SWOT Concept

The SWOT analysis, which stands for "Strengths, Weaknesses, Opportunities and Threats," is used to outline goals for yourself or your business, as well as detail where your strengths lie, what you need to improve and how your goals might be hindered by external elements. If you've never created a SWOT analysis, or if it's been a while since you last compared your current status with a previous SWOT analysis, filling out a fresh SWOT analysis matrix could be beneficial to you or your company.

The SWOT Analysis Matrix

One of the most popular methods of SWOT analysis review is the SWOT matrix. This matrix is comprised of a two-column, two-row table with strengths and weaknesses listed in the top two boxes and opportunities and threats outlined in the bottom two boxes.

Each row and column in the SWOT matrix has a label. The row with strengths and weaknesses is named "Internal Origin," defining parts of your business or persona that you control. The row with opportunities and threats is labeled "External Origin," since you have no real control over the environment that provides these elements.

The left column, which houses the strengths and opportunities categories, is known as the "Helpful" column, as these benefit your initiative. The right column, which contains the weaknesses and threats categories, is called "Harmful," since these can work against your objective.

To obtain the most desirable results from a SWOT analysis, fill out each of your strengths, weaknesses, opportunities and threats in the most honest, objective way possible. For instance, if you're writing about your company include details about your employees as well as yourself. If this SWOT analysis regards your own personal goals, list the ways your skills can contribute to your goal in the "Strengths" section, but don't forget to cite any necessary improvements or skill deficiencies in the "Weaknesses" category.

Outlining Strengths in the SWOT Matrix

Mindtools.com recommends beginning with the strengths you or your company possess. Begin making a list of any advantages your company provides over competitors as well as positive personality characteristics you maintain. Anything considered to add to your bottom line or your unique selling proposition (USP) should be categorized under strengths.

Outlining Weaknesses in the SWOT Matrix

Defining your weaknesses can show you where you need to improve. Mindtools.com says you should use this section to face the truth about how well you're doing as a company or as an individual. Be sure to list any aspect that could be perceived as a turn-off or disadvantage to potential customers. This includes your personality or that of your employees as well as any product or service that appears sub-par when compared to your competitors.

Defining Opportunities in the SWOT Matrix

According to netmba.com, opportunities often arise with changes in your environment. For instance, if one of your competitors relocated its business several states away, this could be considered an opportunity. Write down any aspect about the current market environment, the economy, or new government policies that make your company stand out or look better than your competitors

Defining Threats in the SWOT Matrix

Threats to a business occur in much the same way opportunities do; they just affect your business in a negative direction. Let's take the above example of your competitor moving away. If a competitor moves into your location and begins providing a product or service on par or better than yours, this is a threat. According to netmba.com, similar threats occur with changes in market trends and government regulations. If your company is affected by these changes, list them in the threats category.

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SWOT OR TOWS Analysis (TOWS MATRIX)

SWOT analysis is the analysis/strategy to identified strength, weakness, opportunities and strengths whereas TOWS is the acronym for threats, opportunities, weakness and strengths both refers to the same thing. SWOT or TOWS analysis use by people or company to develop strategies to make successful for their business. The strategies to identified all that things/creating SWOT or TOWS MATRIX aims to give several alternative of strategies which can help people individual or company to choose what is the best or suitable strategy for their business in terms of available resources.

SWOT analysis can be very useful to develop our business, SWOT | TOWS analysis will effectively if we implement in marketing, human resource and other business areas. In this session, we will discuss the way to develop Threats,  Weaknesses,  Opportunities,  and strength in matrix and its attributes in detail and also give examples to show company develop strategies using SWOT or TOWS matrix.

What are the things need to be included in SWOT or TOWS matrix?

SWOT|TOWS matrix as discussed above consist of Threats, Opportunities, weaknesses,  and Strengths using these variety of strategies are developed. The most common tabular form of the SWOT or TOWS is shown in the figure below
I would like to explain strengths,weakness opportunities and threats before going into details

Strengths

Strengths are the strong areas or attribute of the company, which are used to overcome weakness and capitalize to take advantage of the external opportunities available in the industry.
Weakness

Weakness are painful for the company means these are the weak factors which needs to be improve in future otherwise if they exposed to the competitors they can take the advantage of it.

Opportunities
Opportunities are the chances exist in the external environment, it depends firm whether the firm is willing to exploit the opportunities or may be they ignore the opportunities due to lack of resources.

Threats

Threats are always evil for the firm, minimum no of threats in the external environment open many doors for the firm. Maximum number of threats for the firm reduce their power in the industry.

How to identify strengths,weakness,opportunities and threats for TOWS Matrix?

Well, if you have same question them its a good one, finding strengths, weakness, opportunism and threats is deep thinking process. The best thing to do ask the decision maker,employee, strategic partners and customer as well about your good and bad points. The other way out to use some statistical and mathematical tool.In strategic management strengths and weakness are extracted from IFE matrix, opportunities and threats from EFE matrix.

Example of Wal-Mart Strengths,Weakness,Opportunities and Threats
Wal-Mart Strengths


  • Customer oriented
  • SAM’S Club customers able to buy in bulk
  • Super centers offer one stop shopping
  • Satisfaction guaranteed programs promoting customer goodwill
  • Buy from local merchants when possible
  • Stock ownership and profit-sharing with employees
  • Leads industry in information technology
  • Ongoing development of its employees Strong community involvement

Wal-Mart Weakness


  • No formal mission statement
  • Membership only for SAM’S Club
  • Keep poor performing employees on hand
  • Old fashioned store policies
  • Few women and minorities in top management
Wal-Mart Opportunities

  • Consumers want ease of shopping
  • Internet shopping growing
  • Dollar value increasing
  • Similar shopping patterns worldwide
  • Retail sales expected to increase
  • Environment conscious consumers
  • Elderly population growing
  • Asian market virtually untapped by retail
  • European Market untapped by retail

Wal-Mart Threats

  • Regulation of Wal-Mart pharmacies
  • Small towns do not want entry of Wal-Mart
  • Bad media exposure for Kathie Lee Brand
  • Variety of competition nationally, regionally and locally
  • Substitute products more easily because of intense competition

What type of strategies are the part of TOWS Matrix?

The SWOT Matrix is an important matching tool that helps managers develops four types of strategies:

  1. SO strategies—use a firm’s internal strengths to take advantage of external opportunities.
  2. WO strategies—are aimed at improving internal weaknesses by taking advantage of external opportunities.
  3. ST strategies—use a firm’s strengths to avoid or reduce the impact of external threats.
  4. WT strategies—are defensive tactics directed at reducing internal weaknesses and avoiding external threats.

Example of Pakistan State Oil TOWS Matrix


The above TOWS matrix show the four type of strategies, SO strategies are developed using PSO strengths to exploit the external opportunities, WO strategies are developed to overcome weaknesses by utilizing the opportunities. ST strategies are developed by PSO to minimize or eliminate the threats using the internal strengths and last WT strategies are developed to avoid threat and minimize weaknesses.


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Conducting a SWOT or (TOWS)

What is it? Justify Full
The granddaddy of focus group data gathering processes is the traditional SWOT and its updated offspring, TOWS Analysis. You can SWOT (or TOWS) a concept, a program, a department, a school, or a new initiative. You can even SWOT a person, although one must be careful when doing so.
When doing SWOT Analysis, remember that the S and the W are INTERNAL and the O and T are external. Traditionally, facilitators begin with the organization’s Strengths and Weaknesses and then move out to the external Opportunities and Threats. Recent thinking prompts consideration first of the opportunities and threats existing in the "outside world" against which the institution can leverage its strengths and find conviction to correct its weaknesses. We like this reversal of the traditional order because it helps an organization place itself in context.

Method
Group Process Technique: Brainstorming

Purpose: To generate a large quantity of ideas in response to a stated problem or question.
The group is asked to generate as many responses to the following questions within a limited time frame (10-20 minutes per question). All responses are recorded verbatim and ideas are not judged until evaluation time.

Group Size: Can be used with any number of participants (large groups can be broken into smaller groups of 6-10 to maximize output)

Resources: Flip chart and markers

Procedure
1. Explain basic rules of brainstorming:

Don’t evaluate the idea; defer judgment.
Quantity is the goal.
The wilder the better.
Record each idea verbatim. Tagging on or combining ideas is okay.


2. Begin brainstorming by asking the following questions:

a. What opportunities exist in our external environment?
b. What threats to the institution exist in our external environment?

Brainstorm these along the lines of:

  • Political, economic, social, technology
  • Market size and behavior
  • Constituent behavior
  • Benefits sought
  • Potential new entrants
  • Direct competitors’ performance, strategies, capabilities, intentions

c. What are the strengths of our institution?

d. What are the weaknesses of our institution?

Brainstorm these along the lines of:

  • Ability to design/innovate
  • Ability to source and produce
  • Ability to market and service
  • Ability to finance
  • Ability to manage

4. Record all ideas verbatim.

5. After all ideas have been storyboarded and the time limit is up, categorize ideas into thematic groupings.

Facilitator Notes To Wrap Up

Prioritization is a key factor in obtaining useful SWOT (OTSW) data, as the output from brainstorming will be significant.

At the end of the small group reports, reduce the list of strengths and weaknesses to no more than five distinctive competencies and debilitating weaknesses:

1. Strengths that are distinctive competencies
Are those few things that your institution does best that constituents really care about and that set it apart from other market entries. Core competencies usually attract widespread agreement. An organization will focus on capitalizing on its distinctive competencies.

2. Weaknesses that are debilitating

Are those areas in which constituents expect and demand performance or competency and the institution is dangerously lacking. Debilitating weaknesses frequently attract widespread agreement. An organization will focus on correcting its debilitating weaknesses.

Reduce threats and opportunities to the five most critically important of each.

Questions to Consider when evaluating OTSWs or SWOTs:

1. What will the institution gain if it does nothing? What will it lose?

2. What will the institution gain if it launches a successful initiative? What will it lose if it does not?

SWOT (OTSW) MATRIX

  • What are the Threats and Opportunities present in the external marketplace that effect this school, department, program, project?
  • What are the Strengths and Weaknesses present inside the institution that effect this school, department, program, project?

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When to Use (Not ) SWOT Analysis in Project ManagementP

In 2008 Project Manager at Volvo IT (Peter C) give a question about when to use and when not to use SWOT analysis in project management? And from the discussion on the Linked In there is a few a good answer, and this is the all answers:
  • SWOT is useful as a portion of the strategy development for a business. It is only a portion of the strategy and everything needs to be researched to be sure that this isn't just brainstorming from non-experts. To better answer your specific question:
  1. Use SWOT when you have real experts stating real facts or you are asking questions which require research for the analysis. Even then, take this information as a portion of the strategy in alignment with other factors like real benchmarking data, customer response data and customer research including forecasting.
  2. Don't use SWOT if you don't have real subject experts in the room and if there is a tendency to move from brainstorming to actions without research.
  • As a principal it is vital for analysis to be done through SWOT mentality. Thinking of scenarios and solutions in terms of strengths, weaknesses, opportunities, and threats gives analyst a perception that would include all dimensions. Of course, there are cases where SWOT is not fully applied. The only place I would not use SWOT is when we are in the realm of hypothetical... especially when these are far-fetched thoughts. SWOT requires some form of comprehension that may not exist in these cases.

  • SWOT's are always important to utilize both prior to, during, and after completing projects. The key is "objectivity". This can be very difficult to do in a high pressure situation where time is cirtical or in a culture that doesn't re-examine itself for the sake of improvement. If the SWOT is done objectively and supported by 3rd party non-biased market research, "last minute" risks or problems are generally uncovered before they occur. Checking in periodically on your assumptions throughout the project will enable you to further refine the outcome and avoid major mis-steps and ensure quality output. If the project duration is long term, it is good practise to continually evaluate more current market research to support or to adjust your strategy/direction. Finally, re-examining your SWOT with your final outcomes will enable you to learn what works and what doesn't. Doing so will enable you to become more effective in utilizing SWOTs.

  • SWOT is almost always useful, but too many companies see it as the end of the project instead of the beginning. SWOT establishes a good framework and context, but in and of itself, it does not point to the future...it isn't strategy. There are "next steps" that some companies don't take.

  • I found SWOT to be used all too often as a lazy approach to diagnosing a problem (real or perceived). It is too high level to coalesce thinking about the nature of the problem, the place where and when it appears, its frequency and its severity. If used as a sole rationale behind a change and/or project, chances of successfully addressing what ails your organisation are pretty small. It is useful to communicate with people who want to see an "analysis-on-a-page", but as previous contributors said, it is just one of many diagnostic tools that you have to use to analyse the situation(s) you are facing.

  • I think SWOT is more useful when you are analyzing a particular company or business. However, if you wish to analyze an industry, you can use Porter's five forces analysis. Also, SWOT is mostly applicable for static conditions of business. For dynamic or rapidly changing businesses such as knowledge intensive industries, SWOT may not be that helpful. Alternatively, use of BCG matrix or GE/Mckinsey Matrix along with SWOT can give better results.

  • I believe that SWOT, while always useful, is frequently not a sufficient exploration of the situation. For large, company strategy type issues, you might look at a Porter Five Forces model which takes in aspects of the landscape. While SWOT's OT portion looks at the landscape, I think the Five Forces looks deeper and more usefully. Similarly, I like Porter's Diamond of International Competition for a lot of things, like new product entry and predicting a team's chances for success in the playoffs. It takes some tweaking to move Land, Location, Labor, Population and Resources to a world of products and baseball, but you work your own analogues.I try to work every project through the Theory of Constraints. It's a solid theory and works very nicely to figure out what needs fixing. But, generally speaking, SWOT is always a good place to start. At the very least, it's a good exercise that can lead you to a more useful model for looking at the project.

I hope this article can give some lesson for us especially for people who concern in management of their company..

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How to Write a SWOT Analysis (Analyse a Company According to Its Internal And External Factors)

A Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis allows business management to formulate strategies to increase profits for a company. The SWOT analysis also helps a company and its employees to adapt to changing factors in the industry.


The SWOT can be classified into internal and external factors affecting a company. The Strengths and Weaknesses of the SWOT analysis represent the internal factors that influence the viability of the company. The Opportunities and Threats, on the other hand, are the external factors that may affect the company's performances.

What Are Examples of Internal Strengths of a Company?

A strength is essentially a factor from within the company that has resulted in the success of the organisation. For example, a management team with strong calibre denotes that the company is forward looking and is flexible to change. Both factors allow the company to presevere amongst competitors, especially when external threats, such as changes in regulation with respects to the industry, occur.

Another example of a company strength is a hefty financial cash flow. Companies that are liquid in cash are more likely to succeed in the long-run than companies that have invested in illiquid assets (such as heavy equipment / renovations in the office.) This is because working capital (cash) is required to sustain the company's ability to pay employees / suppliers / fund marketing campaigns.

What Are Examples of Weaknesses within a Company?

A weakness of an organisation can be detrimental to the survival of the company. A popular example is poor retention rate of employees. This equates to a high turnover with dissatisfied employees leaving for other job opportunities. The fact that this takes place can be due to a number of reasons. One of them may be poor compensation packages (due to lack of funds). Another example may be a weak organisational culture that inhibits employees from expressing their views and concerns.

What Are Opportunities in the External Environment?

An opportunity allows a company to increase profits by offering a gap in demand, a wider consumer base, or an opportunity to reduce costs. A company's strategic goal is to move forward to achieving opportunities that arise in the market. For example, a coffee house may find an opportunity when new suppliers of coffee beans enter into the market. This increases competition amongst coffee bean suppliers and thus, reduces costs for the coffee house. Opportunities are almost always found in shifts in consumer preferences. For example, with the increase of women penetrating the workforce, more clothing designers nab the opportunity to produce fashionable career attire for working women.

What Are the Threats Inherent in the Environment?

A threat can affect the company negatively, especially if the company is unable to adapt to the threat and mitigate its harmful effects. For example, a threat for small grocery retailers would be the emergence of a hyper-market in the area - Wal-mart - for instance. A common threat in any economy would be an economic recession, which reduces consumers' consumption. This threat generally reduces revenue in companies, regardless of the sector.

At the end of a SWOT analysis, the company's plans to move forward should be centred around the opportunities quadrant. Opportunities translate into opportunities to increase revenue as well as to reduce costs; this, in turn, is transformed into higher profits. To achieve success in the opportunities quadrant, the company should look at capitalising on its strengths, such as an effective marketing strategy. By using their strengths, companies should also be able to strategise against the threats that are inherent in the market. Threats are extinguishable but steps to mitigate them can be taken to protect the operations on the company. Although companies always capitalise on their strengths, they should not ignore their weaknesses. Weaknesses represent loopholes within their organisational structure / operations. A company should resolve to fill in their weaknesses in the long-run to ward off aggressive competition.

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How to do a SWOT Analysis (Strategic Planning Made Easy)

“Strategic Planning” sounds a lofty pursuit and perhaps beyond our humble capabilities. Not so with a SWOT Analysis. Learn how to do a SWOT analysis using the SWOT matrix and become an effective strategic planner today, achieving your goals.
What’s Strategic Planning Anyway?

Strategic planning is just management speak for long term future planning. Strategic planning concerns anything that will bring results in anything from 1 year to 5 years or beyond. It’s good management practice to raise your head above the daily grind every now and then, and take action now to positively affect your future.

Definition of SWOT

As with most management models, the clue is in the name.

S = Strengths
W = Weaknesses
O = Opportunities
T = Threats

The SWOT Matrix Explained

All the best management models have four quadrants, and the SWOT matrix is no exception. You use each of the four quadrants in turn to analyze where you are now, where you want to be, and then make an action plan to get there.


Regardless of whether you or your team are future planning for specific products, work, personal or any other area, the SWOT analysis process is the same.

Step 1 – In the here and now…
List all strengths that exist now. Then in turn, list all weaknesses that exist now. Be realistic but avoid modesty!

Step 2 – What might be…
List all opportunities that exist in the future. Opportunities are potential future strengths. Then in turn, list all threats that exist in the future. Threats are potential future weaknesses.

Step 3 – Plan of action…
Review your SWOT matrix with a view to creating an action plan to address each of the four areas.

In summary;
· Strengths need to be maintained, built upon or leveraged.
· Weaknesses need to be remedied or stopped.
· Opportunities need to be prioritised and optimised.
· Threats need to be countered or minimised.

SWOT Analysis Example

Here’s one I prepared earlier:


Sow the seeds and reap the benefits

And that’s it! Not too complicated, I’m sure you’ll agree. The SWOT matrix is a useful tool for strategic planning and achieving your goals, individually or with a team. It’s easy to learn how to do a SWOT analysis – just try one out for yourself and reap the benefits.

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SWOT Analysis Benefit


You don't have to be running a multinational company to benefit from a SWOT analysis. No matter what size your enterprise, you will take a benefit from running a quick SWOT check.

For those who don't know, a SWOT analysis covers your STRENGTHS, WEAKNESSES, OPPORTUNITIES, and THREATS.

Take your strengths to begin with. All businesses have them; otherwise, there wouldn't be a business in the first place. The point of highlighting them, is to increase them. If you can STRENGTHEN your STRENGTHS, you are on to a winner. And if you clearly understand what your strengths are, it is so much easier to add to them.

If you have a strong line of product sellers, then try and increase them. If you have a good agent, or good employee, producing great results, then give them more work and responsibility. If you have an exclusive line that pays a great margin, then market it more aggressively. Push your strengths, and ignore those products and lines that don't produce enough, or sufficient, profit.

WEAKNESSES? All businesses have those too. Know what they are, and attack them relentlessly as if they were the devil incarnate. Business is war, and it is a war that needs winning. Perhaps your products are too dear. Then do something about it. Perhaps they are not producing sufficient margin. Then tackle that head on. Perhaps you have a shop and too much of your stock is going missing. Then install CCTV. Perhaps your products are going out of date. Then wake up, and modernise. May be you don't spend enough time on your business. Then quit watching soaps. I did, and it was the best thing I ever did. A good businessperson always knows their weaknesses inside out, and addresses them as much as they are able. Identify and destroy weaknesses as if they are an alien force about to obliterate your particular planet. If you don't, they will.

OPPORTUNITIES: If any business is to survive in the longer term, it must create and take on board new opportunities. Any business that chugs along doing the same thing month in month out, year in year out, without keeping one eye to the future, is a business that is ultimately doomed. So, what opportunities are currently out there for you? Perhaps there is a range of new ebooks that have come on the market with reproduction rights. May be there is an opportunity there for you increase your range, or venture into a completely new field, for you. May be the local pet shop in your town is closing down. Perhaps there is an opportunity there to enter that trade and mop up their previous business, and goodwill. Or may be the company you work for full time is closing down, or the boss you work for is retiring. Is there an opportunity there for you to take over, or buy that business? Perhaps you could even arrange easy payment terms to pay for it out of your ongoing profits over the next year, or better still, the next five years. There are many stories about, of employees buying the business they work for, and ultimately making a huge success of it. And why not? After all, who knows any business better, than an inside employee? They know where there is hidden value, and they know where the skeletons are buried. We have all heard people say "I could run it better myself". Well, perhaps you could. But have you got the bottle, the energy, and the financial muscle to do so, or could you find it? And if that chance really does come along, may be you should look seriously at grabbing it, before someone else does. Chances like that only appear so many times in life. Your OPPORTUNITIES analysis will highlight that, and any other potential opportunities too.

THREATS: lastly the worst one of all, and the one that is so easy to ignore, and even not notice at all, until it creeps up on you, and thumps you in the profit line. In my local town, there were two newsagents. They have been there for as long as anyone could remember, and both have a loyal and enthusiastic bunch of customers. Then along came the giant Tesco. It wasn't one of those superstore all embracing bullies, but a smaller convenience store. But it was still going to be open all hours, it was still going to be a price efficient and formidable competitor. As soon as the planning permission for that store appeared in the local press, one of the newsagents sold out. Got a good price for it too, by all accounts, while the other one showed no signs of even noticing the aggressive newcomer about to open on his doorstep. This story is only in its infancy, but if that newsagent is still open in three or four years time, I for one will be very surprised. Identify your threats, and don't be afraid of doing something about it. All businesses have threats. It does not matter whether you run a small mail order business from home, a letting agent on the high street, or a boat builder on the river. All businesses have threats of some kind, that's the way of things.

That is why a regular SWOT analysis will keep you fully aware of what they are, and where they are coming from, and if you do that, you can react against them in the most positive way. If you do nothing, and hope those threats evaporate, you run the risk of being swamped, or gobbled up. Threats rarely disappear by themselves. Always try and confront them head on.

If you are running a successful business, then instigate a yearly SWOT check. It will not take you too long to carry out, and it could save you your business and your livelihood. If you are running an unsuccessful business, then perhaps it is even more imperative that you run a SWOT analysis right now. Once you understand your weaknesses and threats, you can attack them. Once you understand why you are not making any money, you can introduce a well thought out plan to do something about it. Running a business is not just about selling, it is about managing too. A SWOT analysis is an essential tool for any good manager. Running a SWOT is a sign of a well-run business; and more often than not, a sign of a successful business too

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SWOT Analysis (Strategy)

SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats

SWOT analysis is an important tool for auditing the overall strategic position of a business and its environment.

Once key strategic issues have been identified, they feed into business objectives, particularly marketing objectives. SWOT analysis can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis. It is also a very popular tool with business and marketing students because it is quick and easy to learn.


The Key Distinction - Internal and External Issues

Strengths and weaknesses are Internal factors. For example, a strength could be your specialist marketing expertise. A weakness could be the lack of a new product.

Opportunities and threats are external factors. For example, an opportunity could be a developing distribution channel such as the Internet, or changing consumer lifestyles that potentially increase demand for a company's products. A threat could be a new competitor in an important existing market or a technological change that makes existing products potentially obsolete.

it is worth pointing out that SWOT analysis can be very subjective - two people rarely come-up with the same version of a SWOT analysis even when given the same information about the same business and its environment. Accordingly, SWOT analysis is best used as a guide and not a prescription. Adding and weighting criteria to each factor increases the validity of the analysis.


Areas to Consider

Some of the key areas to consider when identifying and evaluating Strengths, Weaknesses, Opportunities and Threats are listed in the example SWOT analysis below:

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McDonalds SWOT Analysis


Here is the SWOT analysis of McDonalds. We evaluate strengths, weaknesses, opportunities and threats. 


Strengths

  • It has a strong global presence and is considered as a market leader in both the domestic as well as the international markets.

  • It is a global brand that owns 31,000 restaurants serving in 120 countries. Of these 31,000 restaurants at least14,000 restaurants are situated in the US.

  • It uses economies of scale for reducing the cost, as its huge expansion diversifies the overall risk involved with the economic performance.

  • They own an active children’s charity by the name‘The Ronald McDonald House’.

  • It takes steps in adjusting the Ingredients and product offerings in order to comply with the upgraded health standards deemed necessary by the USDA.

  • It earns revenue by fast food sales as well as a property investor and a franchiser of restaurants.

  • It has a firm real estate portfolio.

  • It has branded menu items i-e Big Mac, Chicken McNuggets, which further promote McDonalds.

  • Its recognized as one of the world’s most recognized logos.

  • It is recognized as a socially responsible and community oriented firm.

  • It adapts to the cultural differences regarding the region where the restaurant is set up.

  • It has located itself in major airports, cities, highways, tourist locations, theme parks.

  • It has an efficient food preparation style that follows the process in a systematic way.

  • It takes food safety extremely cautiously.

  • It was the first to provide the customers about nutrition facts.


Weaknesses

  • It uses advertising that mostly targets children.

  • High employee turn-over.

  • It has yet to accomplish going on the trend of organic food.

  • Price competition with the competitors resulting in low revenue.

  • Lack of innovative products.

Opportunities

  • It can adapt to the needs of the societies and undergo an innovative product line.

  • It can research ways to use ‘green’ energy and packaging which will work as a part of their promotional effort as well as fulfill their social responsibility.

  • It can create new product offerings, use mobile text messaging to offer services that appeal to consumers.

  • It can upscale some of its restaurant settings at luxurious locations to attract more customers.

  • It can provide optional items that are regarded to be the basis of allergy for some.

  • It can slow down the level of expansion in order to increase the profitability of the organization.

Threats

  • The recession negatively impacts the holding position of the firm regarding its revenue streams, even though they are quite diversified.

  • Foreign currency fluctuations are regarded to be a major problem as it uses standard pricing for its food items.

  • More restaurants that are increasing their food offering and declining the price.

  • Health issues regarding the fast food chain.

  • Heavy investments on promotional campaigns which decrease the gaining of market share.

  • Some parents criticize the firm’s ‘cradle to grave’ marketing strategy that focuses on kids, who later on take it as a trend to their adulthood.

  • Sued various times for unhealthy food, usually with addictive additives.

  • Emergence of major fast food competitors: Burger King, Starbucks, Wendy’s, Taco Bell, KFC.

  • The expansion has made the firm vulnerable to the slow economies of the other countries.

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SWOT Analysis Model

SWOT analysis, method, or model is a way to analyze competitive position of your company. SWOT analysis uses so-called SWOT matrix to assess both internal and external aspects of doing your business. The SWOT framework is a tool for auditing an organization and its environment.


SWOT is the first stage of planning and helps decision makers to focus on key issues. SWOT method is a key tool for company top officials to formulate strategic plans. Each letter in the word SWOT represents one strong word: S = strengths, W = weaknesses, O = opportunities, T = threats.
SWOT model analyzes factors that are internal to your business and also factors that affect your company from outside. Strengths and weaknesses in the SWOT matrix are internal factors. Opportunities and threats are external factors.

SWOT can be used in conjunction with other tools for strategic planning, such as the Porter's Five-Forces analysis or the Balanced Scorecard framework. SWOT is a very popular tool in marketing because it is quick, easy, and intuitive.

What is SWOT matrix?
The concept of determining strengths, weaknesses, threats, and opportunities is the fundamental idea behind the SWOT model. To present the model in a more understandable way, scholars came up with so-called SWOT matrix. SWOT matrix is only a graphical representation of the SWOT framework.



SWOT analysis matrix

The above is a schema of how SWOT works. You start at the top level and go down to details. When this is filled with content, it gets the shape of a matrix, such as the example below:


SWOT matrix makes understanding the model easier.

Can you show SWOT analysis on an example?

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. Below you can find a few examples of what your strengths might be:

  • Unique product
  • Location of your business
  • Patents, know-how, trade secrets
  • Worker's unique skill set
  • Corporate culture, company image
  • Quality of your product
  • Access to financing
  • Operational efficiency

The following list shows a few examples of weaknesses:

  • Location of your business
  • Lack of quality and customer service
  • Poor marketing and sales
  • Access to resources
  • Undifferentiated products or services

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

An opportunity in the SWOT model could be for example:

  • A new emerging or developing market (niche product, place - new country, less competition)
  • Merger, joint venture, or strategic alliance
  • Market trends
  • New technologies
  • Social changes (for example demographics)

And now the final one, threats. A threat could be:

  • New competition in the market, possibly with new products or services
  • Price wars
  • Economic conditions
  • Political changes
  • Competitor oligopoly or monopoly
  • Taxation
  • Availability of resources

Factors related to each aspect of the SWOT model depend very much of the nature of your business. SWOT for a manufacturing company will be different from a SWOT for an internet start-up.

Is SWOT analysis a hard science?

The answer is no. SWOT analysis can be very subjective. Someone can see a new firm coming into the market as a threat because it takes away your current customers. Someone else might see the same company as opportunity because that company might have innovative ideas which your business can explore, and your business might even benefit from possible takeover of that new competitor.

What is the difference between SWOT and TOWS?

TOWS analysis is very similar to the SWOT method. TOWS simply looks at the negative factors first in order to turn them into positive factors.
How should I do the SWOT analysis?

There is a number of simple rules that you can go by when creating a SWOT matrix in SWOT analysis.

Be realistic: Make sure you assess your situation objectively. It is better to be more pessimistic about weaknesses and threats and lighter about strengths and opportunities.

Today versus future: When doing the SWOT analysis, distinguish between today's state of your business and your expectation for the future. Mixing your expectation with the current state will result in skewed outcome.

Simple: Keep your SWOT matrix short and simple. Avoid complexity and over analysis. If you want to include many points to each quadrant of the SWOT matrix, it is a good idea to weight them.

What is the next step in SWOT analysis?

We mentioned that the SWOT analysis is very subjective. One way to bring numbers into the SWOT analysis and make it more useful is to weight individual items. Give a weight to every item in the SWOT matrix and then add them together. Each quadrant in the SWOT matrix will result in some number which as a whole will give you a better picture where your business is relative to other quadrants. This leads us to two models called the IFE matrix and EFE matrix that are rooted in the SWOT analysis.

There are three other models related to this called the BCG matrix model, SPACE matrix model, and QSPM model which you can find here: BCG matrix, SPACE matrix model, QSPM model.

In case you have any questions about SWOT analysis, you are welcome to ask them at our management discussion forum.

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TOWS Analysis for Decision Making Strategy

How does a firm decide to pursue one course of action over another? Along with SWOT analysis, TOWS analysis is a process that requires management to think critically of its operations. By identifying several action plans that could improve the company's position, TOWS analysis allows management to choose those strategies that most effectively capitalize on the available opportunities.


For companies to develop adequate and successful business strategies, they must sufficiently analyze their internal and external environments.
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One helpful strategic development tool entails SWOT analysis, which identifies the strengths, weaknesses, opportunities, and threats facing a company.

However, a major shortcoming of this method involves its focus on the company's internal environment at the expense of its external situation. Subsequent to the SWOT model, organizations should conduct a TOWS analysis, a procedure that focuses more on the external environment. Although the acronym is simply SWOT reversed, TOWS analysis takes a different approach to linking a company's internal strengths and weaknesses with its external opportunities and threats. This approach allows a business to clearly identify and evaluate the options it could pursue.

To perform a proper TOWS analysis, the company must first conduct a SWOT analysis to identify its internal strengths and weaknesses and external opportunities and threats. The rest of the procedure involves dividing and linking the appropriate classifications into four categories:

  • Maxi-Maxi
  • Maxi-Mini
  • Mini-Maxi
  • Mini-Mini

Creating a TOWS matrix is an easy and visually helpful way to aid in this process.

"Maxi-Maxi" Strategy

Under the Maxi-Maxi classification, an organization identifies the appropriate strengths it can use to take advantage of its opportunities. The firm needs to distinguish and list the strengths that could aid in the maximization of each one of its listed opportunities. For example, possible strengths that could help a company penetrate a new market could include high-brand recognition, high-brand loyalty, large levels of research and development spending, and superior customer service.

"Maxi-Mini" Strategy

The Maxi-Mini category identifies the strengths the company can exploit to minimize its external threats. For instance, a potential threat to a firm could be the loss of market share to a new competitor entering the market. One way the firm could protect its position involves developing a marketing campaign emphasizing its superior customer service or its competitor's inferior customer service.

"Mini-Maxi" Strategy

With the Mini-Maxi strategy, a company wants to use its external opportunities to minimize its internal weaknesses. To illustrate, consider a company that faces rising labor costs in its home country. Simultaneously, it has identified an attractive opportunity to outsource some of its operations to another country where the cost of labor is far cheaper. This outsourcing prospect reduces the company's threat of rising labor expenses.

"Mini-Mini" Strategy

Mini-Mini strategies attempt to minimize the company's weaknesses and prevent external threats. This section matches the firm's threats and weaknesses in order for the company to recognize the potential situations that could harm its operations. Once these possible conditions are realized, the company can conceive of ways to protect its business. For example, a firm can enter into a strategic alliance or merge with one of its competitors to protect its operations from a rival firm. Moreover, the options to withdraw from a market or suspend operations are always present.

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SWOT analysis definition

According to Wikipedia Encyclopedia the definition of SWOT analysis:

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning, including SWOT and SCAN analysis, has been the subject of much research.

  • Strengths: attributes of the person or company that are helpful to achieving the objective(s).
  • Weaknesses: attributes of the person or company that are harmful to achieving the objective(s).
  • Opportunities: external conditions that are helpful to achieving the objective(s).
  • Threats: external conditions which could do damage to the objective(s).

Identification of SWOTs are essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated.

The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development

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