{"id":133,"date":"2014-05-13T17:44:41","date_gmt":"2014-05-13T17:44:41","guid":{"rendered":"http:\/\/opentextbc.ca\/strategicmanagement\/?post_type=chapter&p=133"},"modified":"2019-07-02T22:45:24","modified_gmt":"2019-07-02T22:45:24","slug":"swot-analysis","status":"publish","type":"chapter","link":"https:\/\/opentextbc.ca\/strategicmanagement\/chapter\/swot-analysis\/","title":{"raw":"SWOT Analysis","rendered":"SWOT Analysis"},"content":{"raw":"
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Learning Objectives<\/p>\r\n\r\n<\/header>\r\n

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  1. Understand what SWOT analysis is.<\/li>\r\n \t
  2. Learn how SWOT analysis can help organizations and individuals, and its limitations.<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>\r\nFive forces analysis, from Chapter 3, examines the situation faced by the competitors in an industry. Strategic groups analysis narrows the focus by centering on subsets of these competitors whose strategies are similar. [pb_glossary id=\"2773\"]SWOT analysis[\/pb_glossary]<\/strong>\u00a0<\/strong>takes an even narrower focus by centering on an individual firm. Specifically, SWOT analysis is a tool that considers a firm\u2019s s<\/strong>trengths and w<\/strong>eaknesses along with the o<\/strong>pportunities and t<\/strong>hreats that exist in the firm\u2019s environment (Figure 4.20 \"SWOT\"<\/a>).<\/a>\r\n\r\n[caption id=\"attachment_1239\" align=\"aligncenter\" width=\"400\"]\"Figure<\/a> Figure 4.20 SWOT [Image description]<\/a>[\/caption]Executives using SWOT analysis compare these internal and external factors to generate ideas about how their firm might become more successful. In general, it is wise to focus on ideas that allow a firm to leverage its strengths, steer clear of or minimize its weaknesses, capitalize on opportunities, and protect itself against external threats. For example, untapped overseas market opportunities have presented potentially lucrative market opportunities to Subway. Meanwhile, Subway\u2019s strengths include a well-established brand name and a simple business format that can easily be adapted to other cultures. In considering the opportunities offered by overseas markets and Subway\u2019s strengths, it is not surprising that entering and expanding in different countries has been a key element of Subway\u2019s strategy in recent years. Indeed, Subway currently has operations in\u00a0over 100 nations. \u00a0Of course, other restaurant chains such as McDonald\u2019s and KFC also see this overseas opportunity, and are\u00a0external threats to Subway's success (Wikipedia, 2014).\r\n\r\nSWOT analysis is helpful to executives and managers, and is used within most organizations. Important cautions need to be offered about SWOT analysis, however. First, in laying out each of the four elements of SWOT, internal and external factors should not be confused with each other. Strengths and weaknesses are internal\u00a0to the firm's environment: they are within the company.\u00a0 The external environment includes opportunities and threats in the business community outside the company.\u00a0It is important not to list strengths as opportunities, for example, if executives are to succeed at matching internal and external concerns during the idea generation process.\r\n\r\nSecond, opportunities should not be confused with strategic moves designed to capitalize on these opportunities. In the case of Subway, it would be a mistake to list \u201centering new countries\u201d as an opportunity. Instead, untapped markets are the opportunity presented to Subway, and entering those markets is a way for Subway to exploit the opportunity. Finally, and perhaps most important, the results of SWOT analysis should not be overemphasized. SWOT analysis is a relatively simple tool for understanding a firm\u2019s situation, which is inherently complex. As a result, SWOT is best viewed as a brainstorming technique for generating creative ideas, not as a rigorous method for selecting strategies. Thus the ideas produced by SWOT analysis offer a starting point for executives\u2019 efforts to craft strategies for their organization, not an ending point.\r\n\r\nIn addition to organizations, individuals can benefit from applying SWOT analysis to their personal situation. A college student who is approaching graduation, for example, could lay out his or her main strengths and weaknesses and the opportunities and threats presented by the environment. Suppose, for instance, that this person enjoys and is good at helping others (a strength) but also has a rather short attention span (a weakness). Meanwhile, opportunities to work at a rehabilitation centre or to pursue an advanced degree are available. Our hypothetical student might be wise to pursue a job at the rehabilitation centre (where her strength at helping others would be a powerful asset) rather than entering graduate school (where a lot of reading is required and her short attention span could undermine her studies).\r\n
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    Key Takeaways<\/p>\r\n\r\n<\/header>\r\n

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