Mtm10 White Paper SWOT Analysis

1. BCG Growth/Share Portfolio Matrix
ITOTW 1
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(Enhanced) SWOT Analysis
Intelligence Collaborative - Mastering the Methods Series

2. Macro-Environmental (STEEP) Analysis
This White Paper is #9 in a series of intelligence methods being offered to members of the
Intelligence Collaborative. It was developed by Dr. Craig S. Fleisher to provide a concise
overview of how to apply key intelligence methods to support analysis. Although every
effort is made to ensure that the information is accurate and fit for its purpose, the author
and Aurora WDC make no implied or explicit warranties as to its applicability or use in
your particular work context.
Please direct any questions about this paper to its author at the following:
Craig S. Fleisher, Ph.D.
Aurora WDC
Email: craig.fleisher@aurorawdc.com
http://IntelCollab.com
Other White Papers are available on a regular basis from http://IntelCollab.com. Related
Methods in the series are:
Value Chain Analysis
Win/Loss Analysis
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3. Macro-Environmental (STEEP) Analysis
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4. Macro-Environmental (STEEP) Analysis
Abstract
Arguably the most utilized technique for several forms of situation analysis, SWOT (or TOWS) is an
acronym for Strengths, Weaknesses, Opportunities and Threats. A SWOT analysis should be used to
assess the fit between an organization’s strategy, its internal capabilities (i.e., its strengths and
weaknesses) and external possibilities (i.e., its opportunities and threats).
The Method’s Primary Value
The essential thrust of the model asks four questions (Andrews, 1971):
1. What can we do? (i.e., strengths and weaknesses)
2. What do we want to do? (i.e., organizational and individual values)
3. What might we do? (i.e., external opportunities and threats)
4. What do others expect us to do? (i.e., stakeholder expectancies)
Overview of the Method
A SWOT analysis is conceptually simple and comprehensive as it can be applied to any and all facets of
an organization. These factors have made it one of the most popular models, particularly for
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5. Macro-Environmental (STEEP) Analysis
determining an organization’s ability to deal with its environment. As well, it has been taught in
undergraduate and MBA strategy courses for over 25 years and remains frequently used by consultants.
SWOT is a methodology that identifies the strengths, weaknesses, opportunities and threats of an
organization. It is a basic, straightforward model that assesses what an organization can/should and
can/should not do as well as its potential opportunities and threats. The analyst takes the information
from an environmental analysis and separates it into internal (strengths and weaknesses) and external
issues (opportunities and threats) dimensions. Once this is completed, SWOT analysis determines what
factors can support the company in accomplishing its objectives, and what obstacles must be overcome
or minimized to achieve desired results.
Where the Method Fits in Planning and Strategy
SWOT analysis forces managers to better understand and respond to those factors that have the
greatest importance for the firm’s performance. We call these factors strategic issues. A strategic issue
is an environmental factor, either inside or outside the organization, which is likely to have an impact on
the ability of the enterprise to meet its objectives.
If the SWOT is done the way we describe it, the analysts and managers should have a clear sense of the
strategic issues facing their enterprise. They should also have a clear sense of how different issues are
aligned with the firm’s resources – otherwise known as the secondary level of SWOT analysis. Lastly, the
strategist will take the secondary layer of SWOT and add possible action options that they can array and
prioritize to determine which directions are most sensible for the firm moving forward.
Cautions with Applying this Method
The simplicity of SWOT masks a great deal of individual and organizational complexity. For an individual
manager who must complete an environmental analysis, the primary concerns are gathering and
interpreting massive quantities of data about the most significant environmental forces, and then
deciding what action to take in response to them. Because interpretation represents a form of
judgment, it may differ from manager to manager. For example, one manager may see an
environmental factor, say freer trade among nations, as an opportunity for market expansion, while
another may focus on the threat of increased competition from international rivals.
It should be emphasized that strategic issues rarely arrive on top of a manger’s desk neatly labeled.
Instead, data from SWOT analysis of the environment identify new technologies, market trends, new
competitors, and employee morale trends. They require interpretation and translation before they are
labeled as strategic issues. Often, managers draw upon their experience to categorize issues as
controllable or uncontrollable, as threats or opportunities. The categories then determine how an issue
appears to an individual manager, how well it can be sold to other managers, and what action the firm
subsequently takes.
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6. Macro-Environmental (STEEP) Analysis
The SWOT model is a purely descriptive model in that it does not offer the analyst any explicit or
formulaic strategic recommendations. Only very generalized self-evident/common sense
recommendations are offered:
• Move the company away from threats
• Match the company’s strengths with opportunities
• Defend against the weaknesses through divestment or bolstering
Applying the Method
The first step in utilizing a SWOT analysis to evaluate existing and possible future strategies involves
listing and evaluating the firm’s strengths, weaknesses, opportunities, and threats.
Strengths
1._______________________________
2._______________________________
3._______________________________
4._______________________________
Etc.
Weaknesses
1.______________________________
2.______________________________
3.______________________________
4.______________________________
Etc.
Opportunities
1._______________________________
2._______________________________
3._______________________________
4._______________________________
Etc.
Threats
1.______________________________
2.______________________________
3.______________________________
4.______________________________
Etc.
An analysis of SWOT includes the following:
Strengths: Strengths are those factors that make an organization more competitive than its
competitors. Strengths are what the company has a distinctive advantage at doing or what resources it
has which are superior to the competition. Strengths are, in effect, resources or capabilities that the
organization holds that can be used effectively to achieve its objectives.
Weaknesses: A weakness is a limitation, fault or defect within the organization that will limit it from
achieving its objectives. It is what an organization does poorly or where it has inferior resources as
compared to the competition.
Opportunities: Opportunities include any favorable situation in the organization’s environment such as
a trend, change or overlooked need, which supports the demand for a product or service and permits
the organization to enhance its position.
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7. Macro-Environmental (STEEP) Analysis
Threats: A threat includes any unfavorable situation or impending change in an organization’s
environment that is potentially damaging or threatening to its ability to compete. It may be a barrier,
constraint, or anything that might inflict problems, damages or injury to the organization.
The next step for the analyst is to identify the firm’s strategic fit given its internal capabilities and
external environment. This fit or misfit should help indicate the degree of strategic change necessary.
Four scenarios will become evident as the analyst fills up the quadrants in Figure 2b with the identified
strategic issues:
• Quadrant 1 - Internal strengths matched with external opportunities
• Quadrant 2 - Internal weaknesses matched with external opportunities
• Quadrant 3 - Internal strengths matched with external threats
• Quadrant 4 - Internal weaknesses matched with external threats
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8. Macro-Environmental (STEEP) Analysis
Once a strategy is decided upon for each issue, constant monitoring and periodic iteration is required to
revisit established issues, and to proactively conceive strategies to address developing issues. Consider
this iteration as a sweep over the environmental radar screen to monitor movement of identified blips
and to benefit from the early warning capabilities afforded by the SWOT technique.
It is important here not to ascribe unfounded accuracy to this matrix. The analyst must remain aware of
the risk of quantitatively ranking qualitative data and information. A binomial ranking doesn’t properly
capture any of the subtle and often intangible mutual dependencies between issues and their
interrelated impact on the firm’s competitive position. Nonetheless, it can serve as a useful tool to
concisely visualize a rough approximation of the set of opportunities within the theoretical construct of
the SWOT model.
Finally, a separate SWOT analysis is required for each business or product market. The completed SWOT
analysis should produce an “actionable” set of recommendations that link back to each of the steps
beforehand. An example of what should be the result can be seen in the figure below for the Winnebago
Industries back a few decades.
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9. Macro-Environmental (STEEP) Analysis
Complementary Methods
• Competitive Profiling
• Cross-impact Analysis
• Driving Forces Analysis
• Financial Ratio and Statement Analysis
• Functional Capability and Resource Analysis
• Industry Analysis
• Issue Analysis
• Stakeholder Analysis
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Strengths
1)Identifiable corporate name
with a good reputation
2)Good service and warranty
3)Established dealer network
4)Extensive R&D capabilities
5)Automated, economical plant
6)Manufacturing of most parts
for the motor home
Weaknesses
1)One product focus: vulnerable
2)Focus on higher priced units
3)Heavy investment in tool-making
will raise cost of model changes
4)One plant location
5)No preparation for transition
from family to corporate mgmt.
Opportunities
1)Demand for smaller RVs
2)Development of international
market
3)Demand for low-cost modular
housing (FHA subsidy for
mortgage loans)
Threats
1)Gasoline shortage and higher
prices of gasoline
2)Slackening demand for RVs
3)“Trade-up” creates secondary
market
4)Increased competition (GM,
Ford, International Harvester,
VW, Toyota)
5)Impending safety regulations
Possible Strategies
1)Emphasize smaller, more
efficient motor homes (O1, S1,
S2, S3, S4, S5, S6)
2)Expand into foreign markets
(O2, S1, S4)
3)Diversify into modular housing
(O3, S1, S4, S6)
Possible Strategies
1)Diversify into farm equipment,
railroad cars (T1, T2, T3, S1, S3,
S4, S5)
2)Consider diesel engines for
motor homes (T1, S4,)
3)Make RVs safer in anticipation
of safety regulations (e.g.
visibility, flame retardant,
crash resistant, brakes)
(T5, T4, S6)
Internal
External
Possible Strategies
1)Develop and produce smaller
RVs (O1, O2, W1, W2)
2)Build smaller plants in different
parts of the country and abroad
(O1, O2, W4)
Possible Strategies
1)Sell the company (T1, T2, T4, W1
W1, W4, W5)

10. Macro-Environmental (STEEP) Analysis
Additional Resources
See chapter 12 (pg. 199-222) on Scenario Analysis in the (2013) book Analysis without Paralysis: 12
Tools to Make Better Strategic Decisions, 2nd
Ed., by Babette E. Bensoussan and Craig S. Fleisher, Upper
Saddle River, NJ: FT Press.
Business and Competitive Analysis: Effective Application of New and Classic Methods by Craig S. Fleisher
and Babette Bensoussan, 2007, Upper Saddle River, NJ: FT Press.
Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition by Craig
S. Fleisher and Babette Bensoussan, 2003, Upper Saddle River, NJ: Pearson/Prentice Hall.
Andrews, K., The Concept of Corporate Strategy, 1971, R.D. Irwin, Homewood: Ill
Weihrich, H., “The TOWS Matrix – A Tool for Situational Analysis,” Long Range Planning, 1982, April,
15(2) pp.54-66.
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