-through
• relative to threat of background integration
by firms in the industry
•
•7
External marketing audit checklist
Macroenvironment
Forces Key topics/Trends
MACROENVIRONMENT

EU and national laws; codes of practice;

Political / legal
political instability

Economic Economic growth; unemployment; interest

and exchange rates; global economic trends
(e.g. the growth of the BRICS economies

Global warming; pollution; energy and other

Ecological / physical environment
scarce resources; environmentally friendly
ingredients and components; recycling and
non-wasteful packaging

Changes in world population, age distribution

Social / cultural and household structure; attitude and lifestyle
changes; subcultures within and across
national boundaries; consumerism

Technological Innovators, communications, technology

infrastructures, bio-technology

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 The TOWS matrix
(strategy development)

Once a SWOT analysis has been completed,

thought can be given how to turn weaknesses into
strengths and threats into opportunities (= conversi- on
strategies).
Another way to use a SWOT analysis is to match
strengths with opportunities (= matching strategies).
SWOT analysis and the TOWS matrix
(strategy development)
Strengths Weaknesses

Conversation
Strategies
Marketing
Strategies

Opportunities Threats

Conversation
Strategies

10
An example – TOWS matrix (strategy
development)