Research Center forResearch Center forQuantum InformationQuantum Information

Institute of PhysicsInstitute of Physics

Slovak Academy of Slovak Academy of SciencesSciences

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SWOT AnalysisSWOT AnalysisMichaMichaëël Le Gohebell Le Gohebel

Project managerProject manager

Budmerice 2005Budmerice 2005Institute of Advanced StudiesInstitute of Advanced Studies

Soft skills seminarSoft skills seminar

1313--16 October, 200516 October, 2005

ProgramProgramnn TThe origins of the SWOT analysis he origins of the SWOT analysis

modelmodelnn What's it all about?What's it all about?nn What for ?What for ?nn Your own SWOT analysisYour own SWOT analysisnn Simple rules for successful SWOT Simple rules for successful SWOT

analysisanalysisnn SWOT Analysis AppleSWOT Analysis Applenn Open discussionOpen discussion

TThe origins of the SWOT he origins of the SWOT analysis modelanalysis model

This remarkable piece of history as to the origins of This remarkable piece of history as to the origins of SWOT analysis has been provided by Albert S SWOT analysis has been provided by Albert S Humphrey, one of the founding fathers of what we Humphrey, one of the founding fathers of what we know today as SWOT analysis.know today as SWOT analysis.

SWOT analysis came from the research conducted at SWOT analysis came from the research conducted at Stanford Research Institute from 1960Stanford Research Institute from 1960--1970. The 1970. The background to SWOT stemmed from The research background to SWOT stemmed from The research was funded by the fortune 500 The Research Team was funded by the fortune 500 The Research Team were Marion were Marion the need to find out why corporate the need to find out why corporate planning failed. companies to find out what could be planning failed. companies to find out what could be done about this failure.done about this failure. Dosher, Dr Otis Benepe, Dosher, Dr Otis Benepe, Albert Humphrey, Robert Stewart, Birger Lie. Albert Humphrey, Robert Stewart, Birger Lie.

It all began with the corporate planning trend, which It all began with the corporate planning trend, which seemed to appear first at Du Pont in 1949. By 1960 seemed to appear first at Du Pont in 1949. By 1960 every Fortune 500 company had a 'corporate every Fortune 500 company had a 'corporate planning manager' (or equivalent) and 'associations planning manager' (or equivalent) and 'associations of long range corporate planners' had sprung up in of long range corporate planners' had sprung up in both the USA and the UK.both the USA and the UK.

What's it all about?What's it all about?

SWOT analysis is a tool for auditing SWOT analysis is a tool for auditing an organization and its environment.an organization and its environment.

SWOT Analysis is an effective method SWOT Analysis is an effective method of identifying your internal and of identifying your internal and external environment summarised as external environment summarised as your your strengthsstrengths, , opportunitiesopportunities, , weaknessesweaknesses and and threatsthreats and is key to and is key to scientificscientific planning success. planning success.

Strengths and weaknesses are Strengths and weaknesses are internal factors. Opportunities and internal factors. Opportunities and threats are external factors. threats are external factors.

The SWOT analysis is an analytical tool which is predominately used in

corporate appraisal, as part of a strategic planing exercise. In a

performance management scenario, the SWOT analysis can be used to

analyse the effectiveness of the small business in terms of its strengths,

weaknesses, opportunities and threats.

..

.

Strengths and weaknesses are Strengths and weaknesses are internalinternal factorsfactors

A strength could be:A strength could be:

your your specificspecific expertiseexpertisea new, innovative product or service a new, innovative product or service location of your location of your laboratorylaboratoryquality processes and procedures quality processes and procedures any other aspect of your any other aspect of your activity activity that adds that adds value value to your product or serviceto your product or service

A weakness could be:A weakness could be:

lack of expertise lack of expertise location of your business location of your business poor quality goods or services poor quality goods or services damaged reputation damaged reputation

Opportunities and threats are Opportunities and threats are external factorsexternal factors

An opportunity could be:An opportunity could be:

a developing market such as a developing market such as Quantum Quantum information and processinginformation and processing. . CooperationCooperationss or strategic alliances or strategic alliances moving into new moving into new scientificscientific segments that segments that offer improved offer improved outlooksoutlooksa new international market a new international market (public/private)(public/private)

A threat could be:A threat could be:

a new competitor in your a new competitor in your fieldfielda competitor has a new, innovative product a competitor has a new, innovative product or service or service EU regulations and priorities are changing in EU regulations and priorities are changing in the allocation of funds for your projectsthe allocation of funds for your projects

What for ?What for ?Carrying our this in-depth analysis using the SWOT

framework will show where you stand today with your business and will highlight your internal strengths and weaknesses, the opportunities available to your

activity and the threats that may be coming your way.

what a SWOT analysis doesA SWOT analysis looks at your A SWOT analysis looks at your companycompany’’s: s:

• Strengths - to build on, maintain, build and leverage

• Weaknesses – to cover, remedy or exit • Opportunities – to capture, prioritise and

optimise • Threats – to defend against, counter

It aims to: It aims to:

•• Reveal your competitive advantages Reveal your competitive advantages •• Analyse your prospects for successAnalyse your prospects for success•• Prepare your institution for problems Prepare your institution for problems •• Allow for the development of contingency Allow for the development of contingency

plansplans

what strengths and weaknesses what strengths and weaknesses are examinedare examined

The strengths and weaknesses analysis is an internalThe strengths and weaknesses analysis is an internalexamination that focuses on your past performance, examination that focuses on your past performance, present strategy, resources and capabilities. It is present strategy, resources and capabilities. It is based on an analysis of facts and assumptions about based on an analysis of facts and assumptions about the the institutioninstitution, including: , including:

““SalesSales””Products Products Markets Markets Financial resources Capabilities/scalability Financial resources Capabilities/scalability People and skills (in particular People and skills (in particular researchresearch, export , export experience) experience) Customers (market research) Customers (market research) Intellectual property Intellectual property

SStrengthstrengthsAdvantages of proposition? Advantages of proposition? Capabilities? Capabilities? Competitive advantages? Competitive advantages? Resources, Assets, People? Resources, Assets, People? Experience, knowledge, data? Experience, knowledge, data? Financial reserves, likely returns? Financial reserves, likely returns? Marketing Marketing -- reach, distribution, awareness? reach, distribution, awareness? Innovative aspects? Innovative aspects? Location and geographical? Location and geographical? Price, value, quality? Price, value, quality? Accreditations, qualifications, certifications? Accreditations, qualifications, certifications? Processes, systems, IT, communications? Processes, systems, IT, communications? Cultural, attitudinal, behavioural? Cultural, attitudinal, behavioural? Management cover, succession? Management cover, succession?

WWeaknesseseaknessesDisadvantages of proposition? Disadvantages of proposition? Gaps in capabilities? Gaps in capabilities? Lack of competitive strength? Lack of competitive strength? Reputation, presence and reach? Reputation, presence and reach? Financials? Financials? Own known vulnerabilities? Own known vulnerabilities? Timescales, deadlines and pressures? Timescales, deadlines and pressures? Cashflow, startCashflow, start--up cashup cash--drain? drain? Continuity, supply chain robustness? Continuity, supply chain robustness? Effects on core activities, distraction? Effects on core activities, distraction? Reliability of data, plan predictability? Reliability of data, plan predictability? Morale, commitment, leadership? Morale, commitment, leadership? Accreditations, etc? Accreditations, etc? Processes and systems, etc? Processes and systems, etc? Management cover, succession? Management cover, succession?

what opportunities and threats what opportunities and threats are examinedare examined

The opportunity and threat The opportunity and threat analysis is carried out by analysis is carried out by examining external factors in examining external factors in your domestic and export your domestic and export market(s). This is usually market(s). This is usually broken down into broken down into environmental factors and environmental factors and competitors, includingcompetitors, including

Environmental Environmental factorsfactors

Demographic Demographic Economic Economic Political/legal Political/legal Sociological Sociological Environmental Environmental Technology Technology Cultural Cultural

CompetitorsMarket segments Market segments Products Products Prices Prices Promotion Promotion Distribution Distribution Capability Capability Resources Resources Ownership Ownership New entrants New entrants Substitute products Substitute products Suppliers customers Suppliers customers Product life cycle Product life cycle Risk and cost of intellectual property violation of Risk and cost of intellectual property violation of your product your product

Opportunities

Market developments? Market developments? Competitors' vulnerabilities? Competitors' vulnerabilities? Industry or lifestyle trends? Industry or lifestyle trends? Technology development and innovation? Technology development and innovation? Global influences? Global influences? New markets, vertical, horizontal? New markets, vertical, horizontal? Niche target markets? Niche target markets? Geographical, export, import? Geographical, export, import? Tactics Tactics -- surprise, major contracts, etc? surprise, major contracts, etc? Business and product development? Business and product development? Information and research? Information and research? Partnerships, agencies, distribution? Partnerships, agencies, distribution? Volumes, production, economies? Volumes, production, economies? Seasonal, weather, fashion influences? Seasonal, weather, fashion influences?

TThreatshreatsPolitical effects? Political effects? Legislative effects? Legislative effects? Environmental effects? Environmental effects? IT developments? IT developments? Competitor intentions Competitor intentions -- various? various? Market demand? Market demand? New technologies, services, ideas? New technologies, services, ideas? Vital contracts and partners? Vital contracts and partners? Sustaining internal capabilities? Sustaining internal capabilities? Obstacles faced? Obstacles faced? Insurmountable weaknesses? Insurmountable weaknesses? Loss of key staff? Loss of key staff? Sustainable financial backing? Sustainable financial backing? Economy Economy -- home, abroad? home, abroad? Seasonality, weather effects? Seasonality, weather effects?

YOUR YOUR SWOT ANALYSIS SWOT ANALYSIS Strengths Strengths

Identifying your strengths will Identifying your strengths will help you decide on which areas help you decide on which areas you can rely. you can rely. You are likely to see better You are likely to see better returns for your effort in these returns for your effort in these areas. areas.

Weaknesses Weaknesses

Your weakness will tell you which areas need special attention - thus turning them into strengths.

Alternatively, you might decide that these are areas which you should avoid.

Opportunities Opportunities

Opportunities are areas which the business needs to attack: they offer earning potential.

You will need a strategy that allows you to make the most of the opportunity which exists.

ThreatsThreats

Threats are areas which need to Threats are areas which need to be monitored and action taken if be monitored and action taken if needed. needed.

The system you have to monitor The system you have to monitor your business needs to watch out your business needs to watch out for Changing or increasing areas for Changing or increasing areas of threat of threat

Simple rules for successful Simple rules for successful SWOT analysisSWOT analysis

be realistic about the strengths and be realistic about the strengths and weaknesses of your organizationweaknesses of your organizationanalysis should distinguish between where analysis should distinguish between where your organization is today, and where it your organization is today, and where it could be in the futurecould be in the futurebe specific. Avoid grey areas.be specific. Avoid grey areas.always analyse in relation to your always analyse in relation to your competition i.e. better than or worse than competition i.e. better than or worse than your competitionyour competitionkeep your SWOT short and simple. Avoid keep your SWOT short and simple. Avoid complexity and over analysiscomplexity and over analysisSWOT is subjective.SWOT is subjective.

SWOT Analysis AppleStrengths Strengths

Apple is a very successful company. Sales of its iPod music Apple is a very successful company. Sales of its iPod music player had increased its second quarter profits to $320 player had increased its second quarter profits to $320 (June 2005). The favourable brand perception had also (June 2005). The favourable brand perception had also increased sales of Macintosh computers. So iPod gives the increased sales of Macintosh computers. So iPod gives the company access to a whole new series of segments that company access to a whole new series of segments that buy into other parts of the Apple brand. Sales of its buy into other parts of the Apple brand. Sales of its notebooks products is also very strong, and represents a notebooks products is also very strong, and represents a huge contribution to income for Apple. huge contribution to income for Apple.

Brand is allBrand is all--important. Apple is one of the most established important. Apple is one of the most established and healthy IT brands in the World, and has a very loyal set and healthy IT brands in the World, and has a very loyal set of enthusiastic customers that advocate the brand. Such a of enthusiastic customers that advocate the brand. Such a powerful loyalty means that Ample not only recruits new powerful loyalty means that Ample not only recruits new customers, it retains them i.e. they come back for more customers, it retains them i.e. they come back for more products and services from Apple, and the company also products and services from Apple, and the company also has the opportunity to extend new products to them, for has the opportunity to extend new products to them, for example the iPod. example the iPod.

WeaknessesWeaknessesIt is reported that the Apple iPod Nano may have a faulty It is reported that the Apple iPod Nano may have a faulty screen. The company has commented that a batch of its screen. The company has commented that a batch of its product has screens that break under impact, and the product has screens that break under impact, and the company is replacing all faulty items. This is in addition to company is replacing all faulty items. This is in addition to problems with early iPods that had faulty batteries, problems with early iPods that had faulty batteries, whereby the company offered customers free battery cases whereby the company offered customers free battery cases

There is pressure on Apple to increase the price of its There is pressure on Apple to increase the price of its music download file, from the music industry itself. Many music download file, from the music industry itself. Many of these companies make more money from iTunes (i.e. of these companies make more money from iTunes (i.e. downloadable music files) than from their original CD downloadable music files) than from their original CD sales. Apple has sold about 22 million iPod digital music sales. Apple has sold about 22 million iPod digital music players and more than 500 million songs though its iTunes players and more than 500 million songs though its iTunes music store. It accounts for 82% of all legally downloaded music store. It accounts for 82% of all legally downloaded music in the US. The company is resolute, but if it gives in music in the US. The company is resolute, but if it gives in to the music producers, it may be perceived as a to the music producers, it may be perceived as a commercial weakness. commercial weakness.

Early in 2005 Apple announced that it was to end its longEarly in 2005 Apple announced that it was to end its long--standing relationship with IBM as a chip supplier, and that standing relationship with IBM as a chip supplier, and that it was about to switch to Intel. Some industry specialists it was about to switch to Intel. Some industry specialists commented that the swap could confuse Apple's commented that the swap could confuse Apple's consumers. consumers.

OpportunitiesOpportunitiesApple has the opportunity to develop its iTunes and music player technology into a mobile phone format. The Rokr mobile phone device was developed by Motorola. It has a colour screen, stereo speakers and a advance camera system. A version of Apple's iTunes music store has been developed for the phone so users can manage the tracks they store on it. Downloads are available via a USB cable, ands software on the handset pauses music if a phone call comes in. New technologies and strategic alliances offer opportunities for Apple.

Podcasts are downloadable radio shows that can be downloaded from the Internet, and then played back on iPods and other MP3 devices at the convenience of the listener. The listener can subscribe to Podcasts for free, and ultimately revenue could be generated from paid for subscription or through revenue generated from sales of other downloads.

ThreatsThreatsThe biggest threat to IT companies such as Apple is the very high level of competition in the technology markets. Being successfulattracts competition, and Apple works very hard on research and development and marketing in order to retain its competitive position. The popularity of iPod and Apple Mac are subject to demand, and will be affected if economies begin to falter and demand falls for their products. There is also a high product substitution effect in the innovative and fast moving IT consumables market. So iPod and MP3 rule today, but only yesterday it was CD, DAT, and Vinyl. Tomorrow's technology might be completely different. Wireless technologies could replace the need for a physical music player. In 2005 Apple won a legal case that forced Bloggers to name the sources of information that pre-empted the launch of new Apple products. It was suspect that Apple's own employees had leaked confidential information about their new Asteroid product. The three individuals prosecuted, all owned Apple tribute sites, andwere big fans of the company's products. The blogs had appeared on their sites, and they were forced to reveal their source. Theruling saw commercial confidentiality as more important as the right to speech of individuals. Apple are vulnerable to leaks that could cost them profits.

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