Developing and Implementing a Marketing Plan

Learning Topic

SWOT Analysis Porter's five forces analysis 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.

SWOT analysis takes an even narrower

focus by centering on an individual firm.

Specifically, SWOT analysis is a tool that

considers a firm’s strengths and weaknesses

along with the opportunities and threats

that exist in the firm’s environment, as

represented in the table below.

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

resolve its weaknesses, capitalize on

opportunities, and protect itself against

threats. For example, untapped overseas

markets have presented potentially lucrative

opportunities to Subway and other

restaurant chains such as McDonald’s and

KFC. Meanwhile, Subway’s 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’s strengths, it is not surprising

that entering and expanding in different

countries has been a key element of

Subway’s strategy in recent years. Indeed,

Subway currently has operations in nearly

100 nations.

SWOT Analysis

SWOT point Organizational

examples

Individual

examples

Strengths

Having high-

levels of cash

flow gives

firms

discretion to

purchase new

equipment if

they wish to.

Strong

technical and

language skills,

as well as

previous work

experience,

can help

individuals rise

above the

competition.

Weaknesses

Dubious

leadership and

CEO scandals

have plagued

some

corporations

in recent

years.

Poor

communication

skills keep

many job

seekers from

being hired

into sales and

supervisory

positions.

Opportunities

The high cost

of gasoline

creates

opportunities

for substitute

products

based on

alternative

energy

sources.

The US

economy is

increasingly

services based,

suggesting that

individuals can

enjoy more

opportunities

in service

firms.

Threats

Concerns

about

worldwide

pollution are a

threat to

petroleum-

based

products.

A tight job

market poses

challenges to

new graduates.

SWOT analysis is helpful to executives 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. It 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.

Second, 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

“entering new countries” 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 a

SWOT analysis should not be

overemphasized. SWOT analysis is a

relatively simple tool for understanding a

firm’s situation. 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’ efforts to craft

strategies for their organization, not an

ending point.

In 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 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

center or to pursue an advanced degree are

available. Our hypothetical student might be

wise to pursue a job at the rehabilitation

center (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).

Key Takeaway

Executives using SWOT analysis compare

internal strengths and weaknesses with

external opportunities and threats to

generate ideas about how their firm might

become more successful. Ideas that allow a

firm to leverage its strengths, steer clear of

or resolve its weaknesses, capitalize on

opportunities, and protect itself against

threats are particularly helpful.

Making Competitive

Moves

(https://leocontent.u

mgc.edu/content/sco

r/uncurated/mba/221

8-mba640/learning-

resourcelist/making-

competitivemoves.ht

ml?ou=922430)

Applied SWOT

Analysis

(https://leocontent.u

mgc.edu/content/sco

r/uncurated/mba/221

8-mba640/learning-

resourcelist/applied-

swot-analysis.html?

ou=922430)

Resources

Licenses and Attributions

4.6 SWOT Analysis

(http://open.lib.umn.edu/strategicmanageme

nt/chapter/4-6-swot-analysis/) from

Mastering Strategic Management by the

University of Minnesota Libraries Publishing

is an adaptation of a work whose original

author and publisher request anonymity and

is available under a Creative Commons

Attribution-NonCommercial-ShareAlike 4.0

International

(https://creativecommons.org/licenses/by-

nc-sa/4.0/) license. © 2015, University of

Minnesota.

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