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SWOT Analysis

Samuel Nwakolam

BUSN 698: Comprehensive Examination for MBA

Dr. Jamiel Vadell

11/28/2021
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Abstract

SWOT Analysis is one of the many strategic analysis tools that compares the internal

capabilities of a firm to the external market factors. To conduct SWOT analysis, certain

analytical questions must be asked, which pertain to the resource allocation, firm performance

and profitability, and management approach, etc. A business consultant provides a bird’s eye

view of the company’s standing against the market factors, macro environmental trends, and

the inherent strengths and weaknesses of other rival firms. The comparative analysis of rival

strengths, weaknesses is usually what one’s own strengths and weaknesses are measured.

SWOT analysis is rather limited in its scope and does not take into account factors beyond the

industry. Therefore, other strategic analysis tools may be used in conjunction, such as value

chain analysis, SOAR analysis, and BCG matrix. Such a comprehensive analysis approach

may also be used if there is a disparity between the competitive position of a firm and its

internal resource capabilities.

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1. What analytical questions should be asked to identify the current position of the firm?

A firm’s market standing is indicative of its inherent strengths, organizational capabilities,

strategic vision, and brand positioning, among other factors. Research indicates that the

overall size of the workforce of a firm does not have any significant impact on the overall

positing of a firm in the market (Zerilli, J., Knott, A., & Gavaghan, J. M. (2019)). However,

the managerial oversight, the leadership are factors that determine the standing of a firm.

Similarly, the firm’s product offerings, its profitability, and the capital structure. From an

analytical standpoint, one may ask the following questions to determine to market position of

a firm at any given time: How does the company fare in terms of profitability, compared to its

rival firms in the market? Who are the people that hold the key positions in the firms and what

is the strategic direction they have provided to the company?

The market standing of a firm is also impacted by its resources, technological or innovative

prowess, and the overall internal market orientation. Existing literature suggests that the

inherent resources of a firm, be they in terms of human resources, intellectual property, design

capabilities, or value chain integration positively affect the firm’s market standing (Lee &

Yoo, 2021). An analyst, therefore, might consider the following factors: What are the

dimensions of the internal resources of the firm? What are the innovative and technological

capabilities of the company that may ultimately help the company create a competitive

advantage in the market? How is the company positioned to innovate or introduce

technologically superior products in the market? A comprehensive market analysis along

these factors may help one better understand how the internal orientation and resource

capabilities related to the external market factors, to determine the overall market standing of

a firm.
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2. What role does a business consultant play in SWOT analysis?

A business consultant is most likely to analysis the internal factors of the company and how

they affect the market standing, at any given time. In SWOT analysis, a business analyst

might analyze internal factors, such as supply partners of a firm, its organizational structuring,

the overall culture, strategic direction, design and production methods, and other internal

processes. This is done to understand the strengths and weaknesses of said firm and pinpoint

areas of improvement. One of the fundamental roles of a business consultant is to provide a

firm solution to establish congruence between the internal orientation of the company, the

external market factors, and the long-term strategic direction of that company. A business

consultant is able to provide a bird’s eye view of the how the company fares in the market, the

internal resources capabilities and strategies of the competitors, and the areas where the

company lags behind. Moreover, due to their broader understanding of the external market

factors, the internal capabilities of the competitors, and its comparison with their current firm,

a business consultant is able to better access certain tactics, strategies, or measures that may

help the company bolster its competitive advantages while taking measures to mitigate some

of the risks associated with its internal shortcomings. Modern businesses are characterized

with uncertainty and risks associated with the ever-changing market dynamics (Vukotić,

Aničić, & Vukotić, 2017). A business consultant, therefore, uses their market knowledge,

along with their analysis of the company’s internal factors, to recommend tools, techniques,

and frameworks that a business may adopt in order to stay abreast of the market changes, and

ensure that it maintains its competitive advantage.

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3. To what does a business compare their strengths to when conducting a SWOT analysis?

Strengths refer to the internal positives that a company can control and which often result in

creating a competitive advantage for the company in the market. For example, the supply

chain efficiency of a company, its unique product designs, its intellectual property etc. are

among the factors that a company may regard as its strengths. These factors are compared to

the similar factors of other market players, as it is the overall effect of these factors that help

one establish a competitive advantage. A company accessing its strength in terms of employee

productivity may access the same factors for a rival company in the market. How that is

determined is a different, and often complicated process. For instance, to access whether or

not one’s workforce is a strength, one may compare its turnover rate, results of employee

satisfaction surveys from independent sources, the absentee ration, etc. with those of other

companies to access whether or not this is among the strengths of the company. Often times,

this kind of information is presented in the annual reports of companies, while the overall

industry reports may also help one decipher how any internal factor of their company

compared to that of a rival firm in the market.

4. To what does a business compare their weaknesses to when conducting a SWOT analysis?

A weakness may be defined as an inherent negative factor that may drive the company to

perform below the industry’s average standard, in some capacity or which may mar the

overall competitive advantage of said company. A weakness is an internal factor that can be

addressed internally by a company, through proper analysis and strategic execution.

Generally, a simple way to determine a company’s weaknesses is to take one specific factors
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into account and compare it with those other firms. In this way, the method to determine

strengths is quite similar to that of determining weaknesses.

A novel way of looking at the internal strengths and weaknesses of a firm proposes an upside-

down view of the traditional SWOT analysis. This approach, as described in Harvard Business

Review illustrates how a company’s strengths and the opposition’s weaknesses can become a

threat to company, while one’s weaknesses and a rival’s strengths can be considered as

potential opportunities. All of this is predicated upon the premise that an organization has two

kinds of weaknesses: first is the one that is obvious measurable and fixable. The second,

however, is what one would normally characterize as a strength. According to this approach,

the organizational strengths inadvertently drive a company to bank of those factors, without

paying much heed to the ever-changing market dynamics. This results in organizational “core

rigidities” that can prove to be counterproductive to a company (Brandonburger, 2019).

Therefore, the weaknesses of a company may also be compared as one’s own core rigidities

with those of other firms.

5. To what degree can a firm compare market opportunity to their capabilities using SWOT

alone?

SWOT analysis is rather limited in its illustration of the market opportunities available to a

firm. A SWOT analysis is more geared towards focusing on the firm and industry-specific

factors that may be available for a firm. It does, however, seem not to consider the broader

macro environmental factors that can have an impact on a firm. For example, a SWOT

analysis may provide one insight into the opportunities that arise from the development of

new product or the possibility of integrating value chain, but it may not consider factors that
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can impact the entire industry. For instance, a major political upheaval, or a major

technological push introduced by someone else in another industry, which, may nonetheless,

impact the firm. Similarly, other factors that are beyond the scope of a firm’s industry are

often not given that much consideration in SWOT analysis. This could be due to the erroneous

assumption that any outside factor impacting a firm may have the same impact on other firms

as well, hence eliminating the unique opportunity for said firm.

Changes in customer preferences, the availability of new alternates, and the new methods of

delivery can also be factors that are often negated. In a digital ecosystem, the mangers’ views

about a diverse range of business situations need to be checked and interrogated to foresee

how a certain manger may deal with a hypothetical situation (Namugenyi, Nimmagadda, &

Reiners, 2019). This can provide one a better understanding of industry and the opportunities

that it may present to a manager. However, this kind of approach is also not covered in the

traditional mode of opportunity analysis in SWOT.

6. What additional tools can be used along with SWOT to provide a more complete picture of

the businesses current competitive position?

SOAR analysis (strengths, opportunities, aspirations, and results) allows a company to focus

on what it already does well and the ways it could maximize its competitive advantages in the

market. This type of analysis may be better suited to a firm that is keener on consolidating its

market position. Similarly, as mentioned in the earlier section, SWOT often does not take into

account the broader environmental factors that can affect the entire industry. For this purpose,

a PESTEL analysis may be used by the company. This will allow it to better understand the

political, economic, social, technological, environmental, and legal factors that may present
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an opportunity or a threat a firm. For instance, a PESTEL analysis might provide a firm

insight into new tax subsidies or a new form of regulation that may indirectly increase the

retail costs of their product. Such factors are generally not covered in SWOT, which is why is

so recommend to use other market and firm analysis tools that may compliment SWOT.

As SOAR analysis is geared towards understanding the external market opportunities, the

BCG Matric may also be used by a company to better understand the relative performance of

its strategic business units. This is essentially a portfolio management platform that allows

one to understand which business units are performing well, which have the most potential to

grow, and which are becoming costly for the company. The resulting strategies from this

analysis could be diverting, investing, consolidating, etc. A BCG Matrix divides the

company’s portfolios into four categories: star, dog, question mark, and cash cows (BCG,

2021). Low growth and high share companies are perceived a cash cow. These are usually

business unites that have a consolidated market share, but offer great return on investment,

with minimal associated risk. Similarly, others are categories as question marks, dogs, and

stars, based on their relative growth and market share. If a business intends to access the

performance of its business portfolios, then the BCG matrix might be among the most useful

tools available.

7. What other tools or analyses can be done to interpret results?

What is often left uncovered by SWOT analysis is the extent to which a company is able to

achieve its organizational objectives, through its current performance. The role of strategic

intent and the congruence between the existing practices and log-term goals may be

deciphered through a GAP Analysis. A GAP Analysis checks the extent to which an
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organization uses its existing resources to achieve its strategic objectives. This type of

analysis may be used with SWOT to not only access the internal strength and weaknesses of

the company but also areas where a company is not using its resources effectively, or where

its resources are being spent of areas that are not of any strategic concern to the company.

Essentially, the resource allocation, usage, and efficiency are the main aspects that are

covered by GAP Analysis. A gap analysis measures the current performance, usually through

the metrics of cost, labor, productivity, etc., against the desired performance of a firm. The

four main steps of GAP are defining the organizational goals, benchmarking the current

organizational performance, analyzing the current gap, and compiling a gap report.

8. If managers find a disconnect between the firm’s competitive position and their

capabilities, what can or should be done?

The market position of a firm is a product of its organizational capabilities and the strategic

direction. In a case where there exists a disparity between the competitive position of a firm

and tis capabilities, the first step would be to analyze the gap and see the extent to which it

can be addressed from the existing resources of a firm. If there is too much of a disparity

between the market positing and firm’ capabilities, then it might mandate a complete

reevaluation of the market positing strategy of a firm. This is all predicated upon the premise

that It is comparatively easy to change a company’s market positing according to its internal

resource capabilities than it is to change the entire structure, resource allocation, and strategic

orientation of a company just to fit a certain market competitive position. In case of a

disconnect, a manager may make use of certain strategic analysis tools to better understand

how the organization’s inherent capabilities are suited to certain competitive positions. For
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instance, an analysis of Porter Five Force Model may illustrate how the external market

factors affect the existing competitive position of a firm, while value chain analysis may

depict how the internal capabilities are suited for certain types of strategies (Straková, Rajiani,

Pártlová, Jan, & Dobroviˇ, 2020). In such a scenario, the need is to make a comprehensive

assessment of how external, internal, and certain strategic positions are likely to impact the

long-performance and well-being of a firm.

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