SWOT ANALYSIS

PRESENTED BY:
ELOISA GRACE D. SAMSON
 What is a SWOT
Analysis?
A SWOT analysis is a strategic planning technique
that helps organizations identify their strengths,
weaknesses, opportunities, and threats. It is a
simple but effective tool that can be used to
assess a company's competitive position and to
develop strategies for future growth.

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Strengths are internal factors that
give a company an advantage over its
competitors. Examples of strengths
include:
• A strong brand reputation
• A loyal customer base
• A skilled and experienced workforce
• A unique product or service offering
• A strong financial position

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Weaknesses are internal factors that
could put a company at a
disadvantage. Examples of
weaknesses include:
• A weak brand reputation
• A small customer base
• An inexperienced workforce
• A lack of innovation
• A weak financial position

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Opportunities are external factors
that a company can take advantage of
to improve its position in the market.
Examples of opportunities include:
• A new market opportunity
• A change in technology
• A new competitor's weakness
• A favorable government policy

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Threats are external factors that
could harm a company's position in
the market. Examples of threats
include:
• A new competitor
• A change in technology
• An unfavorable government policy
• A natural disaster

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A SWOT analysis can be conducted by a team of people or by a single
individual. To conduct a SWOT analysis, the following steps should be
followed:

1. Identify the strengths, weaknesses, opportunities, and threats. This can

be done by brainstorming, conducting research, and interviewing
stakeholders.
2. Prioritize the strengths, weaknesses, opportunities, and threats. This will
help to focus the analysis and to determine which factors are most
important.
3. Develop strategies to address the strengths, weaknesses, opportunities,
and threats. This will help to ensure that the company is taking advantage
of its strengths, addressing its weaknesses, capitalizing on
opportunities, and mitigating threats.
 Here are some additional benefits of
conducting a SWOT analysis:
• It can help to improve communication and
collaboration within an organization.
• It can help to identify and prioritize new
opportunities.
• It can help to develop more effective strategies.
• It can help to track progress over time.

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 RESOURCE SIMILARITY
In business and economics, resource similarity refers
to the degree to which two or more firms possess
similar resources, both in terms of type and
quantity. These resources can encompass tangible
assets such as physical equipment, machinery, or
technology, as well as intangible assets like brand
recognition, intellectual property, or human capital.

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Here are some specific examples of how
resource similarity can impact business
decisions:
• Pricing strategies: Firms with similar production costs and resource capabilities may
engage in price wars to attract customers and gain market share.
• Product differentiation: When firms have comparable resources, they may focus on
differentiating their products through design, features, or marketing campaigns.
• Innovation: Resource similarity can lead to a race for innovation, as firms strive to
develop new products or processes that give them a competitive edge.
• Collaboration and alliances: Firms with complementary resources may form
partnerships to share expertise, expand their market reach, or develop new
technologies.
• Mergers and acquisitions: Resource similarity can be a driving factor behind mergers
and acquisitions, as firms seek to consolidate resources, gain economies of scale,
and eliminate potential competitors.

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CHALLENGES OF INTERNAL ANALYSIS
Internal analysis is a crucial component of business planning, allowing organizations to identify their strengths, weaknesses,
opportunities, and threats (SWOT). However, conducting effective internal analysis can be challenging due to several factors.
Here are some of the key challenges of internal analysis:
1. Subjectivity and Bias: Internal analysis often involves subjective assessments of the organization's strengths and weaknesses,
making it susceptible to biases and personal opinions. This can lead to inaccurate or incomplete evaluations that may hinder
effective strategic decision-making.
2. Data Availability and Quality: Conducting a comprehensive internal analysis requires access to accurate and reliable data from
various sources within the organization. However, gathering and analyzing this data can be challenging due to data silos, poor
data organization, and inconsistent data quality.
3. Limited Perspective: Internal analysis often focuses on the organization's internal factors, neglecting the external environment.
This can lead to an incomplete understanding of the organization's overall position and the opportunities and threats it faces.
4.Resistance to Change: Internal analysis may uncover areas where the organization needs to improve or make changes.
However, implementing these changes can be met with resistance from employees or managers who are resistant to change or
prefer the status quo.
5. Lack of Resources or Expertise: Conducting a thorough internal analysis may require specialized expertise and resources that
may not be readily available within the organization. This can lead to the need for external consultants or additional training for
internal staff.

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 To overcome these challenges, organizations can adopt several
strategies:
1.Establish Clear Objectives: Clearly define the objectives of the internal analysis to ensure that data collection and
evaluation are focused and aligned with the organization's goals.

2.Utilize Multiple Data Sources: Gather data from various sources, including employee surveys, financial records, customer
feedback, and industry reports, to gain a comprehensive understanding of the organization's strengths and weaknesses.

3.Involve Diverse Perspectives: Engage employees from different departments and levels of seniority to provide diverse
perspectives and insights into the organization's strengths and weaknesses.

4.Seek External Expertise: Consider seeking guidance from external consultants or experts to provide objective
assessments and recommendations based on their knowledge and experience.

5.Address Resistance to Change: Communicate the findings of the internal analysis effectively and transparently to
employees and managers. Address concerns and seek input on potential solutions to overcome resistance to change.

6.Regularly Review and Update: Regularly review and update the internal analysis to reflect changes in the organization's
internal and external environment. This ensures that strategic decisions remain informed and relevant.

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 ANALYSIS OF EXTERNAL OPPORTUNITIES
AND THREATS
- An analysis of external opportunities and threats (OT) is a crucial aspect of strategic planning,
enabling organizations to identify and assess factors beyond their control that could impact their
future success. By understanding these external forces, businesses can develop strategies to
capitalize on opportunities and mitigate potential threats.
External opportunities represent favorable external factors that can create new business prospects or enhance an
organization's competitive advantage. These opportunities can arise from various sources, including:
•Market trends and shifts: Changing consumer preferences, technological advancements, and emerging market segments can
present new opportunities for businesses that adapt and innovate accordingly.
•Economic conditions: Favorable economic growth, rising disposable incomes, and expanding global markets can create new
opportunities for businesses to expand their reach and increase their customer base.
•Regulatory changes: New regulations or policy changes can open up new opportunities for businesses that can comply with
and adapt to these changes effectively.
•Social and environmental trends: Growing awareness of environmental sustainability, social responsibility, and ethical
practices can create opportunities for businesses that align their operations with these trends.
•Technological advancements: Rapid advancements in technology, such as artificial intelligence, cloud computing, and data
analytics, can provide businesses with new tools and capabilities to improve efficiency, enhance products and services, and
expand into new markets.
Identifying and exploiting these external opportunities can be critical for businesses to maintain a competitive edge and
achieve sustainable growth.

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External Opportunities
External opportunities represent favorable external factors that can create new business prospects or enhance an
organization's competitive advantage. These opportunities can arise from various sources, including:

•Market trends and shifts: Changing consumer preferences, technological advancements, and emerging market
segments can present new opportunities for businesses that adapt and innovate accordingly.
•Economic conditions: Favorable economic growth, rising disposable incomes, and expanding global markets can create
new opportunities for businesses to expand their reach and increase their customer base.
•Regulatory changes: New regulations or policy changes can open up new opportunities for businesses that can comply
with and adapt to these changes effectively.
•Social and environmental trends: Growing awareness of environmental sustainability, social responsibility, and ethical
practices can create opportunities for businesses that align their operations with these trends.
•Technological advancements: Rapid advancements in technology, such as artificial intelligence, cloud computing, and
data analytics, can provide businesses with new tools and capabilities to improve efficiency, enhance products and
services, and expand into new markets.
Identifying and exploiting these external opportunities can be critical for businesses to maintain a competitive edge
and achieve sustainable growth.

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 External Threats
External threats represent potential challenges or obstacles that can hinder an organization's progress
or even threaten its survival. These threats can arise from various sources, including:

•Increased competition: The entry of new competitors or the expansion of existing ones can intensify
competition, leading to price wars, market saturation, and reduced profit margins.
•Economic downturns: Economic recessions, financial crises, or currency fluctuations can lead to
decreased consumer spending, reduced business investment, and increased risk of insolvency.
•Regulatory changes: Unfavorable regulatory changes or new government policies can impose additional
costs, restrict business activities, or increase compliance burdens.
•Technological disruptions: Rapid technological advancements can also pose threats to businesses that
fail to adapt or become obsolete.
•Social and environmental challenges: Social unrest, political instability, environmental disasters, and
climate change can disrupt supply chains, damage reputations, and increase operating costs.

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Strategies for Managing External Opportunities
and Threats
Effectively managing external opportunities and threats requires a strategic approach that incorporates both
offensive and defensive strategies. For external opportunities, businesses should focus on:

•Scanning the external environment: Continuously monitor market trends, regulatory changes, technological
advancements, and social and environmental developments to identify emerging opportunities.
•Developing innovative solutions: Leverage new technologies, adopt new business models, and create unique value
propositions to capitalize on identified opportunities.
•Building partnerships and collaborations: Collaborate with other businesses, research institutions, or government
agencies to share resources, expertise, and risk.

For external threats, businesses should focus on:

•Proactive risk management: Identify potential threats early on, assess their likelihood and impact, and develop
contingency plans to mitigate their effects.
•Adaptability and flexibility: Maintain a flexible organizational structure and culture that can adapt to changing
market conditions and technological disruptions.
•Continuous improvement: Continuously improve efficiency, enhance product quality, and strengthen customer
relationships to build resilience against external threats.

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 SOURCES OF EXTERNAL ANALYSIS
External analysis is a crucial aspect of strategic planning, allowing organizations to identify and assess factors
beyond their control that could impact their future success. By understanding these external forces, businesses
can develop strategies to capitalize on opportunities and mitigate potential threats. There are numerous
sources of external information that businesses can utilize to conduct effective external analysis. These sources
can be broadly categorized into two main types:

Primary Sources
-Primary sources provide firsthand data and information directly from the external environment. This
type of data is considered to be the most reliable and accurate, as it is collected directly from the source.
Examples of primary sources include:
• Industry reports: These reports provide comprehensive analyses of specific industries, including market
trends, competitive landscapes, and regulatory developments.
• Government data: Government agencies collect a vast amount of data on a wide range of topics, including
economic indicators, demographic trends, and environmental issues.
• Trade publications: Trade publications provide industry-specific news, insights, and analysis, offering valuable
perspectives on emerging trends and challenges.

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 Secondary Sources
Secondary sources provide analysis and interpretation of primary
data by experts, industry analysts, and research organizations.
These sources can provide valuable insights and perspectives on
complex external issues. Examples of secondary sources include:
•Industry analysts: Industry analysts provide in-depth analysis
of industry trends, competitive landscapes, and future growth
prospects.
•Research organizations: Research organizations conduct
studies and publish reports on a wide range of topics,
including economic forecasts, technological advancements,
and social trends.
•News and media reports: News articles, blogs, and social
media discussions can provide up-to-date information on
current events, emerging trends, and emerging threats.

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Sources of external analysis
External analysis involves examining factors outside of an organization that can affect its
performance and strategic decisions. Various sources can be used to conduct external
analysis. Here are some common sources:
• Market Research Reports: Reports published by market research firms provide
insights into industry trends, market size, growth forecasts, and competitor analysis.
• Government Publications: Government agencies often release economic indicators,
industry reports, and regulatory updates that can impact businesses.
• Industry Publications and Journals: Specialized publications and journals in specific
industries provide in-depth analysis, case studies, and emerging trends.
• News Media: Monitoring news outlets, both general and industry-specific, helps stay
informed about current events, market shifts, and global developments.

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Cognitive inertia and External Analysis
Cognitive inertia is the tendency to resist change. It can be a major obstacle to external analysis, as it can prevent
organizations from adapting to new information and developing new strategies.
There are several reasons why cognitive inertia can occur:
•People are comfortable with the status quo. They are used to the way things are and may be reluctant to change,
even if the change would be beneficial.
•People may not believe that change is necessary. They may not see the need to change, or they may not believe that
change is possible.
•People may be afraid of the unknown. Change can be risky, and people may be afraid of the potential negative
consequences.
•People may not have the skills or resources to change. They may not know how to change, or they may not have the
time or money to implement change.
Cognitive inertia can be overcome through a variety of methods, including:
•Creating a sense of urgency. People are more likely to change if they believe that it is absolutely necessary.
•Providing clear and compelling reasons for change. People need to understand why change is needed and what the
benefits will be.
•Building a sense of ownership. People need to feel like they have a stake in the change process.
•Providing support and training. People need the skills and resources to implement change successfully.

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- External analysis is the process of identifying and assessing factors outside of an organization
that could impact its future success. It is a crucial part of strategic planning, as it helps
organizations to understand their opportunities and threats.
- Cognitive inertia can hinder external analysis in a number of ways. It can prevent
organizations from:
• Identifying new opportunities. If organizations are stuck in a rut, they may not be able to see
new opportunities that arise.
• Responding to threats. If organizations are not aware of threats, they will not be able to take
steps to mitigate them.
• Learning from their mistakes. If organizations are not willing to change, they will not learn
from their mistakes and will continue to make them.
o To overcome cognitive inertia and conduct effective external analysis, organizations should:
• Create a culture of openness and transparency. Organizations need to create a culture
where people are comfortable sharing information and discussing new ideas.
• Encourage creativity and innovation. Organizations need to encourage their employees to
think outside the box and come up with new ideas.
• Benchmark themselves against other organizations. Organizations can learn from other
organizations that are more successful or that are doing things differently.
• Seek out new information. Organizations need to be proactive in seeking out new
information about their industry and the external environment.

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 TOWS MATRIX
A TOWS matrix is a strategic planning tool that helps organizations to identify and
analyze their internal and external factors. The matrix has four quadrants:
•Strengths and Opportunities (SO): This quadrant identifies strategies that capitalize on
an organization's strengths to take advantage of external opportunities.
•Weaknesses and Opportunities (WO): This quadrant identifies strategies that minimize
an organization's weaknesses while taking advantage of external opportunities.
•Strengths and Threats (ST): This quadrant identifies strategies that use an organization's
strengths to mitigate external threats.
•Weaknesses and Threats (WT): This quadrant identifies strategies that minimize an
organization's weaknesses and mitigate external threats.
By analyzing the information in each quadrant, organizations can develop strategies to
improve their overall competitive position.

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 Here is an example of a TOWS matrix:
Strengths Weaknesses
Strong brand reputation Lack of innovation
Experienced management team Weak financial position
Loyal customer base Limited product offerings
Proprietary technology High operating costs

Opportunities Threats
New market opportunity New competitor
Changing consumer preferences Economic downturn
Technological advancements Regulatory changes

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 By analyzing the information in this TOWS matrix, the organization could develop the following
strategies:

• SO Strategies: Use the strong brand reputation to expand into new markets.

• WO Strategies: Develop new products and services to address weaknesses and take advantage of
new market opportunities.

• ST Strategies: Use proprietary technology to reduce operating costs and mitigate the threat of
new competitors.

• WT Strategies: Invest in research and development to improve innovation and reduce the threat
of new competitors.

• The TOWS matrix is a valuable tool for strategic planning. By identifying and analyzing internal
and external factors, organizations can develop strategies to improve their competitive position
and achieve their goals.

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 Critique of Swot Analysis
Despite its widespread use, SWOT analysis has been criticized for several limitations:
1. Oversimplification of Complex Situations: SWOT analysis tends to oversimplify complex
organizational situations by reducing them into a four-quadrant matrix. This can lead to an
incomplete understanding of the factors that are most important to the organization's
success.
2. Subjectivity and Bias: The identification and categorization of strengths, weaknesses,
opportunities, and threats can be subjective and influenced by personal biases and
perspectives. This can lead to inaccurate or misleading conclusions.
3. Lack of Prioritization and Actionable Insights: SWOT analysis often fails to prioritize the
identified factors or provide clear guidance on how to address them. This can make it difficult
to translate the analysis into actionable strategies.
4. Static Nature and Limited Applicability: SWOT analysis is a static snapshot of an
organization's situation at a particular point in time. It may not capture the dynamic nature of
the business environment or the need for continuous adaptation.
5. Failure to Consider Interrelationships: SWOT analysis often treats the four factors
independently, neglecting the complex interrelationships and interactions that exist between
them. This can lead to an overemphasis on certain factors and an underestimation of others.
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6. Limited Focus on Internal Factors: While SWOT analysis considers both internal and
external factors, it tends to place more emphasis on internal strengths and weaknesses. This
can overlook the importance of external opportunities and threats, which may have a more
significant impact on the organization's future.
7. Potential for Paralysis by Analysis: The process of conducting a SWOT analysis can be time-
consuming and resource-intensive, potentially leading to analysis paralysis and delaying
action.
8. Lack of Integration with Other Planning Tools: SWOT analysis is often used as a standalone
tool without integrating it with other strategic planning frameworks. This can result in a
fragmented and disconnected approach to strategy formulation.
9. Difficulty in Measuring and Evaluating Results: It can be challenging to measure and
evaluate the effectiveness of SWOT analysis, making it difficult to assess its real impact on
organizational performance.
To overcome these limitations, organizations should consider using SWOT analysis in
combination with other strategic planning tools, such as PESTLE analysis, Porter's Five Forces,
and scenario planning. Additionally, they should involve diverse perspectives in the analysis
process, regularly review and update the information, and focus on developing actionable
strategies that address the most critical factors.

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Thank you