Q 390. SWOT Analysis is a strategic planning tool. Explain SWOT analysis and how can it be used for business excellence initiatives.

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SWOT Analysis is a structured planning method used in business to evaluate the strengths, weakness, opportunities and threats. 

 

SWOT ANALYSIS FOR BUSINESS EXCELLENCE INITIATIVES -

 

What can be improved? - SWOT is a very good tool for business excellence professionals to address root causes as lack of awareness, misinterpretation, less sense of urgency, no compelling reason to change, pointing the ‘what is in it for me’ syndrome, conflicting interests & priorities. Certainly these root cause are evident in different behaviors, usually active resistance, delayed or no decision, missed meetings, delays in pattern, false starts, passive resistance, vocal skepticism, disengaged team members, missed assignments and so on.

 

How to use SWOT? - 

Identify strengths of the process, people and products related to the improvement initiatives. There are tangible and intangible factors with factors over which we control. ‘Control’ is the key and surrounds internal factors. It mostly means internal to the organization but when improving processes, it can be internal to a business unit, department, geographic location etc.

 

Further, we need to look at the weaknesses of process, people and products. Weaknesses are contributing factors that can be within our control detracting from delivering value without creating more waste. 

 

Now look at the opportunities. What is the target improvement? What opportunity are we trying to capture? Why are we doing this? These questions will always help identify the primary opportunities. In traditional SWOT, the opportunities part of the analysis mostly refers to external ones. In process improvement projects/ initiatives, it can either be this or internal opportunities also.

 

Finally we need to consider the threats. What is likely to happen if this process is not going to be improved. What will be the case, the outcome of not improving the situation. We need to be specific and detailed as much as possible. This also is (traditionally) external threats. But similar to opportunities, it can also be internal threats to the organization.

 

 

 

 

 

I.            Introduction:

SWOT analysis is a very simple, yet powerful framework / tool used to evaluate an organizations Strengths, Weakness, Opportunities and Threats. SWOT evaluates, internal / external factors along with current and future potential. This framework was invented by Albert Humphrey a management consultant, in the 1960’s at the Stanford Research Institute.

 

II.            SWOT explained:

a)     Strengths (Internal, Positive):

Describes the company’s strengths which separates if from its competition that can be used to maximise the identified opportunities. Examples could be, the brand value, customer base, technology and so on.

·         Things the company does well

·         Qualities that separate the company from its competition

·         Internal resources such as skilled / knowledgeable workforce

·         Tangible assets like propriety technology, intellectual property etc.

 

b)     Weaknesses (Internal, Negative):

Any internal factor that prevents an organization from performing at its best which needs improvement to remain competitive. Examples are, bad debt, supply chain issues, lack of funds etc.

·         Things the organization lacks

·         Stuff the competitors does better

·         Limitations on resources

·         Uncertain USP (unique selling proposition)

 

c)      Opportunities (External, Positive):

These are external factors that are favourable which could give a competitive advantage. Examples include, tariff cuts, increasing market share, new markets etc.

·         Underserved markets for certain products

·         Fewer competition in the area

·         Emerging need for product / services

·         Media coverage

 

d)     Threats (External, Negative):

External factors that have the potential to harm a company. Examples are natural calamities, inflation etc.

·         Emerging competition

·         Unstable regulatory policies

·         Negative media coverage

·         Changing consumer attitudes

 

III.            Steps to conduct a SWOT analysis:

                       

 

 

 

IV.            A sample SWOT analysis for a restaurant:

 

 

 V.            Advantages and Disadvantages of SWOT:

 

Advantages	Disadvantages
Helps condense large amount of data into manageable chunks	Sometimes leads to oversimplification
Single tool can describe four critical areas	It is not always objective
Wide application – can be used by any organization	No limits in place (relevance)
Simple / low cost	Unknown factors may influence outcomes
	Terms used could be vague, or even meaningless
	No obligation to verify

 

 

 

VI.            Application in Business Excellence initiatives:

 

Effective and efficient businesses processes are required for companies to stay competitive. The current digital era is demanding organizations to re-design and improve processes with agility and help achieve the strategic objectives. SWOT analysis framework can be used to understand the AS-IS state by studying the strengths and weaknesses that are internal to any business / process and develop the TO-BE state by developing strategies capitalizing on the opportunities and overcoming threats which are external.

When the outcome is combined with other tools, SWOT can help in identifying transactional and transformational improvement projects aligned to goals the organization.

SWOT can also help identify the strengths of the people, process, and products relative to the improvement initiative which could be tangible and intangible factors. Likewise, the weakness factors of people, process, and product that prevent from delivering value could be identified. Opportunities can be considered as the targeted improvements which could be internal or external. Threats can be looked upon as the effect or consequences if people, process, or product is not improved.

 

 

 

 

SWOT analysis is a powerful tool to understand the pros and cons of any strategy or organization. It can be used to check what will work and what will create an issue.

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats; this tool is used for analyzing these 4 facets of any strategy and business. It can be used in different scenarios e.g. for studying new business, new companies, part of company, any strategical planning. It can be used for industry, place, product or persons. It helps in decision planning.

SWOT analysis can be used to predict the factors which will work in tandem to help implement the plan and also the factors which will create problem and strategy can be made to tackle those problems thus paving the way for smooth implementation.

 

A Visual Example of SWOT is below:

 

 

SWOT ANALYSIS – INTERNAL AND EXTERNAL FACTORS

SWOT Analysis is comprised of INTERNAL and EXTERNAL Factors -

 

INTERNAL FACTORS – Strengths and Weaknesses (Current or Backward-Looking Factors)

EXTERNAL FACTORS – Opportunities & Threats (Forward Looking Factors)

 

APPROACHING SWOT ANALYSIS

SWOT analysis can be approached by using a brainstorming technique with a team from a different functions and levels in organization.

 

Let’s look at each facet in more detail:

 

STRENGTHS

It is an internal factor as we look at the current situation or backward-looking factor. We look at things which are presently available. Strengths are the edge that organization/strategy have over others. It is the things which will work for betterment.

Strengths are integral part of organization, so these are the advantages your company has and will utilize it.

 

Example:

·       Company Culture

·       Company image

·       Better Capacity

·       Better Location etc,

 

WEAKNESSES

As is the case with Strengths, Weakness is also Internal Factor. Its time to write down things which goes against the organization. Being honest is very important and listing out as many things as possible. What could be improved? What are the things that is to be avoided.

 

Example:

·       Low capacity

·       Little market presence.

·       Less organizational efficiency.

·       Inefficient Suppliers etc,

 

OPPORTUNITIES

Opportunities are the chances that can be grabbed with efforts and can be turned into strengths. It is a forward-looking approach which can be used for the benefit. They usually arise from the situation outside of the organization.

 

Example:

·       Political Changes

·       Social pattern

·       Per capita income growth trajectory etc

 

THREATS

Threats include anything which can work negatively. It is also a forward-looking approach and generally are factors which are outside of your organization. It is vital to anticipate and tackle these threats.

 

Example:

·       Change in market behavior

·       Shortage of manpower

·        Change in banking policies etc.

 

Example of Completed SWOT analysis: 

 

 

 

How can it be used in Business Excellence Initiatives?

Generally Business Excellence Initiatives involves radical policy changes or policy deployment. It can be affected by issues from both from the organization itself or outside of the organization. Doing SWOT analysis and trying to figure out Strengths & Weakness can create an extra advantage for the team. Also Figuring out Opportunities & changing them into strength would create the initiatives a lot more profitable. Avoiding threats is imperative for the organization to stay relevant in future as well.

SWOT analysis in Business Excellence can give an outlook to the organization about what will work and what won’t so that measures can be taken for that.

 

SWOT Analysis

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

With the focus on business vision and to reach the business goals we need to do SWOT analysis. It is vital tool for any kind of decision making

The output of the analysis would provide information that is helpful in matching the organisations resources and capabilities to the competitive environment in which it operates.

The acronym SWOT stands for;

It is a technique used to determine and define the Strengths, Weaknesses, and Opportunities

and Threats

 

Strengths

- An organisations strengths are resources and capabilities that can be used as a basis for developing a competitive advantage.

Any inherent capabilities that we have within the organisation gives and advantage over others… So we need to list those strengths and look forward to build on that.

Strengths such as Marketing, Money, Resources, Strong Research and Development capability etc. all are very critical for the success of the business. These help the business grow.

We need to analyse and understand what we can utilise that would help the business grow and reach the business goals

Few more examples could be

o   Strong brand name

o   Good reputation among customers

o   Exclusive access to high grade resources

o   Favourable access distribution networks

 

Weaknesses

-      The absence of certain strengths may be viewed as weakness. It is a BIG problem in the business that needs to be worked upon.

Few examples are;

o   Weak brand name

o   Poor reputation among customers

o   High cost structure

o   Lack of access to the best natural resources

o   Lack of access to the key distribution channels

o   Low financial strength

o   Low R & D capabilities

o   Low communication skills

o   Low marketing skills

Weaknesses are inherent limitations within an organisation which creates disadvantage over others.

A detail and candid analysis of what is going wrong in the organisation will help in understanding, analysing and improve the business.

It is very critical and crucial to identify the weaknesses early and try to minimise them.

 

Opportunities

These are favourable external factors that could give a competitive advantage

Favourable conditions available in the market we need to encash.

We need to invest on the opportunities. For e.g. any rise in demand – we need to invest and try to fulfil the demand requirement that help in getting higher revenue and profits.

Explore new geographies is another example of grabbing the opportunity.

Few more examples are;

o   An unfulfilled customer need

o   Arrival of new technologies

o   Loosening of regulation

o   Removal of international trade barriers

o   Market trends

 

New have to be mindful that not every opportunity in the market may be useful for our business. So, we need to figure out the right opportunity at that particular point in time and leverage it.

 

Threats

-      Factors that have potential to harm. Changes in the external environment that may present threats to the organisation

Few examples such as;

o   New regulations

o   Increased trade barriers

o   Shift in customer tastes away from firms products and services

o   New entrants or

o   Cheaper substitutes

Monitor and take appropriate timely action, so that our business does not get impacted

Unfavourable conditions.

By identify the threats – we need to counter attack based on the business strengths.

 

More examples summary;

Top areas of concerns
Threats and Weaknesses
External	Internal
Poor Customer Support	Empowerment
Complicated buying process	Peer interaction
Poor communication	Work life balance
Delay in payments	Exchange of best practices
Financial terms	Sharing of information
Business continuity	Mutual support
Timely reporting
Environmental impact
Social responsibility
Top areas of satisfaction
Strengths and Opportunities
External	Internal
Timely Delivery	Training activities
Product Quality	Clarity of tasks assigned
Good Reputation	Shared resources
Transparency	Internal reporting
Communication	Accessibility
Ease of doing business
Ethical of doing business
Workplace impact
Market standing/Image

 

We can do SWOT analysis for all the Business, Personal, Product, Place, Policies, New initiatives and any kind of decision making.

 

In an organisation to understand;

• What skills do we have to reach these goals?
• What is stopping us to reach these goals?
• What kind of opportunities do we have to strengthen our weaknesses?  
• What can happen suddenly which stops us to reach our goals?

We need to do SWOT Analysis.

 

As we understood that who and why SWOT Analysis needs to be done to help in reducing weakness and improving opportunities, we are underlying the MAXI and MINI business strategy

i.e.  

• Maximise Strengths, Maximise opportunities &
• Minimise threats, Minimise weakness

We need to maximise the strengths so that we can grab opportunities.

With weakness we may lose out due to threats. So we need to minimise the weakness.

SWOT (Strengths, Weakness, Opportunities & Threats) Analysis is a very important and widely used tool in strategic planning across major multinational companies for doing the high level analysis with their competitors.

This tool may help a person, team, organization and at all the levels to analyze on :

• Strengths : What you do well and give you an advantage over the others
• Weaknesses : What you don’t do well and put you at weak position compared to competitors
• Opportunities : Elements available in the environment which you can use to gain competitive advantage over the others
• Threats : Elements present in the environment which may cause troubles for the company in long run.

Pictorial Representation of the Tool :

 

 

Where this is tool is primarily used ?

i)  Strategic Planning

ii) Corporate Affairs Planning

iii) Marketing strategy Planning

iv) New Products Launch

v) New Mergers and Acquisitions

vi) New Campaign Launch

vii) New Policy Deployment

viii) New Customer Segment Penetration etc.

 

Limitations :

i) SWOT Analysis may act as a starting point for strategic building overall, but does not tell us how to gain the competitive advantage.

ii)  In the rapidly changing environment, it may be challenging to perform and adhere to SWOT analysis with long horizon.

iii) Sometimes putting too much focus on one strength may take the focus out from the weakness E.g. Focusing more on cost part may bring the quality down.

iv) It may result in generating the too many ideas and put the one in dilemma which one to use

v) This method does not prioritize the issues

 

Example of SWOT Analysis in my company (a software major and IT giant) :

 

 

How SWOT Analysis can be used for Business Excellence Initiatives?

 

SWOT analysis can be used to identify the Strengths, Weaknesses, Opportunities and Threats of a particular business / domain / vertical / segment etc. and accordingly six sigma interventions can be planned in those areas as shown in below grid :

 

 

Famous Companies used successfully SWOT Analysis to gain competitive advantage or even gained using it :

 

 

Other popular tools / techniques similar to SWOT :

 

PESTLE Analysis, Porter 5 forces Model, SOAR Analysis, Noise Analysis etc.

 

So we see here SWOT Analysis lays the foundational stone for the Six Sigma initiatives and good and proactive organizations / companies with great vision build upon the areas surfaced out post SWOT analysis by their Business Excellence initiatives to gain the competitive advantage in short as well as in long run !

SWOT Analysis is a strategic tool used by organizations to plan strategically and ascertain the organizations current position. SWOT Analysis consists of a matrix of four quadrants which are Strength, Weakness, Opportunity, and Threat.

Strength

·       Analyze what the organization internally does well.

·       Analyze what the organization does better than the competition or cheaper than the competition.

·       What is the USP or the Unique Selling Proposition of the organization?

Weakness

·       Analyze what the organization internally does poorly.

·       What tasks can be done better?

·       Can the following be improved (resources, symptoms procedures and people)?

Opportunity

·       External chances for the organization to grow in the future.

·       The organization should take initiative and claim the opportunity.

·       Opportunities can occur in political decisions, demographic change, and social issues.

Threat

·       External negative events that affect the organization.

·       Usually out of the control of the organization, for example a global pandemic, environmental issues, and political changes.

·       Anticipation and proactiveness is the best answer with effective reactions a close second.

SWOT analysis are a good way for the organization to take a snapshot of its internal processes in the form of its strengths and weaknesses and to ascertain the outside factors that affect it in the form of opportunities and threat’s. A well-done SWOT analysis can be used in business excellence initiatives as it gives a good picture of the organization’s current status.

Source:

https://www.mindtools.com/pages/article/newTMC_05.htm

 

SWOT stands for Strengths, Weakness, Opportunities and Threats. This technique is strategic tools for accessing business in these four aspects. As you access your business in these areas, It support what you have and use for the advantages of the business and you can focus on the reduction of hazards which may create a challenge to your business.

 

As uses by business to analyze the current scenarios and to plan the upcoming strategy . You can identify what is in favors of business, what are not favorable and how to achieve it. To drive all these ares SWOT analysis is perfect tool.

 

To perform SWOT Analysis , It should be done in 2 X 2 Matrix. Each matrix has an area for S , W , O and T.

 

First Matrix is ‘S’ – It stands for Strengths.

 

In this matrix , You should focus on the area where you are doing better. In this area you may be doing better than your competitors. In this area you should always focus on your USP (Unique selling point). When you focus on strength ensure that it is real strength not a mere requirement.

 

You can put example like your process , your quality , Cost etc.

 

 

 

Second Matrix is ‘W’ – It stands for Weaknesses.

 

In this matrix, You should focus on the areas you need to improve. In this area Honesty is the best policy. In this area when you compete yourself with your competitor that makes you behind. You can also take view from other stakeholder how they see you as compare to competitors. And then thinks the areas which you could improve or avoid the current practice.

 

Third Matrix is ‘O’ – It stands for Opportunities.

 

Opportunities are the situation which might happen and may give you a positive benefits and you can grasp them. These are usually happens outside your area and you need to focus on it . In this matrix you can collect all these areas.

 

You can focus on new development in market , New Government policy or any major market strategies  which may support your business.

 

Fourth Matrix is ‘T’ – It stands for Threats.

 

Threats are the situations happens outside your business which can give negative effects. These are the obstacles that you face for your business to perform. In this matrix you need to collect all the threats and take a suitable action on the same before it arises. Here you can also focuses on your competitors but do not do what they do. Keep your focus on the solving or reducing the impact before it arise.

 

The situation like New technology evolve, Future supply chain problem , Natural calamity affecting the process , Pandemic scenario , Labor challenges. These can be an example for Threats in business.

 

 

How to you use it in business excellence.

 

The major advantages of SWOT analysis is to provide input to the business excellence team and transform the Business. These are some of the areas where we can use SWOT for business excellence.

 

1.      Business excellence team can structure to their working philosophy with SWOT of overall business.

2.      SWOT will give input for business excellence team for driving improvement.

3.      It help business excellence team to determine initiative and Project.

4.      Team can also use SWOT analysis approach for input generation during start of the project.

5.      This can be used inline with VOC-QFD analysis for generation of major Areas for development of Long term plan.

6.      Business excellence team can also use SWOT analysis for re-design the process and make the system more Agile to face a future challenge.

 

 

Conclusion              

 

SWOT analysis in one of the best strategic tool use for business as Good business must be competitive. This Analysis help us to visualize the AS IS scenario of the business and support to be work on it. This analysis is not restricted to the business. We can use SWOT analysis for Personal development ,Employee development , Business Process Management. The beauty of this analysis is we can think what stop us to improve and how we can improve in 2 X 2 Matrix.

 

 

SWOT analysis is one of the strategic tool to identify and evaluate the business strength, weakness, opportunity and treat. It is commonly used for person / organization / market study etc.

SWOT analysis play a key role in any organization provided the team is free to provide the facts so that real situation will be visible to take any actions and look for an opportunity.

 

Strength: Shall identify the organizational strength like brad name, Safety, High quality with low cost, Technology and strong balance sheet etc. Some of the strength most of the organization cannot imitate like culture, team engagement and system etc. Such a strength shall separate the organization from competitors. Its kind of Blue ocean strategy, If the organization have strong strengths then they may stand far away from other competitors.

 

Weakness: Its stop an organization to move forward or perform well. The weakness shall be proactively identified and removed from the system. The weaknesses are low brand image, weak supply chain, low market share and high level of debt.

 

Opportunity: Its an favorable external factors will support or lead an organization for competitive advantage.  Example most of the countries now moving towards H2 energy with Govt funding / low tax etc. Such an external factors shall support organization to open a new market as an opportunity.

 

Threat: Its refer to potential harm or adverse impact to an organization. Country political instability, regulation on high tax, high raw material cost and etc all considered as threat to business. So such a threats shall be identified in advance and actions shall be executed. 

 

Strength and weakness are considered as internal factors and Opportunity and Treats are considered as external factors. The External factors also equally important for organizational growth (market change, political change, monitory polices.

 

The adequate actions shall be executed once identified all such threats and opportunities. 

 

Thanks

Strength and weakness are the focus area for most of the organisation and people, however when the organisation work on opportunities and threats along with Strength and weakness than the results are delightful. SWOT can also help the organisation to think beyond the limitations and develop products or services which can be future revolution.

As a results: Designing and creating the need for next generation.

SWOT stands for –

Strengths – Identify current strengths of your Business and reflect on how the current question/problem/decision to be taken, would help in building on those strengths and enhancing your competitive advantage.

Weaknesses – It is extremely important to be realistic about the current weaknesses in your business so that during the implementation of a new idea/business decision etc. one can deal with them adequately.

Opportunities – Identifying the opportunities external market has to offer is extremely important while analyzing a new idea/business decision, if not this could be detrimental/damaging for the business. SWOT analysis would help the business to seize an existing opportunity in the external market.

Threats – Certain external factors can pose threat to existing business or cause problems in the implementation of any new idea/business decision. E.g. new government policies. A SWOT analysis can help you identify threats and ways to counteract them, depending on your strengths and weaknesses.

SWOT analysis looks at all the internal and external factors that can affect your business or the decisions that you are taking based on this.

For example – For an ongoing Business Excellence Project ABC company has decided to go with the trend and automate some of its processes using RPA (Robotic Process Automation).

The objective of the project is to enhance the efficiency of the overall process without any compromises with the quality of the output.

Step 1 – Start with a questions in mind –

How will RPA help me in achieving my objective?

My process would become faster, but with RPA would it also be error free?

Are there any particular weaknesses of RPA that we need to ponder on before implementing the solution?

Step 2 – To answer the above questions we do SWOT analysis –

-          Building on Strengths - The value that the current business creates for its customers is that it serves as a one stop solution for all the Small and Medium sized businesses and offer services such as Accounting, Software Development, Marketing, Administration, Medical Billing etc. at the best prizes to help its customers get break through services that only the larger businesses can endow.

 

With RPA current business can build on its strengths as now we could do “more with less”. With limited resources faster and additional work can be done which would give the business a competitive edge and assist it in keeping up with the pace of fast changing market needs.

 

-          Minimizing Weaknesses – Employees are used to working in the traditional manner and are not completely exposed to the advancement in technology. Change management would have to be carefully planned out.

 

Trainings could be planned before implementing the final solution to keep the team up to speed with the new technology being implemented.

 

-          Seizing Opportunities - Artificial Intelligence, Machine Learning and Robotics, these technologies are widely used in various industries to help humans focus on analytics/decision making rather than regular mundane tasks.

 

Implementing robotics for some of the existing processes in the company would help team focus on analysis and important decision making rather than processing regular documents on a daily basis.

This would also help the management get more business with limited resources and would have an overall positive impact on the growth of the company.

 

-          Counteracting Threats – The current business model demands data to be move from one country to another. Conflicting data privacy rules between the two nations could cause problems in implanting Robotic Process Automation to the existing processes.

 

Current policies such as GDPR (General Data Protection Regulation) needs to be looked into and concrete analysis is to be drawn in order to proceed with hassle free implementation.

 

Step 3 – Further SWOT analysis can be done on any individual issues highlighted in the high level SWOT analysis, such as the one about GDPR (General Data Protection Regulation) and conclude the final analysis with a list of implementation steps and the control plan. 

 

 

SWOT Analysis stands for Analyzing Strengths, Weakness, Opportunities and Threats.

 

This is strategic business planning tool which any company or even a business unit should do it during their business planning exercise to try and understand how they are doing on the above 4 quadrants..

 

 

Strengths: 

• Things that the company does well or is best at..
• Unique things that the company is know in the market for..
• Unique skills that the company possess 
• Any key assets, or IPs that the company owns

Weakness:

• Things that the company lacks
• Things that the competitors do better than the company
• Any resource limitations

Opportunities:

• Markets untapped
• Untapped products

Threats:

• Emerging competitors
• Disruption happening in market by any new company
• Disruption happening owing to any new product

 

This tool can helo in building the future of the company and how the company can shape up and move forward.

 

Very interesting usages of SWOT analysis in Business Excellence. Some of the noteworthy mentions and must read answers are from Rahul Garg (how it can be used for identification of business excellence projects), Vinod Jeba Azir (how it can be used for AS-IS vs TO-BE tool) and Swarandeep Kaur Juneja (how it can be used for business excellence project assessment).

There is one answer that combines all of these and hence it has been selected as the winning answer. Congratulations Saurabh Gorantiwar. Well done!