WEBVTT Kind: captions Language: en 00:00:00.240 --> 00:00:02.330 Welcome to the SWOT Analysis Video. 00:00:02.330 --> 00:00:09.639 The APICS Dictionary 15th edition defines SWOT analysis as “an analysis of the strengths, 00:00:09.639 --> 00:00:14.459 weaknesses, opportunities, and threats of and to an organization.” 00:00:14.459 --> 00:00:20.039 The SWOT analysis is used to assess an organization’s ability to implement a strategy and defend 00:00:20.039 --> 00:00:21.939 itself against competition. 00:00:21.939 --> 00:00:27.269 During SWOT analysis, you will look both internally and externally. 00:00:27.269 --> 00:00:32.470 Strengths and weakness are internal to the organization, while opportunities and threats 00:00:32.470 --> 00:00:34.080 are external. 00:00:34.080 --> 00:00:37.400 Strengths the organization currently possesses. 00:00:37.400 --> 00:00:42.230 Strengths often include an organization’s core process and its core competencies. 00:00:42.230 --> 00:00:46.160 Inherent weaknesses would prevent the organization from properly implementing their 00:00:46.160 --> 00:00:49.050 goals or excelling. 00:00:49.050 --> 00:00:51.910 Weaknesses can be competitive liabilities. 00:00:51.910 --> 00:00:57.780 They may be things that an organization does poorly or things it cannot do at all. 00:00:57.780 --> 00:01:03.300 Weaknesses may be insufficient resources—tangible resources, such as production capacity, 00:01:03.300 --> 00:01:09.830 or intangible resources, such as a divisive or unethical organizational culture. 00:01:09.830 --> 00:01:13.770 Weaknesses may also be missing or deficient capabilities. 00:01:13.770 --> 00:01:17.710 Opportunities are conditions in the external environment that could convey a competitive 00:01:17.710 --> 00:01:20.140 advantage to the organization. 00:01:20.140 --> 00:01:24.850 This can include opportunities that already exist, or additional opportunities that would 00:01:24.850 --> 00:01:29.189 be available to the organization if they pursued a particular path. 00:01:29.189 --> 00:01:33.819 Threats can be environmental factors that will damage the organization’s current competitiveness 00:01:33.819 --> 00:01:39.530 or profitability, such as the current political climate or legal changes. 00:01:39.530 --> 00:01:44.110 They may be risks that can limit the success of a planned strategic action. 00:01:44.110 --> 00:01:47.899 New threats could arise as a result of taking a particular step. 00:01:47.899 --> 00:01:53.119 Let’s walk through an example of a SWOT analysis for a baby food company. 00:01:53.119 --> 00:01:57.659 Our baby food company is based in the United Kingdom, but distributes throughout Europe. 00:01:57.659 --> 00:02:00.869 They have been in business for over 50 years. 00:02:00.869 --> 00:02:05.350 One of the biggest challenges for our company is the continually changing customer base 00:02:05.350 --> 00:02:07.200 and consumer values. 00:02:07.200 --> 00:02:12.870 Our company is contemplating a shift to producing products with 100% organic ingredients. 00:02:12.870 --> 00:02:18.020 This strategy has been chosen instead of adding an organic product-line because research shows 00:02:18.020 --> 00:02:21.710 that an ethical shift is appreciated by consumers. 00:02:21.710 --> 00:02:26.250 After completing a SWOT analysis, we will have a better idea of whether or not this 00:02:26.250 --> 00:02:29.320 strategy would be beneficial for our company. 00:02:29.320 --> 00:02:33.420 Strengths: Our brand name and customer loyalty is strong. 00:02:33.420 --> 00:02:36.720 We have strong networks for distribution and manufacturing. 00:02:36.720 --> 00:02:41.140 We have a strong customer service team and market research department. 00:02:41.140 --> 00:02:43.740 We have cash on hand to cover the sales ramp-up. 00:02:43.860 --> 00:02:51.220 Weaknesses: Our marketing has not changed in recent years, instead relying on existing brand recognition. 00:02:51.220 --> 00:02:54.720 We have limited presence in online retail environments. 00:02:54.720 --> 00:02:59.930 We have a weak understanding of the evaluation process needed for organic suppliers. 00:02:59.930 --> 00:03:05.690 Our supplier network is not currently focused on organic produce because of a limited shelf-life, 00:03:05.690 --> 00:03:09.880 local regulations on fresh food ingredients, and other special conditions. 00:03:09.960 --> 00:03:17.060 Opportunities: By switching to 100% organic, we would be the first major baby food company to make 00:03:17.060 --> 00:03:22.540 this commitment as there are no companies currently committed to offering 100% organic 00:03:22.550 --> 00:03:23.640 selections. 00:03:23.640 --> 00:03:28.670 A growing number of families are seeking 100% organic food for their children. 00:03:28.670 --> 00:03:33.530 We will also have the opportunity to serve new geographic regions such as China. 00:03:33.530 --> 00:03:37.690 A growing number of consumers care about the mission of the company when purchasing their 00:03:37.690 --> 00:03:38.760 goods. 00:03:38.760 --> 00:03:42.740 Our profit margin could increase with increased pricing in our products. 00:03:42.840 --> 00:03:49.800 Threats: Organic produce is more expensive than traditional produce which would force higher prices or 00:03:49.810 --> 00:03:51.230 lower margins. 00:03:51.230 --> 00:03:55.500 Birthrates are decreasing Supplier misrepresentation of non-organic 00:03:55.500 --> 00:03:59.830 products as organic. Potential competitors in the market have stronger 00:03:59.830 --> 00:04:04.240 online marketing strategies Strengths may allow an organization to act 00:04:04.240 --> 00:04:09.690 on opportunities quickly, and may be a way to offset the threats as well. 00:04:09.690 --> 00:04:16.520 Uncorrected weaknesses increase an organization’s vulnerability to external threats. 00:04:16.520 --> 00:04:21.870 Opportunities can be realized as advantages or strengths if the organization has the resources 00:04:21.870 --> 00:04:25.430 and capabilities to act on the opportunity. 00:04:25.430 --> 00:04:31.180 Acting on opportunities generally requires building strengths and correcting weaknesses. 00:04:31.180 --> 00:04:36.389 It may also create the potential for new threats that must be evaluated. 00:04:36.389 --> 00:04:41.180 An organization becomes more vulnerable to external threats when it does not build its 00:04:41.180 --> 00:04:46.710 competencies, correct its weakness, and commit to regular scanning of its internal and external 00:04:46.710 --> 00:04:48.650 environments. 00:04:48.650 --> 00:04:53.039 Threats are not always something a company can address, but understanding the threat 00:04:53.039 --> 00:04:56.289 puts them in a stronger position to prepare for its reality. 00:04:56.289 --> 00:05:01.259 The findings of a SWOT analysis can improve the choice, development, and execution of 00:05:01.259 --> 00:05:05.169 a business strategy: Potential strategies must be checked for alignment 00:05:05.169 --> 00:05:07.960 with the organization’s strengths. 00:05:07.960 --> 00:05:12.990 Does the organization have the resources, capabilities, and competencies required to 00:05:12.990 --> 00:05:15.250 execute the strategy? 00:05:15.250 --> 00:05:19.800 Does the organization possess the strengths to seize this opportunity? 00:05:19.800 --> 00:05:25.340 Our company has the maturity, brand recognition, and strong networks to allow us to implement 00:05:25.340 --> 00:05:29.840 a 100% organic policy quickly and nearly seamlessly. 00:05:29.840 --> 00:05:35.040 How can the organization address their weaknesses if this potential strategy is realized in 00:05:35.040 --> 00:05:38.400 order to increase the chances for strategic success? 00:05:38.400 --> 00:05:43.990 In our case, we must be sure that our strategy includes a fresh marketing and e-commerce 00:05:43.990 --> 00:05:48.900 strategy which allows us to reach our target market quickly and easily. 00:05:48.900 --> 00:05:54.280 We will also need to ensure we employ a regulatory team experienced in vetting organic growers. 00:05:54.280 --> 00:05:59.820 Additionally, we will need to negotiate with new organic suppliers to ensure we have enough 00:05:59.820 --> 00:06:01.139 organic produce. 00:06:01.139 --> 00:06:04.430 How likely are the threats to the organization? 00:06:04.430 --> 00:06:08.749 If they occur, what will the business impact be? 00:06:08.749 --> 00:06:12.860 The threat of increased produce prices and environmental threats from the weather will 00:06:12.860 --> 00:06:19.520 always be present and possible, but our economies of scale will help us to mitigate this threat. 00:06:19.520 --> 00:06:25.330 We can also negotiate prices to our advantage as much as we can, and create strong relationships 00:06:25.330 --> 00:06:27.809 with our suppliers. 00:06:27.809 --> 00:06:32.770 Research shows consumers are willing to pay higher prices for organic foods, so we should 00:06:32.770 --> 00:06:35.889 be able to mitigate our costs with higher prices. 00:06:35.889 --> 00:06:38.160 A SWOT analysis can focus organizations 00:06:38.200 --> 00:06:42.560 on opportunities that take advantage of competitive strengths. 00:06:42.569 --> 00:06:48.659 It can advise on resources and capabilities that will require further development or alternately 00:06:48.659 --> 00:06:54.089 steer the organization away from situations where it is at a competitive disadvantage. 00:06:54.089 --> 00:06:58.689 A SWOT analysis can also point out negative outcomes that the organization must be able 00:06:58.689 --> 00:07:01.889 to withstand, avoid, or prepare for. 00:07:01.889 --> 00:07:07.620 A company could also seek out cooperation as an option if they seek an opportunity but 00:07:07.620 --> 00:07:13.309 are not strong enough on their own, they can seek a partner and split the profit. 00:07:13.309 --> 00:07:18.650 In this scenario, we feel that our strengths allow us to seize this opportunity successfully 00:07:18.650 --> 00:07:23.430 as long as we take action to reduce our weaknesses and mitigate our threats. 00:07:23.430 --> 00:07:27.269 Thank you for watching this video, and best of luck on your studies!