assignment 2 benchmarking and swot analysis

SWOT Analysis – How to Do It Properly

SWOT analysis involves the collection and portrayal of information about internal and external factors that have, or may have, an impact on business. [2]

SWOT is a framework that allows managers to synthesize insights obtained from an internal analysis of the company’s strengths and weaknesses with those from an analysis of external opportunities and threats. [3]

What is SWOT Analysis

What is SWOT analysis? The answer to the question is simple: it’s a tool used for situation (business or personal) analysis! SWOT is an acronym that stands for:

S trengths: factors that give the company an edge over its competitors. W eaknesses: factors that can be harmful if used against the firm by its competitors. O pportunities: favorable situations which can bring a competitive advantage. T hreats: unfavorable situations that can negatively affect the business.

Strengths and weaknesses are internal to the company and can be directly managed by it, while the opportunities and threats are external and the company can only anticipate and react to them. Often, SWOT is presented in a form of a matrix as in the illustration below:

SWOT is a widely accepted tool due to its simplicity and value of focusing on the key issues which affect the firm. The aim of SWOT is to identify the strengths and weaknesses that are relevant in meeting opportunities and threats in particular situation. [4]

SWOT tool has 5 key benefits:

• Simple to do and practical to use.
• Clear to understand.
• Focuses on the key internal and external factors affecting the company.
• Helps to identify future goals.
• Initiates further analysis.

Limitations

Although there are clear benefits of doing the analysis, many managers and academics heavily criticize or don’t even recognize it as a serious tool. [2] According to many, it is a ‘low-grade’ analysis. Here are the main flaws identified by the research: [2][5]

• Excessive lists of strengths, weaknesses, opportunities and threats.
• No prioritization of factors.
• Factors are described too broadly.
• Factors are often opinions, not facts.
• No recognized method to distinguish between strengths and weaknesses, opportunities and threats.

How to perform the analysis?

SWOT can be done by one person or a group of members who are directly responsible for the situation assessment in the company. Basic SWOT analysis is done fairly easily and comprises of only a few steps:

Step 1. Listing the firm’s key strengths and weaknesses Step 2. Identifying opportunities and threats

Strengths and Weaknesses

Strengths and weaknesses are the factors of the firm’s internal environment. When looking for strengths, ask what you do better or have more valuable than your competitors have. In case of the weaknesses, ask what you could improve and at least catch up with your competitors?

Where to look for them?

Some strengths or weaknesses can be recognized instantly without deeper studying of the organization. But usually, the process is harder and managers have to look into the firm’s:

• Resources: land, equipment, knowledge, brand equity, intellectual property, etc.
• Core competencies
• Capabilities
• Functional areas: management, operations, marketing, finances, human resources and R&D
• Organizational culture
• Value chain activities

Strength or a weakness?

Often, a company’s internal factors are seen as both strengths and weaknesses at the same time. It is also hard to tell if a characteristic is a strength (weakness) or not. For example, a firm’s organizational structure can be a strength, a weakness or neither! In such cases, you should rely on:

Clear definition . Very often, factors that are described too broadly may fit both strengths and weaknesses. For example, “brand image” might be a weakness if the company has a poor brand image. However, it can also be a strength if the company has the most valuable brand in the market, valued at $100 billion. Therefore, it is easier to identify if a factor is a strength or a weakness when it’s defined precisely.

Benchmarking . The key emphasis in doing SWOT is to identify the factors that are the strengths or weaknesses in comparison to the competitors. For example, a 17% profit margin would be an excellent margin for many firms in most industries, and it would be considered as a strength. But what if the average profit margin of your competitors is 20%? Then company’s 17% profit margin would be considered as a weakness.

VRIO framework . A resource can be seen as a strength if it exhibits VRIO (valuable, rare and cannot be imitated) framework characteristics. Otherwise, it doesn’t provide any strategic advantage for the company.

Opportunities and threats

Opportunities and threats are the external uncontrollable factors that usually appear or arise due to the changes in the macro environment, industry or competitors’ actions. Opportunities represent the external situations that bring a competitive advantage if seized upon. Threats may damage your company so you would better avoid or defend against them.

PESTEL . PEST or PESTEL analysis represents all the major external forces (political, economic, social, technological, environmental and legal) affecting the company so it’s the best place to look for existing or new opportunities and threats.

Competition . Competitors react to your moves and external changes. They also change their existing strategies or introduce new ones. Therefore, the company must always follow the actions of its competitors as new opportunities and threats may open at any time.

Market changes . The most visible opportunities and threats appear during the market changes. Markets converge, starting to satisfy other market segment needs with the same product. New geographical markets open up, allowing the firm to increase its export volumes or start operations in a new country. Often niche markets become profitable due to technological changes. As a result, changes in the market create new opportunities and threats that must be seized upon or dealt with if the company wants to gain and sustain a competitive advantage .

Opportunity or threat?

Most external changes can represent both opportunities and threats. For example, exchange rates may increase or reduce the profits gained from exports. This depends on the exchange rate, which may rise (opportunity) or fall (threat) against the home country’s currency. The organization can only guess the outcome of the change and count on analysts’ forecasts. In such cases, when an organization cannot identify if the external factor will affect it positively or negatively, it should gather unbiased and reliable information from external sources and make the best possible judgment.

Guidelines for successful SWOT

The following guidelines are very important in writing a successful SWOT analysis. They eliminate most of the SWOT limitations and improve it’s results significantly:

• Factors have to be identified relative to the competitors. It allows specifying whether the factor is a strength or a weakness.
• List between 3 – 5 items for each category. Prevents creating too short or endless lists.
• Items must be clearly defined and as specific as possible. For example, firm’s strength is: brand image (vague); strong brand image (more precise); brand image valued at $10 billion, which is the most valued brand in the market (very good).
• Rely on facts, not opinions. Find some external information or involve someone who could provide an unbiased opinion.
• Factors should be action-orientated. For example, “slow introduction of new products” is action orientated weakness.

SWOT analysis example A

This is a basic example of the analysis:

You can find an extensive list of strengths, weaknesses, opportunities and threats by looking at our examples of SWOT analyses , which include Alphabet (Google) SWOT , Amazon.com SWOT , Apple Inc. SWOT , The Coca Cola Company SWOT , Ford Motor Company SWOT , McDonald’s Corporation SWOT , PepsiCo Inc. SWOT , Samsung Electronics SWOT , Starbucks Corporation SWOT , Walmart Stores, Inc. SWOT and many more swot analyses.

Advanced SWOT

At the most, SWOT is considered to be only a reference to further analysis as it has too many limitations and cannot be used alone in the situation analysis. The previous guidelines identified in this article meet most of the SWOT limitations except one: “prioritization of factors”. An advanced SWOT goes a step further and eliminates this important drawback.

In a simple SWOT, strengths and weaknesses or opportunities and threats are equal to each other. Therefore a minor weakness can balance a major strength. Without prioritization, some factors might be given too much or too little emphasis and the most relevant factors might simply be overlooked.

The aim of advanced SWOT is to identify the most significant factors of the analysis from all the items listed in it. How to perform it?

Step 1. Identify strengths, weaknesses, opportunities and threats. Step 2. Prioritize them.

(The first step was discussed earlier so please refer to it when doing an advanced SWOT analysis. See example B when reading further instructions.)

Prioritization

Strengths and weaknesses are evaluated on three categories:

• Importance . Importance shows how important a strength or a weakness is for the organization in its industry as some strengths (weaknesses) might be more important than others. A number from 0.01 (not important) to 1.0 (very important) should be assigned to each strength and weakness. The sum of all weights should equal 1.0 (including strengths and weaknesses).
• Rating . A score from 1 to 3 is given to each factor to indicate whether it is a major (3) or a minor (1) strength for the company. The same rating should be assigned to the weaknesses where 1 would mean a minor weakness and 3 a major weakness.
• Score . Score is a result of importance multiplied by rating. It allows for prioritizing the strengths and weaknesses. You should rely on your most important strengths and try to convert or defend your weakest parts of the organization.

Opportunities and threats are prioritized slightly differently than strengths and weaknesses. Their evaluation includes:

• Importance . It shows to what extent the external factor might impact the business. Again, the numbers from 0.01 (no impact) to 1.0 (very high impact) should be assigned to each item. The sum of all weights should equal 1.0 (including opportunities and threats).
• Probability . The probability of occurrence shows how likely the opportunity or threat will have any impact on business. It should be rated from 1 (low probability) to 3 (high probability).
• Score . Importance multiplied by probability will give a score by which you’ll be able to prioritize opportunities and threats. Pay attention to the factors having the highest score and ignore the factors that will not likely affect your business.

SWOT analysis example B

This SWOT example is adopted from the previous example and additionally includes prioritization. Highlighted cells point to the most significant factors affecting the organization.

Advanced SWOT of Company X

• Thompson, J. and Martin, F. (2010). Strategic Management: Awareness & Change. 6th ed. Cengage Learning EMEA, p. 140, 817
• Pickton, D.W. and Wright, S. (1998). What’s SWOT in strategic analysis? Strategic Change Vol. 7, pp. 101-109, 105-106
• Rothaermel, F. T. (2012). Strategic Management: Concepts and Cases. McGraw-Hill/Irwin, p. 105-106
• Johnson, G, Scholes, K. Whittington, R. (2008). Exploring Corporate Strategy. 8th ed. FT Prentice Hall, p. 156, 160
• Coman, A. and Ronen, B. (2009). Focused SWOT: diagnosing critical strengths and weaknesses. International Journal of Production Research Vol. 40, Issues 20, pp. 5677–5689
• Kotler, P. (1991). Marketing Management. 7th ed. Prentice-Hall
• David, F.R. (2009). Strategic Management: Concepts and Cases. 12th ed. FT Prentice Hall, p. 125-126, 166-168
• Virtual Strategist (2008). SWOT analysis: How to perform one for your organization (VIDEO). Available at: https://www.youtube.com/watch?v=GNXYI10Po6A
• Wikipedia (2013). SWOT analysis. Available at: https://en.wikipedia.org/wiki/SWOT_analysis
• SWOT Analysis of Walt Disney 2023
• SWOT Analysis of Blackberry 2023
• SWOT analysis of BMW 2023
• SWOT Analysis of eBay 2023
• SWOT Analysis of Dell 2023

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SWOT and PESTLE Analyses

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SWOT and PESTLE are strategy frameworks used to analyze a company’s financial health and competitive advantages or disadvantages. These strategy tools were created to analyze internal and external forces affecting a company or industry. Examining a company's internal capabilities (SWOT) and external environment (PESTLE), helps to create strategies that can proactively contend with organizational challenges. In this guide, you can find an overview of each tool, as well as information on how to find these items within the library collection. 

SWOT Overview

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is a tool that you use to analyze these aspects of a company. A SWOT is often represented as a grid with four quadrants. 

You can learn more about the SWOT analysis here:  

• SWOT Analysis (2012). In S. D. Hill (Ed.), Encyclopedia of Management (7th ed., pp. 977-980). Gale. 

Find a SWOT

Many of our databases carry SWOT analyses on publicly traded companies. Learn how to find a SWOT analysis in each of the below databases: 

Articles from 1,400+ business, law, and I.T. journals plus 27,000+ videos from industry leaders

• From the Advanced Search page, type your company name into the search bar 
• Scroll down to  “Publication Type”  and choose  “SWOT Analysis” 
• Click search 

Company financials, industry reports, investment analysis, and competitive benchmarking data

• Search for company name or by ticker symbol 
• From the company page, choose the “Company Reports” tab 
• Click “Broker Research Reports” (located just under tabs) 
• View reports (Tip: GlobalData reports generally include SWOTs) 

What if I can't find a SWOT on my company?

Some companies will not have SWOTs in the library databases. Generally, only large, publicly traded companies are covered. If you cannot find a ready-made SWOT for your company, you can use a combination of resources and information about your company, competitors, and industry to conduct your own SWOT analysis. Try to identify peer companies with the same or similar products and services or who are operating in the same market. Read critically to infer the situation and setting of your company.  

For more information about researching a company, please see:

For more information on researching an industry, please see:

Can I use a SWOT I found through the open web/Google/Bing/etc.?

While you can run a general internet search for a company SWOT, free web-sourced SWOTs can often be dated and unreliable. Pay close attention to the date and who is behind the information. Of course, you can use the open web to research your company in order to create your own SWOT, just be sure to use current company information or news. If you have any questions about the reliability of information you find online, please ask a librarian. 

Can I use AI (like Chat GPT) to generate a SWOT for me?

As noted above, free web-sourced SWOTs can often be dated and unreliable. AI chat bots, like Chat GPT, can only generate answers based on the data it has been trained on, which includes inaccurate or dated information like that found in low-quality, online SWOTs. ChatGPT does not have the ability to fact-check or verify the accuracy of the information it generates. As such, it often generates false or dated information. It also regularly makes up citations or references that do no exist. ChatGPT is just replicating patterns, so it may not be able to understand complex topics, questions that require critical thinking, or the process of attribution.

How can I use AI (like Chat GPT) to help me write a SWOT?

If you would like to utilize AI to help you with your SWOT analysis, consider having it generate a format or template you can replicate and fill it with your own research and analysis. You can also use it brainstorm different categories to consider researching for your SWOT. Here are some example prompts:

• What type of information is found in a SWOT analysis?
• Where can I locate information to include in a SWOT analysis?
• Can you generate a SWOT analysis template?

In general, AI is great for brainstorming ideas or providing boiler plate information that you can use as a jumping off point. It is NOT good and mimicking scholarly output, critical thinking, or analysis. When using AI, approach it as a means to enhance your understanding or learning, NOT replace it.

Remember: As with all academic work, the ideas and contributions of others (including generative AI tools) must be acknowledged and provided with proper attribution. Work that is presented as original must be, in fact, original by the learner. The use of generative AI tools, such as Bard or ChatGPT, when completing coursework without proper attribution is a form of academic dishonesty and violates the university’s Academic Integrity policy. To learn more about how to cite AI, please see: 

• Using Artificial Intelligence: Citing ChatGPT or Other AI

PESTLE Overview

Like SWOT, PESTLE is an acronym—it stands for Political, Economic, Socio-Cultural, Technical, Legal, and Environmental. Unlike SWOT, which is tied to analyzing a specific company’s internal capabilities, PESTLE is designed examine a company’s external environment. Sometimes referred to as “scanning the business environment,” a PESTLE is meant to be a macro or “big picture” look at the market in which your business operates.  

Depending on the context of your course, the reason for assessing these external forces may vary. Refer to your assignment instructions for further information about how and why you may be performing a PESTLE analysis. For more about the specific components of a PESTLE, please see the following articles:  

• Environmental Scanning (2012). In S. D. Hill (Ed.), Encyclopedia of management (7th ed., pp. 340-345). Gale

Research and build a PESTLE

Depending on the context of your assignment, you are almost always going to be working within a particular area (aka. market or environment) when creating a PESTLE. Using resources found in our "Research a Country" guide can help you identify some of PESTLE components for your specific market. You will occasionally find a readymade PESTLE within these reports. However, most of the time, you will have to pull the component parts of a PESTLE analysis from multiple data sources and compile them yourself. 

• How-to Research a Country

If you want to analyze a smaller market/environment in the US, like a city or state, we recommend checking out Data USA, Statista, and local government websites for information on your area. 

US demographic and economic information (formerly American FactFinder)

Visualizations of U.S. public data

Quantitative data on business, finance, politics, and media.

Can I locate ready-made PESTLE analyses in the databases or online?

You will occasionally find a ready-made PESTLE within the databases or online. However, most online PESTLEs are conducted by other students or within a context that does not apply to your current environment. Ultimately, online PESTLEs will not have been written within the same context in which you are conducting your own assessment. It is your job as strategists to pull the component parts of a PESTLE analysis from  multiple data sources and compile them yourself .

Can I use Chat GPT or other AI to write a PESTLE for me?

AI chat bots, like Chat GPT, can only generate answers based on the data it has been trained on, which includes inaccurate or dated information like that found in low-quality, online PESTLEs. ChatGPT  does not  have the ability to fact-check or verify the accuracy of the information it generates. As such, it often generates false or dated information. It also regularly makes up citations or references that do no exist. ChatGPT is just replicating patterns, so it may not be able to understand complex topics, questions that require critical thinking, or the process of attribution. The context in which you are conducting your PESTLE is important, and AI will not be able to understand that context or the content of your previous assessment work to date.

How can I use AI (like Chat GPT) to help me write a PESTLE?

If you would like to utilize AI to help you with your PESTLE analysis, consider having it generate a format or template you can replicate and  fill it with your own research and analysis . You can also use it to brainstorm different categories to consider researching for your PESTLE. Here are some example prompts:

• What type of information is found in a PESTLE analysis?
• Where can I locate information to include in a PESTLE analysis?
• In a PESTLE, what are some factors related to environment (or other factor)? 
• What are some environmental (or other) factors that may impact [your industry]? Etc.

AI is great tool for brainstorming ideas or providing boiler plate information that you can use as a jumping off point to conduct your own research. Do NOT use AI to generate research for you but, instead, use it as a way to generate ideas that can kick start the research process.

Remember: AI is NOT good and mimicking scholarly output, critical thinking, or analysis. When using AI, approach it as a means to enhance your understanding or learning, not replace it. As with all academic work, the ideas and contributions of others (including generative AI tools) must be acknowledged and provided with proper attribution. Work that is presented as original must be, in fact, original by the learner. The use of generative AI tools, such as Bard or ChatGPT, when completing coursework without proper attribution is a form of academic dishonesty and violates the university’s Academic Integrity policy. To learn more about how to cite AI, please see:

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