Swot Analysis
Content
Q. How do u implement the SWOT in taking the business decision? A practical example of any MNC: SWOT ANALYSIS: SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. What a SWOT analysis does? A SWOT analysis looks at your company’s: Strengths - to build on. Weaknesses – to cover. Opportunities – to capture. Threats – to defend against.
It aims to: Reveal your competitive advantages. Analyse your prospects for sales and profitability. Prepare your company for problems. Allow for the development of contingency plans. Internal and external factors
The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories:
Internal factors – The strengths and weaknesses internal to the organization.
External factors – The opportunities and threats presented by the external environment to the organization. - Use a PEST or PESTLE analysis to help identify factors. The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's; as well as personnel, finance,
manufacturing capabilities, and so on. The external factors may include
macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the
form of a matrix. SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is actually important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats. It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.
The SWOT Matrix
A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance at developing a competitive advantage by identifying a fit between the firm's strengths and upcoming opportunities. In some cases, the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity. To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below:
SWOT / TOWS Matrix Strengths Weaknesses
S-O strategies W-O strategies Opportunities S-T strategies Threats W-T strategies
S-O strategies pursue opportunities that are a good fit to the company's strengths.
W-O strategies overcome weaknesses to pursue opportunities. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats.
W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats.
Understanding SWOT Analysis Why use the tool? SWOT Analysis is an effective way of identifying your Strengths and Weaknesses, and of examining the Opportunities and Threats you face.
How to use tool: To carry out a SWOT Analysis, write down answers to the following questions. Where appropriate, use similar questions:
Strengths: What advantages do you have? What do you do well? What relevant resources do you have access to? What do other people see as your strengths? Consider this from your own point of view and from the point of view of the people you deal with. Don't be modest. Be realistic. If you are having any difficulty with this, try writing down a list of your characteristics. Some of these will hopefully be strengths! In looking at your strengths, think about them in relation to your competitors - for example, if all your competitors provide high quality products, then a high quality production process is not strength in the market, it is a necessity.
Weaknesses: What could you improve? What do you do badly? What should you avoid? Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be realistic now, and face any unpleasant truths as soon as possible.
Opportunities: Where are the good opportunities facing you? What are the interesting trends you are aware of?
Useful opportunities can come from such things as: Changes in technology and markets on both a broad and narrow scale. Changes in government policy related to your field. Changes in social patterns, population profiles, lifestyle changes, etc. Local Events. A useful approach to looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.
Threats: What obstacles do you face? What is your competition doing? Are the required specifications for your job, products or services changing? Is changing technology threatening your position? Do you have bad debt or cash-flow problems? Could any of your weaknesses seriously threaten your business?
Carrying out this analysis will often be illuminating - both in terms of pointing out what needs to be done, and in putting problems into perspective. You can also apply SWOT analysis to your competitors. This may produce some interesting insights!
SWOT ANALYSIS OF HCL:
STRENGTHS: HCL’s strengths are many, to mention a few:
a)
Global Presence: Its collaborations and joint ventures with international companies such as Perot System, and partnership with world leaders like Ericsson, Toshiba, Nokia, Oracle and Microsoft, enable it to bring the best technology available world wide to its consumers. 24 locations in 16 countries.
b)
Fast paced and flexible work culture which provides its employees autonomy to accomplish the task without much pressure from the higher authorities. Thus, employees are motivated to give their best to the organization.
c)
The core strength of HCL is the talent and innovativeness of its people which enables it to provide the “right solution at the right time.”
d)
The mass markets handled through a chain of dealers, resellers and a retailer which helps bring technology usage closer to the individual. It has very strong distribution network.
e)
Its pool of competencies: Hardware, Software, Training, Networking, Telecom and System Integration.
f)
Ability to understand customer's business and offer right technology.
g) h) i) j)
Long-standing relationship with customers. Pan India support & service infrastructure. Best-value-for-money offerings. Aggressive marketing strategy.
WEAKNESSES: a) b) c) After sales service. Less promotional campaigns. Channel partner of HCL has not much capable to provide good and frequent services to their promotional customer. OPPORTUNITIES: a) b) c) d) e) IT industry booming at a rate of 45% every year. Increasing consumer awareness about IT and its use. Tremendous untapped potential of IT products in India. Increasing competition. Tie ups with various MNCs enable to extract their core competencies.
THREATS: a) b) c) Local assemblers are biggest threat for the company. Entry of MNCs i.e. IBM, Compaq giving direct competition. Govt. instability has long-term repercussions affecting company’s policies & its growth. d) Technological shift as a result of research & development. Daily new technologies are emerging.
It aims to: Reveal your competitive advantages. Analyse your prospects for sales and profitability. Prepare your company for problems. Allow for the development of contingency plans. Internal and external factors
The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories:
Internal factors – The strengths and weaknesses internal to the organization.
External factors – The opportunities and threats presented by the external environment to the organization. - Use a PEST or PESTLE analysis to help identify factors. The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's; as well as personnel, finance,
manufacturing capabilities, and so on. The external factors may include
macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the
form of a matrix. SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is actually important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats. It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.
The SWOT Matrix
A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance at developing a competitive advantage by identifying a fit between the firm's strengths and upcoming opportunities. In some cases, the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity. To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below:
SWOT / TOWS Matrix Strengths Weaknesses
S-O strategies W-O strategies Opportunities S-T strategies Threats W-T strategies
S-O strategies pursue opportunities that are a good fit to the company's strengths.
W-O strategies overcome weaknesses to pursue opportunities. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats.
W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats.
Understanding SWOT Analysis Why use the tool? SWOT Analysis is an effective way of identifying your Strengths and Weaknesses, and of examining the Opportunities and Threats you face.
How to use tool: To carry out a SWOT Analysis, write down answers to the following questions. Where appropriate, use similar questions:
Strengths: What advantages do you have? What do you do well? What relevant resources do you have access to? What do other people see as your strengths? Consider this from your own point of view and from the point of view of the people you deal with. Don't be modest. Be realistic. If you are having any difficulty with this, try writing down a list of your characteristics. Some of these will hopefully be strengths! In looking at your strengths, think about them in relation to your competitors - for example, if all your competitors provide high quality products, then a high quality production process is not strength in the market, it is a necessity.
Weaknesses: What could you improve? What do you do badly? What should you avoid? Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be realistic now, and face any unpleasant truths as soon as possible.
Opportunities: Where are the good opportunities facing you? What are the interesting trends you are aware of?
Useful opportunities can come from such things as: Changes in technology and markets on both a broad and narrow scale. Changes in government policy related to your field. Changes in social patterns, population profiles, lifestyle changes, etc. Local Events. A useful approach to looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.
Threats: What obstacles do you face? What is your competition doing? Are the required specifications for your job, products or services changing? Is changing technology threatening your position? Do you have bad debt or cash-flow problems? Could any of your weaknesses seriously threaten your business?
Carrying out this analysis will often be illuminating - both in terms of pointing out what needs to be done, and in putting problems into perspective. You can also apply SWOT analysis to your competitors. This may produce some interesting insights!
SWOT ANALYSIS OF HCL:
STRENGTHS: HCL’s strengths are many, to mention a few:
a)
Global Presence: Its collaborations and joint ventures with international companies such as Perot System, and partnership with world leaders like Ericsson, Toshiba, Nokia, Oracle and Microsoft, enable it to bring the best technology available world wide to its consumers. 24 locations in 16 countries.
b)
Fast paced and flexible work culture which provides its employees autonomy to accomplish the task without much pressure from the higher authorities. Thus, employees are motivated to give their best to the organization.
c)
The core strength of HCL is the talent and innovativeness of its people which enables it to provide the “right solution at the right time.”
d)
The mass markets handled through a chain of dealers, resellers and a retailer which helps bring technology usage closer to the individual. It has very strong distribution network.
e)
Its pool of competencies: Hardware, Software, Training, Networking, Telecom and System Integration.
f)
Ability to understand customer's business and offer right technology.
g) h) i) j)
Long-standing relationship with customers. Pan India support & service infrastructure. Best-value-for-money offerings. Aggressive marketing strategy.
WEAKNESSES: a) b) c) After sales service. Less promotional campaigns. Channel partner of HCL has not much capable to provide good and frequent services to their promotional customer. OPPORTUNITIES: a) b) c) d) e) IT industry booming at a rate of 45% every year. Increasing consumer awareness about IT and its use. Tremendous untapped potential of IT products in India. Increasing competition. Tie ups with various MNCs enable to extract their core competencies.
THREATS: a) b) c) Local assemblers are biggest threat for the company. Entry of MNCs i.e. IBM, Compaq giving direct competition. Govt. instability has long-term repercussions affecting company’s policies & its growth. d) Technological shift as a result of research & development. Daily new technologies are emerging.
