SWOT analysis

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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, has
been the subject of much research.[citation needed]

• 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.[citation needed] It is particularly helpful in identifying
areas for development.[citation needed]

Free SWOT Analysis Generator

SWOT Analysis Examples; Reports on Different Companies

SWOT analysis is also known as TOWS analysis.

Introduction
Environmental opportunities are only potential opportunities unless the
organization can utilize resources to take advantage of them and until the
strategic leader decides that it is appropriate to pursue the opportunity. It is
therefore important to evaluate environment opportunities in relation to the
strengths and weaknesses of the organization's resources, and in relation to
the organizational culture. Real opportunities exist when there is a close fit
between environment, values and resources. An evaluation of an
organization's strengths and weaknesses in relation to environmental
opportunities and threats is generally referred to as a SWOT analysis. The
following report will look closely into the SWOT's concept, its main aspects,
and criteria for successful and effective SWOT analysis.

Main Aspects of SWOT Analysis

SWOT has a long history as a tool of strategic and marketing analysis. No
one knows who first invented SWOT analysis. It has features in strategy
textbooks since at least 1972 and can now be found in textbooks on
marketing and any other business disciplines. Its advocates say that it can be
used to gauge the degree of "fit" between the organisation's strategies and
its environment, and to suggest ways in which the organisation can profit
from strengths and opportunities and shield itself against weaknesses and
threats (Adams, 2005). However, SWOT has come under criticism recently.
Because it is so simple, both students and managers have a tendency to use
it without a great deal of thought, so that the results are often useless.
Another problem is that SWOT, having been conceived in simpler times, does
not cope very well with some of the subtler aspects of modern strategic
theory, such as trade-offs (De Witt and Meyer, 1998).

Strengths
Determine an organisation's strong points. This should be from both internal
and external customers. A strength is a "resource advantage relative to
competitors and the needs of the markets a firm serves or expects to serve"
(http://www.css.nccu.edu.tw/mepa/mepa_course/2005/kao/
20060221_1.ppt#1). It is a distinctive competence when it gives the firm a
comparative advantage in the marketplace. Strengths arise from the
resources and competencies available to the firm.

Weaknesses
Determine an organisation's weaknesses. This should be not only from its
own point of view, but also more importantly, from those of the customers.
Although it may be difficult for an organisation to acknowledge its
weaknesses, it is best to handle the bitter reality without procrastination. A
weakness is a "limitation or deficiency in one or more resources or
competencies relative to competitors that impedes a firm's effective
performance"
(http://gift.postech.ac.kr/admin/bbs/data/summer_session_2004/ Corporate
%20Strategy_ver%5B7%5D_final(1).ppt).

Opportunities
marketplace. After all, opportunities are everywhere, such as the changes in
technology, government policy, social patterns, and so on. An opportunity is
a major situation in a firm's environment. Key trends are one source of
opportunities. Identification of a previously overlooked market segment,
changes in competitive or regulatory circumstances, technological changes,
and improved buyer or supplier relationships could represent opportunities
for the firm.

Threats
No one likes to think about threats, but we still have to face them, despite
the fact that they are external factors that are out of our control, for
example, the recent economic slump in Asia. It is vital to be prepared and
face threats even during turbulent times. A threat is a major unfavourable
situation in a firm's environment. Threats are key impediments to the firm's
current or desired position. The entrance of new competitors, slow market
growth, increased bargaining power of key buyers or suppliers, technological
changes, and new or revised regulations could represent threats to a firm's
success.
Because SWOT is such a familiar and comforting tool, many students use it
at the start of their analysis. This is a mistake. In order to arrive at a proper
SWOT appraisal, other analyses need to be carried out first.

• Since opportunities and threats mostly arise from the environment, SWOT
analysis needs to take account of the results of a full environmental analysis.
• It is impossible to gauge what an organisation's real strengths are until you
have assessed its strategic resources - in fact, strategic resources and strengths are
the same thing. There is a tendency for students to put down anything vaguely
favourable that they can think of about a company as a strength. This temptation
needs to be resisted - a strength is not a strength unless it makes a genuine
difference to an organisation's competitiveness. The same is true of weaknesses.

For example, look at Southwest Airlines and Amazon.com. Both companies

have important groups of potential customers to whom they offer poor
service. Southwest ignores business passengers, and will not accept transfers
from other airlines. Amazon makes people wait days to receive books that
they can obtain instantly from their neighbourhood bookstores, and pay a
delivery charge for the privilege. Surely, these are major threats. Southwest
and Amazon have chosen not to give those customers priority. Serving them
would divert resources from the firm's core markets, and dilute service to
their main customers. Not serving them is certainly not a weakness; in a
paradoxical way, it may be a strength.

The wizardry of SWOT is the matching of specific internal and external

factors, which creates a strategic matrix and which makes sense. It is
essential to note that the internal factors are within the control of
organisation, such as operations, finance, marketing, and other areas. On the
contrary, the external factors are out of the organisation's control, such as
political and economic factors, technology, competition, and other areas. The
four combinations are called the maxi-maxi (strengths/opportunities), maxi-
mini (strengths/threats), mini-maxi (weaknesses/opportunities), and mini-
mini (weaknesses/threats). Weihrich (1982) describes the four combinations
as follows:

1. Maxi-maxi (S/O). This combination shows the organisation's strengths and

opportunities. In essence, an organisation should strive to maximise its strengths to
capitalise on new opportunities.
2. Maxi-mini (S/T). This combination shows the organisation's strengths in
consideration of threats, e.g. from competitors. In essence, an organisation should
strive to use its strengths to parry or minimise threats.
3. Mini-maxi (W/O). This combination shows the organisation's weaknesses in
tandem with opportunities. It is an exertion to conquer the organisation's weaknesses
by making the most of any new opportunities.
4. Mini-mini (W/T). This combination shows the organisation's weaknesses by
comparison with the current external threats. This is most definitely defensive
strategy, to minimise an organisation's internal weaknesses and avoid external
threats.

How to Write a Good SWOT Analysis

A successfully conducted SWOT involves identifying the following:

• The things an organisation does particularly well (strengths) or badly

(weaknesses) at present.
• The factors that in the future may give the organisation potential to grow and
increase its profits (opportunities) or may make its position weaker (threats).
Opportunities and threats normally arise from changes in the environment, but
sometimes have their origin inside the organisation - for example, if key machinery or
people, functioning very effectively at present, are likely to break down or retire in a
few years' time, that is a threat.

It is important to bear in mind what a SWOT is for. It is intended to

summarise a strategic situation, with a view to deciding what the
organisation should do next. A SWOT analysis should contain sufficient
information for any reader to be able to see why a particular issue counts as
a strength, weakness, opportunity or threat, and what the implications are
for the firm that you are analysing.

For the same reason, there is no room for equivocation in a SWOT analysis -
a factor can be a strength or a weakness, but not both. For example, a firm's
IT system may provide good management reports but poor production
control information. It is pointless to put this down as both a strength and a
weakness that partially cancel each other out, since managers have only two
choices: either they upgrade the system or they do not (Mintzberg, 1990).
This means that you need to come to a definite answer to the question: On
balance, is the IT system a strength or a weakness? Perhaps the lack of good
production information is important, in which case the system needs to be
upgraded. Perhaps it is vital to maintain the flow of management
information, in which case the system should not be touched (Thompson,
2002). SWOT analysis aims to differentiate factors from being bad or good
for the company's performance. In a SWOT analysis, the strengths and
weaknesses of resources must be considered in relative and not absolute
terms. It is important to consider whether they are being managed
effectively as well as efficiently. Resources, therefore, are not strong or weak
purely because they exist or do not exist. Rather, their value depends on how
they are being managed, controlled and used.

SWOT analyses should only pick out issues that have a substantial effect on a
firm's competitive situation. You should avoid the temptation to put down
under "Strengths" almost everything you can think of that is vaguely
favourable to the firm, and to classify anything remotely unfavourable as a
weakness. It should be rare, to make a genuine difference to the
organisations' profitability - a strategic resource. A weakness, similarly, is
something that affects the organisation's cost or differentiation advantage.
Old-fashioned equipment and authoritarian management styles, for instance,
are only weaknesses if they lead to increased costs, poor quality or bad
customer service (Thompson, 2002; Adams, 2005).

Lists of strengths and weaknesses should not include factors that are
common to every firm in an industry. For example, you could not count
"well-known brand" as a strength for a firm in the jeans or cosmetic
industries such as L'Oreal, since many brands are equally famous. Instead of
writing that main opportunities of the company are overseas expansion and
brand extension, it is crucial to replace it with a broader definition and
explanation. The example of a more successful explanation could be:
"Eastern European markets, with developing spending power and proven
appetite for Western consumer brands, represent opportunity. 25% of
existing sales in airport outlets are to customers travelling to these
countries". Another example could involve: "Competing firms have extended
brands to cosmetics, spectacles, jeans and stationery. Likely opportunity for
this firm to follow suit" (Adams, 2005).
Instead of saying that the threat of a firm is in exchange rate fluctuations,
the statements of: "Appreciation of euro versus dollar likely to lead to
reduced value of US profits (25% of total)" or "This is a specific threat that
affects this firm because of its high proportion of US sales" could be
appropriate (De Witt and Meyer, 1998).

Conclusion
SWOT helps a company to see itself for better and for worse. Companies are
inherently insular and inward looking SWOTs are a means by which a
company can better understand what it does very well and where its
shortcomings are. SWOTs will help the company size up the competitive
landscape and get some insight into the vagaries of the marketplace.

SWOT analysis has been a framework of choice among many managers for
along time because of its simplicity and its portrayal of the essence of sound
strategy formulation - matching a firm's opportunities and threats wit its
strengths and weaknesses. Central to making SWOT analysis effective is
accurate internal analysis - the identification of specific strengths and
weaknesses around which sound strategy can be built.

If you found this article useful please have a look at the other articles we
have written: PEST analysis, Porter's 5 Forces analysis, Ansoff analysis, BCG
Growth-Share Matrix, Porter's Generic Strategies, Scenario Planning, Value
chain analysis, BALANCED SCORECARD, Competitor Analysis, Critical Success
Factors, Industry Lifecycle, Marketing Mix, McKinsey 7S Framework and
Product Life Cycle.

SWOT Analysis of BSRM

A scan of the internal and external environment is an important part of the strategic planning

process. Environmental factors internal to the firm usually can be classified as strengths (S)

or weaknesses (W), and those external to the firm can be classified as opportunities (O) or

threats (T). Such an analysis of the strategic environment is referred to as a SWOT

analysis. The SWOT analysis provides information that is helpful in matching the firm's

resources and capabilities to the competitive environment in which it operates. As such, it is

instrumental in strategy formulation and selection. The following diagram shows how a

SWOT analysis fits into an environmental scan:

STRENGTH:
 Market leader:BSRM is the market leader in the steel Market of Bangladesh. They
occupy 12 % of the total steels market.
 Great competitive skills:It has been working consistently in steel production sector.
So it has achieved great competitive skills. It has the ability to face strong competition.
 Reliability:Be the preferred business partner of the customer and suppliers by
offering quality products; providing best and timely service before and after the
business transaction.
 Strong employee bonding and belongingness:BSRM employees are one of the
major assets of the company. The employees of BSRM have a strong sense of
commitment towards organization and also feel proud and a sense of
belonging
towards BSRM. The strong culture of BSRM is the main reason behind this strength.
 Strong Marketing Lineup: BSRM has developed a sound and effective marketing
policy to share knowledge about their products with design engineers, thus creating
more awareness in the minds of the customers.
 Strong Products Distribution Lineup: BSRM has appointed more than 300 dealers

all over the country so that people can get BSRM products within a reasonable time. Besides
this they have several sales and supply depots in Dhaka, Comilla, Borga, Shylet, and
Khulna.

 Modern Equipment & Technology: The BSRM “Xtreme 500w”project has been

conceptualized by the German consultants “Badische Stahl Engineering (BSE)” and the
complete plant and machineries have been supplied by Danieli Group, Italy – one of the
three largest suppliers of equipments and plants in metal industry worldwide. So it has the
latest and Modern equipment and Technology.

 Backward-linkage industry:To strengthen the competitive advantage of the

company and to minimize the dependency on obtaining raw materials, BSRM Group has
taken initiative to establish the largest billet making plant in Bangladesh under the name of
BSRM Iron & Steel Co Ltd (BISCO).BSRM decided to take over the ownership of BISCO
through acquisition of 95% of its entire share holdings from their existing shareholders.

WEAKNESS
 High interest rates decline profit: BSRM has a large lone from various bank and
financial institutes of Bangladesh. So the interest rates drop down the profits of the
company.
 Power Crises: In Bangladesh the power crisis is increasing day by day. As BSRM is a

heavy industry it needs lots of power supply and gas in daily production. As the government
is failed to make uninterruptable supply of power and gas the production is decline.

OPPORTUNITIES
 Market Dominance: As BSRM occupy 12% of the steel market of Bangladesh and

also they are the market leader. So there is a good probability that they can dominate the
market. Moreover they are increasing their production from 375,000 M.Tons to 500,000.
After the expansion they can occupy 20 % of the local market.

 International Scope: As BSRM is internationally renowned company so its have a

strong possibility to export steels product in near future.
 Increased demand for the products:BSRM has a greater opportunity of profit as the
demand for the 500-grade rods increasing day by day in the local market.
 Organizational Goal: The goal of the Company is to make life of the people secured

and safe by providing quality products at a cheaper price and to be a partner in the nation
building activities. As BSRM is the market leader they have to opportunity to fulfill there
organizational goal.

THREATS
 New competitors: In recent days some new companies have started their steel

production. Among them AKS (Abul Khayer Steel) is one of them. They are targeting to
produce 800,000 M.Tons of steel per year. But now they are producing only 200,000
M.Tons.

 Economic crisis: World recession and the socio- political situation that prevailed in
2008 in Bangladesh stagnated all development works in the country. Then the sales of
steel decrease to half due to recession.
 Growing Competition: All the big steel producers of Bangladesh wish to increase
their production capacity. If they increase the production capacity then their production
cost will decline. So competition will also increase in the steel market.
 Labor Unions: Labor unions are one of the emerging threats of Bangladesh now-a-
days.
 Power Crisis: Power crisis is increasing day by day and that’s why the production of
steel in a decline position. For example Abul Khayer only can produce one forth of their
production capacity due to gas crisis.