BA CORE 6 INTERNATIONAL TRADE
EMODULE 13
FUNDAMENTALS OF SWOT ANALYSIS
SWOT analysis was developed by Ken Andrews in the early 1970s. It is the assessment
of a company’s strengths (S) and weaknesses (W) which occur as part of organizational
analysis. This organizational analysis of S and W is an audit of a company’s internal
workings.
Conversely, examining the opportunities (O) and threats (T) is a part of environmental
analysis. The company must look outside the organization to determine the opportunities
and threats, over which it has less control.
When conducting a SWOT analysis, a firm asks four basic questions about itself and its
environment, and the relationship between strategy formulation and strategy
implementation. These include:
a) What can we do?
b) What do we want to do?
c) What might we do?
d) What do others expect us to do?
Strengths and Weaknesses
A good starting point for strategizing is an assessment of what an organization does well
and what it does less well. The general idea is that good strategies take advantage of
strengths and minimize the disadvantages posed by any weaknesses.
Michael Jordan, for instance, is an excellent all-around athlete; he excels in baseball and
golf, but his athletic skills show best in basketball. As with Jordan’s athleticism, when you
can identify certain strengths that set an organization apart from actual and potential
competitors, that strength is considered a source of competitive advantage.
The hardest but most important thing for an organization to do is to develop its competitive
advantage into a sustainable competitive advantage that is, using the organization’s
strengths in way a that can’t be easily duplicated by other firms or made less valuable by
changes in the external environment.
Opportunities and Threats
After considering what you just learned about competitive advantage and sustainable
competitive advantage, it’s easy to see why the external environment is a critical input
into strategy.
REFERENCE: Saylor URL: http://www.saylor.org/books Saylor.org
Opportunities assess the external attractive factors that represent the reason for a
business to exist and prosper. What opportunities exist in the market or the environment
from which the organization can benefit?
Threats include factors beyond your control that could place the strategy or even the
business itself at risk. Threats are also external where managers typically have no control
over them, but it can be beneficial to have contingency plans in place to address them.
SWOT analysis helps you identify strategic alternatives that address the following
questions:
a) Strengths and opportunities (SO) - how can you use your strengths to take
advantage of the opportunities?
b) Strengths and threats (ST) - how can you take advantage of your strengths to avoid
real and potential threats?
c) Weaknesses and opportunities (WO) - how can you use your opportunities to
overcome the weaknesses you are experiencing?
d) Weaknesses and threats (WT) - how can you minimize your weaknesses and
avoid threats?
Strategy formulation is coming up with the plan and strategy implementation is making
the plan happen.
There are different forms of strategy. Business strategy refers to how a firm competes,
while corporate strategy answers questions concerning the businesses with which the
organization should compete.
International strategy is a key feature of many corporate strategies. In some cases,
international strategy takes the form of outsourcing or offshoring.
An overview of the strategizing process involves a SWOT (strengths, weaknesses,
opportunities, threats) analysis and the development of the organization’s mission and
vision.
HEART
Importing is _____________ while exporting is ____________.
HAND
1. Define : (1) exporting; (2) importing; and (3) global sourcing
2. Why do companies export?
3. Why do companies seek to enter a foreign market?
REFERENCE: Saylor URL: http://www.saylor.org/books Saylor.org
