August 15, 2015

Risk Analysis SWOT (Strength, Weakness, Opportunity, Threat)

Analysis Internal Strengths Internal Weaknesses External Opportunities External Threats

Risk Analysis

•Basis for strategic planning
•Different SWOTswill come up with different strategies
•Copy other company’s success without analyzing SWOT of your own company will likely lead to failure
•Strength: Something a company is good at, e.g., engineering expertise, skilled workforce, solid financial position etc
•Weakness: Something that the firm lacks or is a condition that put it at a disadvantage, e.g. poor cash flow, outdated technology, high overhead expenses etc
•Opportunity: Something external that the firm can take advantage of, e.g., overseas connection
•Threat: Something external that could harm the firm, e.g. law suits

Internal Strengths
Core competencies in critical areas
Solid finances
Market leader
Proprietary technology
Cost advantage
Good marketing skills
Management excellence
World class manufacturing
Good technical and work force skills
Superior brand names
Web skills

Internal Weaknesses
Too many goals
Lack of strategic focus
Obsolete facilities
Outdated technology
Inexperienced management
Manufacturing problems
Weak marketing skills
Lack of growth capital
Weak cash flow
Inadequate R&D
Can not implement plans
External Opportunities
Expansion to new markets
Product line can be broadened
Transfer technical skills to new products
Low industry rivalry
Minimal regulatory requirements
New emerging technologies
Positive growth cycle

External Threats
Global competition
Substitute products are available
Legal and regulatory requirements
Recessionary cycle
New competitors
New technology

SWOT Analysis Deployment
•SWOT requires management to develop an objective view of firm
•However, top management tends to be consists of the same type of person, come up with same kind of analysis and judgment and it is often not accurate or impartial
•It is recommended that different kind of people, such as new employee, low ranking employee and outsiders, be brought into the analysis process