[Solution] SWOT Analysis
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Author: Sarah Bennett
Managers often choose to start strategy formulation with a SWOT analysis, which identifies the organization's internal strengths and weaknesses, as well as its external opportunities and threats.
Using SWOT to Formulate Effective Strategies
Strategies are most effective when they exploit an organization's opportunities and strengths, neutralize its threats, and work around or fix its weaknesses.
SWOT Analysis Framework
Strengths
Internal factors that give the organization an advantage
Weaknesses
Internal factors that limit the organization's success
Opportunities
External factors that the organization could exploit to its advantage
Threats
External factors that could negatively impact the organization
Organizational Strengths
Strengths are internal capabilities that help the organization perform well. These might include superior technology, exceptional talent, strong financial position, or excellent customer service.
Organizational Weaknesses
Weaknesses are internal limitations that hinder the organization's performance. These could include outdated equipment, skill gaps, limited financial resources, or poor location.
Opportunities and Threats
Opportunities and threats come from the external environment. Opportunities might include growing markets, favorable policy changes, or competitor weakness. Threats could include new competitors, unfavorable regulations, or economic downturns.
The table gives examples of different factors considered in a SWOT analysis. Identify whether each factor is a strength, weakness, opportunity, or threat.
Rising consumer demand for the organization's services
Providing excellent customer service
Little cash to pay bills
View Explanation
A strength is an aspect of the organization's internal environment that helps it to be successful. Therefore, providing excellent customer service would be a strength.
A weakness is an aspect of the organization's internal environment that limits its ability to achieve its goals. Not having much cash on hand is an example of a weakness.
An opportunity is an aspect of the organization's external environment that facilitates high performance. Thus, greater consumer demand is an example of an opportunity.
A threat is an element of the organization's external environment that limits the organization's ability to achieve its goals. Entry of a new competitor is an example of a threat.
Select the term that best completes the following sentence.
A company achieves high performance through teamwork, so another company begins using the same team dynamics in an effort to realize the same high performance level. The second company is engaging in .
View Explanation
In strategic imitation, one organization copies another, successful organization in an effort to gain the same success. Even if the first company is efficient by using teamwork, the imitator may or may not be efficient, depending on whether teamwork leverages its strengths. Differentiation is a competitive strategy that involves making products or services of high quality.
Select the correct response(s) to the following question.
Which of the following decisions can be an effective way for a manager to address an organizational weakness? Check all that apply.
- Use resources to fix the weakness.
- Imitate a successful competitor.
- Conduct a SWOT analysis.
- Change the organization's mission so the organization no longer needs to rely on the weakness.
View Explanation
Once a manager has identified an organizational weakness, the manager can either improve that aspect of the organization or change the organization's mission, and thus its strategy, so that the weakness is no longer as relevant.
Imitating a successful competitor will not be effective if doing so involves relying on something that is a weakness in the industry or market.
Weaknesses can be identified by conducting a SWOT analysis, but a SWOT analysis does not improve weaknesses.
