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"InnoSupport: Supporting Innovation in SMEs"2.2. SWOT Analysis
2 How to identify the innovation needs of a business
problem
2.2. SWOT Analysis
Introduction
In 2.1 The Technology audit has been presented as a useful tool for identifying the innovation needs
of a business problem. SWOT analysis is another tool for auditing an organisation and its environment. It is the first stage of planning and helps markets to focus on key issues.
A scan of the internal and external environment is an important part of the strategic planning process.
Environmental factors internal to the firm can usually be classified as strengths (S) or weaknesses
(W), and those external to the firm can be classified as opportunities (O) and threats (T). Such an analysis of the strategic environment is referred as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operates.
2.2.1. What is SWOT Analysis?...................................................................................... 2
2.2.2. When and why to use it? ...................................................................................... 2
2.2.3. How SWOT Analysis is applied? .......................................................................... 3
2.2.4. Tips for successful SWOT analysis ...................................................................... 5
2.2.5. SWOT analysis example ...................................................................................... 5
2.2.6. Resources ............................................................................................................ 7
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"InnoSupport: Supporting Innovation in SMEs"2.2. SWOT Analysis
2.2.1. What is SWOT Analysis?
SWOT analysis is a business tool by which, a firm wishing to implement a strategic analysis, analyses
and recognises its corporate Strengths and Weaknesses as well as the existed or forthcoming Opportunities and Threats from its external environment. Only when these four critical information elements
are well elaborated and known, the enterprise is able to formulate and implement the strategy leading
to its business aims.
The role of SWOT analysis is to take the information from the environmental analysis and separate it
into internal issues (strengths and weaknesses) and external issues (opportunities and threats). Once
this is completed, SWOT analysis determines if the information indicates something that will assist the
firm in accomplishing its objectives (a strength or opportunity), or if it indicates an obstacle that must
be overcome or minimised to achieve desired results (weakness or threat).
When doing SWOT analysis, remember that the S and W are INTERNAL and the O and T are external.
2.2.2. When and why to use it?
The SWOT analysis is an extremely useful tool for understanding and decision-making for all sorts of
situations in business and organisations.
SWOT Analysis is a very effective way of identifying your Strengths and Weaknesses, and of examining the Opportunities and Threats you face. Carrying out an analysis using the SWOT framework
helps you to focus your activities into areas where you are strong and where the greatest opportunities
lie.
By creating a SWOT analysis, you can see all the important factors affecting your business
together in one place. It’s easy to create, easy to read, and easy to communicate.
A company can use the SWOT analysis:
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While developing a strategic plan or planning a solution to a problem.
In order to develop a plan that takes into consideration many different internal and external
factors, and maximises the potential of the strengths and opportunities while minimising the
impact of the weaknesses and threats.
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"InnoSupport: Supporting Innovation in SMEs"2.2. SWOT Analysis
2.2.3. How SWOT Analysis is applied?
SWOT analysis Framework
Action checklist
1. Establish the objectives
The first key step in any project is to be clear about what you are doing and why. The purpose of conducting SWOT analysis may be wide or narrow, general or specific.
2. Allocate research and information-gathering tasks
Background preparation is a vital stage for the subsequent analysis to be effective, and should be
divided among the SWOT participants. This preparation can be carried out in two stages:
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Exploratory, followed by data collection.
Detailed, followed by a focused analysis.
Gathering information on Strengths and Weaknesses should focus on the internal factors of skills,
resources and assets, or lack of them. Gathering information on Opportunities and Threats should
focus on the external factors.
3. Create a workshop environment
If compiling and recording the SWOT lists takes place in meetings, then do exploit the benefits of
workshop sessions. Encourage an atmosphere conducive to the free flow of information and to participants saying what they feel to be appropriate, free from blame. The leader/facilitator has a key role
and should allow time for free flow of thought, but not too much. Half an hour is often enough to spend
on Strengths, for example, before moving on. It is important to be specific, evaluative and analytical at
the stage of compiling and recording the SWOT lists.
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"InnoSupport: Supporting Innovation in SMEs"2.2. SWOT Analysis
4. List Strengths, Weaknesses, Opportunities, Threats in the SWOT Matrix
5. Evaluate listed ideas against objectives
With the lists compiled, sort and group facts and ideas in relation to the objectives. It may be necessary for the SWOT participants to select their five most important items from the list in order to gain a
wider view. Clarity of objectives is key to this process, as evaluation and elimination will be necessary
to separate the wheat from the chaff.
The SWOT analysis template is normally presented as a grid, comprising four sections, one for each
of the SWOT headings: Strengths, Weaknesses, Opportunities, and Threats. The SWOT template
below includes sample questions, whose answers are inserted into the relevant section of the SWOT
grid. The questions are examples, or discussion points, and obviously can be altered depending on
the subject of the SWOT analysis.
Strengths
Weaknesses
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Advantages of proposition?
Capabilities?
Competitive advantages?
USP's (unique selling points)?
Resources, Assets, People?
Experience, knowledge, data?
Financial reserves, likely returns?
Marketing - reach, distribution, awareness?
Innovative aspects?
Location and geographical?
Price, value, quality?
Accreditations, qualifications, certifications?
Processes, systems, IT, communications?
Cultural, attitudinal, behavioural?
Management cover, succession?
Disadvantages of proposition?
Gaps in capabilities?
Lack of competitive strength?
Reputation, presence and reach?
Financials?
Own known vulnerabilities?
Timescales deadlines and pressures?
Cash flow, start-up cash-drain?
Continuity, supply chain robustness?
Effects on core activities, distraction?
Reliability of data, plan predictability?
Moral, commitment, leadership?
Accreditations, etc?
Processes and systems, etc?
Management cover, succession?
Opportunities
Threats
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Market developments?
Competitors' vulnerabilities?
Industry or lifestyle trends?
Technology development and innovation?
Global influences?
New markets, vertical, horizontal?
Niche target markets?
Geographical, export, import?
New USP's?
Tactics - surprise, major contracts, etc?
Business and product development?
Information and research?
Partnerships, agencies, distribution?
Volumes, production, economies?
Seasonal, weather, fashion influences?
Political effects?
Legislative effects?
Environmental effects?
IT developments?
Competitor intentions - various?
Market demand?
New technologies, services, ideas?
Vital contracts and partners?
Sustaining internal capabilities?
Obstacles faced?
Insurmountable weaknesses?
Loss of key staff?
Sustainable financial backing?
Economy - home, abroad?
Seasonality, weather effects?
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"InnoSupport: Supporting Innovation in SMEs"2.2. SWOT Analysis
2.2.4. Tips for successful SWOT analysis
1
Top Tips
But remember …
Never copy an existing SWOT analysis; it will influence
your thinking. Start with a fresh piece of paper every time
You could use a standard template to
help the ideas flow
You may need to come back to it several times before you are happy
2 Set aside enough time to complete it
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Before you begin any analysis, you
The SWOT analysis itself is NOT the result. It’s only a tool
should know what you intend to do
to help you analyse your business
with the results
A SWOT analysis is not a business school fad. It is a
4 proven technique used throughout the business community
You need to be comfortable working
with it in your business
Keep your SWOT analysis simple, readable, short and
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sharp
It needs to make sense to outsiders
(e.g. bank managers or investors) so
don’t use phrases or acronyms that
only you understand
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Make sure you create an action plan based on your
SWOT analysis
You need to communicate this clearly
to everyone involved
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You need to review it – probably quarA SWOT analysis only gives you insight at a single point in
terly – to see how the situation has
time
changed
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Don’t over-analyse. Try not to worry if it isn’t perfect, just
get the analysis done
If you are going to act on the results, it
needs to be accurate in all the important areas
2.2.5. SWOT analysis example
Subject of SWOT analysis example: the achievement of a health centres mission.
The scenario is based on the SWOT analysis, which has been performed by a health centre in order
to determine the forces that promoted or hindered the achievement of its mission.
Starting position of the health centre:
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The staff lack of motivation
The building was really small
The facility was old
There was a lot of paper work and bureaucracy
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"InnoSupport: Supporting Innovation in SMEs"2.2. SWOT Analysis
Those characteristics resulted in this health centre facing up to a lot of problems with the accommodation of the patients. Moreover, the establishment of a new advanced hospital in the city made the
situation even worse. Therefore, they decided to perform a SWOT analysis in order to perform the
best decision-making for all the problems that they faced.
Step 1: Purpose of conducting SWOT analysis- the achievement of a health centres mission.
Step 2: The gathering of information on Strengths and Weaknesses focused on the internal factors of
skills, resources and assets, or lack of them. The gathering information on Opportunities and Threats
should focus on the external factors.
Step 3: The manager of the health centre encouraged all the members of staff to freely express their
opinions about what they felt to be appropriate.
Step 4: SWOT matrix
Strengths:
Weaknesses:
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Willingness of staff to change
Good location of the health centre
Perception of quality services
Staff lack of motivation
Building was really small
Paper work and bureaucracy
Cultural differences with users
Opportunities:
Threats:
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Support of local government
High felt need of users
Internationally funded projects
Low income of users
Bad roads
Low salaries
Lack of budget
Paradigms of providers
High competition
Step 5: After completing the SWOT matrix the SWOT participants had a wider view of the situation at
the centre so they were able to propose the alternatives that helped considerably in the operation of
the health centre.
The alternatives where:
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training of the staff in interactive techniques of quality improvement
coordination with other providers to cover all user needs
remodelling of the facility with local government funds and international help
cost recovery of drugs and lab supplies with user fees
payment of incentives to staff based on performance
review of procedures for decreasing costs and waiting times and increasing perceived quality.
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"InnoSupport: Supporting Innovation in SMEs"2.2. SWOT Analysis
This strategic analysis and planning of the health centre had the below results:
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27% increase of patients
reduction of waiting times to 15minutes
20% increase of staff performance
remodelling of the facility
2.2.6. Resources
Bibliography
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2001-2002, Prof. Emeritus Dimitrios Psoinos, Post Graduate Studies Program in "Management of Production Systems", Faculty of Industrial Management, Department of Mechanical
Engineering, Engineering School, Aristotle University of Thessaloniki, Notes from Lectures.
st
1998, Strategic Management and Business Policy-Entering the 21 century Global Society,
Thomas L. Wheelen & J. David Hunger, Addison Wesley.
Akao, Yoji, Quality Function Deployment QFD: Integration Customer Requirements into Product Design, Productivity Press, Portland Oregon, 1988
Internet sites
General address of the University of Arizona with a useful file about SWOT analysis
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http://www.bpa.arizona.edu/~dmeader/MIS341/341files/341.SWOTAnalysis.pdf
Analytical address which explains the procedure of SWOT analysis
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http://www.planonline.org/planning/strategic/swot.htm
File, which explains the structured way to plan SWOT analysis
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http://www.amputee-coalition.org/communicator/vol2no4pg1.html
Panasia networking website contains an interesting site for SWOT analysis
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http://www.panasia.org.sg/iirr/ikmanual/swot.htm
A very analytical address for SWOT analysis
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http://cbae.nmsu.edu/~dboje/sbc/pages/page3.html
Quick MBA is an address for strategic management in general and therefore it contains the tool of
SWOT analysis
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http://www.quickmba.com/strategy/swot/
In this address one can follow some lessons for successful SWOT analysis
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http://www.marketingteacher.com/Lessons/lesson_swot.htm
Analytical description of the method of SWOT analysis
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"InnoSupport: Supporting Innovation in SMEs"2.2. SWOT Analysis
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http://www.erc.msh.org/quality/ittools/itswot.cfm
SWOT analysis method and examples, with free SWOT template
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http://www.businessmajors.about.com/cs/casestudyhelp/a/SWOT.htm
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