STRATEGIC MANAGEMENT

PROJECT TOPIC : SWOT ANAYLSIS

Submitted To: Submitted By:

Sir. Arif Ali sheikh Muhammad Usman
Reg # 2183105
 SWOT Analysis

CONTENTS

 Introduction...............................................................................................................................3

 Literature Survay.......................................................................................................................5

 Definition………………………………………………………………..……….……………………..……………………………….5

 Component of SWOT Analysis.………………………………..……….……………………..……………………………….7

1. Organtional Strength………………………………………………….………………………………………..9

2. Organtional weakness…………………………………………………………………………………………10

3. Organtional Opportunity ………………………………………………………..………………………….11

4. Organtional threats……....……………………………………………………………………………………11

 Recomendation................................................................................................................................. 10

 Conclusion ........................................................................................................................................ 10

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SWOT ANALYSIS
(Competitive Position Analysis)

INTRODUCTION

Today most organizations engage in strategic planning. Strategic planning

is a way to help an organization be more productive by helping guide the
allocation of resources in order to achieve goals. It is a strategic
management tool. In other words, it is a part of strategic management. In
fact, strategic planning is a key to successful strategic management.
Strategic management is the continuous process of creating, implementing
and evaluating decisions that enable an organization to achieve its
objectives. Strategic management allows an organization to be more
proactive than reactive in shaping its own future; it allows an organization
to initiate and influence - rather than just respond to- activities -and thus to
exert control over its own destiny (David, 2003: 15). Strategic management
consists of the analysis, decisions, and actions an organization undertakes
in order to create and sustain competitive advantages. The strategic
management process is a sequential set of analyses and choices that can
increase the likelihood that an organization will choose ‘good strategy’, that
is, that generates competitive advantages. It begins with vision. Vision is a
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picture of the future. It describes the desired future position of the

organization. The second step of strategic management process is mission.
An organization’s mission is its long-term purpose. Missions define both
what an organization aspires to be in the long run and what it wants to
avoid in the meantime. Objectives are the third step of strategic
management process. Objectives are concrete goals that an organization
seeks to reach. The next phases of the strategic management process is
external and internal analysis, also called SWOT Analysis. By conducting
an external analysis, an organization identifies the critical threats and
opportunities in its competitive environment. It also examines how
competition in this environment is likely to evolve and what implications that
evolution has for the threats and opportunities an organization is facing.
While external analysis focuses on the environmental threats and
opportunities facing an organization, internal analysis helps an organization
identify its organizational strengths and weaknesses. It also helps an
organization understand which of its resources and capabilities are likely to
be sources of competitive advantage and which are less likely to be
sources of such advantages. Based on SWOT Analysis, organizations can
choose the appropriate strategy. Strategic choice is associated with vision,
mission, objectives and the external and internal analysis of the
organization; an organization is willing to make strategic choices. This is to
say that an organization is able to choose its ‘theory of how to obtain a
competitive advantage’. The next step of strategic management process is
implementation of strategy. Choosing a strategy means nothing if that
strategy is not implemented. Strategy implementation occurs when an
organization adopts organizational policies and practices that are
consistent with its strategy (Barney and Hesterly, 2006: 6-11). And the final
step of this process is to obtain competitive advantage.

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LITERATURE SURVAY
This study is a literature review on SWOT, qualitative and descriptive in
nature. The study will examine SWOT Analysis in a historical, theoretical,
time frame perspective, as an effective situation analysis technique which
plays an important role in the fields of marketing, public relations,
advertising and in any fields of requiring strategic planning. SWOT Analysis
is an analysis method used to evaluate the ‘strengths’, ‘weaknesses’,
‘opportunities’ and ‘threats’ involved in an organization, a plan, a project, a
person or a business activity. In this qualitative and descriptive study, firstly
the position of SWOT Analysis in the strategic management process is
explained, secondly the components of SWOT Analysis is examined. The
study includes an international sports wear brand’s SWOT Analysis;
historical origins of SWOT, advantages-disadvantages and the limitations
of SWOT is also reviewed.

DEFINITION

SWOT Analysis is a tool used for strategic planning and strategic

management in organizations. It can be used effectively to build
organizational strategy and competitive strategy. In accordance with the
System Approach, organizations are wholes that are in interaction with their
environments and consist of various sub-systems. In this sense, an
organization exists in two environments, one being in itself and the other
being outside. It is a necessity to analyse these environments for strategic

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management practices. This process of examining the organization and its

environment is termed SWOT Analysis.

SWOT Analysis is a simple but powerful tool for sizing up an organization’s

resource capabilities and deficiencies, its market opportunities, and the
external threats to its future” (Thompson et al., 2007: 97).

SWOT Analysis is a strategic planning framework used in evaluation of an

organization, a plan, a project or a business activity. SWOT Analysis is
therefore a significant tool for situation analysis that helps the managers to
identify organizational and environmental factors. SWOT Analysis has two
dimensions: Internal and external. Internal dimension includes
organizational factors, also strengths and weaknesses, external dimension
includes environmental factors, also opportunities and threats.

“SWOT Analysis is a simple but powerful tool for sizing up an organization’s

resource capabilities and deficiencies, its market opportunities, and the
external threats to its future”.

Figure 1 – SWOT ANALYSIS

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COMPONENT OF SWOT ANALYSIS

SWOT Analysis is a process that involves four areas into two dimensions. It

has four components: ‘Strengths’, ‘weaknesses’, ‘opportunities’, ‘threats.

Strengths and weaknesses are internal factors and attributes of the

organization, opportunities and threats are external factors and attributes of

the environment. SWOT Analysis is typically drawn out in a four-quadrant

box that allows for a summary that is organized according to the four

section titles. The following table is a SWOT Analysis, with its four

elements in a 2x2 matrix.

Figure 2 – SWOT ANALYSIS

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In SWOT Analysis, strong and weak aspects of an organization are

identified by examining the elements in its environment while environmental
opportunities and threats are determined by examining the elements
outside its environment. In this sense SWOT Analysis is a strategic
planning tool used to evaluate the strengths, weaknesses, opportunities
and threats of an organization. It provides information that is helpful in
matching the organization’s resources and capabilities to the competitive
environment in which it operates. Strengths and opportunities are helpful to
achieve the organizational objectives. They are favourable for
organizations. Weaknesses and threats are harmful to achieving the
organizational objectives. They are unfavourable for organizations.
Therefore, underlying any successful selection of strategies is an analysis
of the organization’s internal strengths and weaknesses that are posed by
internal environment and the opportunities and threats that are posed by
the external environment. In other words, manager’s role is to try to ‘fit’ the
analysis of externalities and internalities, to balance the organization’s
strengths and weaknesses in the light of environmental opportunities and
threats.

The framework presented in Figure 3. identifies many of the variables that

management should analyse.

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Figure 3 - SWOT ANALYSIS

 Organizational Strengths:

Strength is the characteristic that adds value to something and makes it

more special than others. Strength means that something is more
advantageous when compared to something else. In this sense, strength
refers to a positive, favourable and creative characteristic. Strength at
organizational level involves properties and abilities by which an
organization gains an advantage over other organizations and competitor
organizations that are revealed as a result of the analysis of its internal
environment. In other words, organizational strength defines the
characteristics and situations in which an organization is more effective and
efficient compared to their competitors.

An organization can be described as strong, equal or weak compared to

their competitors based on five criteria’s: Relative market situation, relative

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financial structure, relative production and technical capacity, relative

research and development potential, relative human capacity and
management effectiveness (Dinçer, 2007: 145).

“A strength is something an organization is good at doing or a characteristic

the organization has that gives it an important capability” (Thompson and
Strickland, 1989: 109). In this context “a strength is a resource, skill, or
other advantage relative to competitors and the needs of the markets an
organization serves or expects to serve. It is a distinctive competence that
gives the organization a comparative advantage in the marketplace.
Strengths may exist about financial resources, image, market leadership,
buyer/supplier relations, and other factors” (Pearce and Robinson, 1991:
182). Organizational strengths consist of the organizational competencies
playing an active role in achieving organizational goals. Before going into
action when encountered a problem or opportunity, an organization must
know the potential that it has and the aspects that makes it more
advantageous than its competitors. Being strong and having strengths are
quite important for an organization. Otherwise, the opportunities created by
the outside environment cannot be used. Moreover, the organization has to
answer to the threats of the outside environment by using its strengths. All
these issues highlight the importance of organizational strengths (Ülgen
and Mirze, 2010: 161).

 Organizational Weaknesses:

Weakness refers to not having the form and competency necessary for
something. Weakness means that something is more disadvantageous
when compared to something else. In this regard, weakness is a
characteristic that is negative and unfavourable. Weakness at
organizational level refers to the situations in which the current existence
and ability capacities of an organization are weaker compared to other

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organizations and competitor organizations. In other words, organization

weakness means the aspects or activities in which an organization is less
effective and efficient compared to its competitors. These aspects
negatively affect the organizational performance and weakens the
organization among its competitors. Consequently, the organization is not
able to respond to a possible problem or opportunity and cannot adapt to
changes. “A weakness is something an organization lacks or does poorly
-in comparison to others- or a condition that puts it at a disadvantage”
(Thompson and Strickland, 1989: 109). In this context “a weakness is a
limitation or deficiency in resource, skills, and capabilities that seriously
impedes an organization’s effective performance. Facilities, financial
resources, management capabilities, marketing skills, and brand image can
be sources of weaknesses” (Pearce and Robinson, 1991: 182). For the
organization, it is as important to know its weaknesses as its strengths. The
reason is that no strategy can be built upon weaknesses. The
organizational weaknesses that have the potential to lead the organization
to inefficiency and ineffectiveness should be known and improved. Solving
the existing problems that would cause difficulties and limitations for long-
term plans and strategies, and foreseeing potential problems are
obligatory.

 Environmental Opportunities:

Opportunity means a situation or condition suitable for an activity.

Opportunity is an advantage and the driving force for an activity to take
place. For this reason, it has a positive and favourable characteristic. For
organizational managements, an opportunity is the convenient time or
situation that the environment presents to the organization to achieve its
goals. Opportunities are those that would yield positive results for the

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organization determined as a result of the analysis of its environment.

Competition and the intense work present organizations big opportunities.
In fact, “opportunities are conditions in the external environment that allow
an organization to take advantage of organizational strengths, overcome
organizational weaknesses or neutralize environmental threats” (Harrison
and St. John, 2004: 164).

 Environmental Threats:

Threat is a situation or condition that jeopardizes the actualization of an

activity. It refers to a disadvantageous situation. For this reason, it has a
negative characteristic that should be avoided. For organizational
managements, a threat is the element that makes it difficult or impossible to
reach the organizational goals. Threats are the situations that come out as
a result of the changes in the distant or the immediate environment that
would prevent the organization from maintaining its existence or lose its
superiority in competition, and that are not favourable for the organization.

They can constitute an impediment to the success of the organization and

cause unrecoverable damages. All environmental factors that can impede
organizational efficiency and effectiveness are threats. The new world
order formed as a result of globalisation involves both opportunities and
threats. This system enhancing opportunities as well as threats directs
organizational managements to be careful of and act more strategically on
the developments in and outside their environments.

RECOMENDATION

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When identifying recommendations to make, consider how you can

leverage your unique strengths in the current environment. Have there
been any recent legal or competitive changes that may present a new
opportunity to expand your market or improve your competitive edge? How
can you convert your weaknesses into strengths?

For example, if you’re overly dependent on a single product, then consider

diversifying your products and expanding into new markets. Consider your
research on the current market conditions and align your strategy to make
the most of your strengths within your available resources and timing of
opportunities.

CONCLUSION

A SWOT analysis provides strategic insight on recommendations and

opportunities for small businesses to map out a strategic plan. As an
actionable management tool, the SWOT helps a small-business owner
home in on the right course of action to leverage the business's unique
characteristics. By turning threats into strengths, and matching strengths
with opportunities, you can make the most of your power in the current
marketplace and maximize your chances of success

SWOT Analysis which has been used over the last fifty years in the field of
strategic management is a valuable technique for planning and decision
making. In the strategic management process several analysis techniques
are used to achieve long-term goals of an organization. Over the years
SWOT has been a widely used technique in the analysis of internal and
external environments to support strategic decision situations. The
technique has been employed myriad of areas demanding strategic
analysis for an industry, an organization, a product, a person, a project, a

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city and so on. SWOT involves determining an objective and to identify the
internal and external factors which are favourable and unfavourable to
achieve that objective. The strategic management process begins with the
evaluation of the organization’s internal analysis. The internal analysis is
used to identify the internal sources and capabilities for competitive
advantage. The external analysis is used to identify market opportunities
and threats by analysing general environment, competitive industry
environment and rivals. While the internal analysis shows the resources
that need to be improved and sustained, the external analysis enables an
organization to align its strategies in accordance with business
environment. SWOT compares strengths, weaknesses, opportunities and
threats. Strengths and weaknesses are reviewed in context of current and
future opportunities and threats. The clearer understanding of strengths
and weaknesses, the less likely unfeasible opportunities pursue. Also,
feasible opportunities can be used to counter threats, weaknesses can be
overcome through strengths and strengths can be used to respond threats.
SWOT Analysis reveals an organization’s current situation and makes it
possible to develop future action plans for the organization. If the technique
is used properly, it can provide a good basis for strategy formulation.
Despite it being a simple managerial tool and having many advantages in
the planning process, disadvantages and limitations are also available.

SWOT Analysis presents a mere list of factors as to micro and macro

environment of an organization, moreover, it is difficult to use qualitatively
listed factors in decision making. The qualitative examination of the internal
and external factors can only be a beginning for an in-depth analyse in
planning process. The expanding literature reviewing SWOT method shows
that referring only SWOT is insufficient in strategic planning. Academic
researches on the subject suggest that the effectiveness of SWOT can be

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improved with using qualitative and quantitative techniques together.

Several scholars have proposed new analytical methods to combine with
SWOT and some scholars suggest alternative methodologies to it. There is
a considerable amount of academic study on SWOT, but little attention has
been paid to understand the historical emergence, advantages and
limitations of the method. This article which also presents current
methodological changes to the technique seeks to reveal a clear
understanding of SWOT, by examining historical background of SWOT, the
components of it, advantages, disadvantages and limitations of the
technique.

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