SWOT ANALYSIS - WHERE ARE WE NOW

SWOT ANALYSIS - WHERE ARE WE NOW

Environmental Analysis is an evaluation of internal conditions and external data and factors that affect the enterprise. Before an enterprise attempt to chart its future, it must determine where it currently stands. The mechanism used to gauge the conditions inside and outside of the enterprise, answering the question " Where are we now ?" is the internal/external assessment. It is a basic management tool that is not only used in strategic planning, but also in problem solving. It provides a baseline assessment of the organization. The process of conducting an assessment is often referred to as SWOT analysis because it involves reviewing the enterprise's Strengths and Weaknesses and the external environment's Opportunities and Threats. The data gathered during the assessment will often lead to the identification of strategic issues.

Conducting the Internal Assessment and Analysis

Internal analysis is an evaluation of the enterprise's position, performance, problems and potentials. Sometimes this is called a situation inventory- where the enterprise identifies its strengths and weaknesses and evaluates its capacity or capability to respond to issues, problems and other scenarios. It also reveals the paradigms that comprise the enterprise's current principles that drive or disrupt current operations. It throws light on administrative or managerial policies and procedures that enhance or inhibit quality.

The initial step in conducting the internal assessment portion of SWOT analysis is to find out how your enterprise has been performing.

Where has the enterprise been?

Have the products and services been of the highest quality?

What has changed internally. Has the enterprise been reorganized ? Have improvements been made or has the enterprise been stagnant or in decline ? Why

What has been accomplished ? What remains to be accomplished.

Where is the enterprise now ?

Identify current programs or activities. Does the existing structure of programs and projects make sense ? is there fit ?
Do existing programs or department activities support one another within the enterprise. Are their any conflict ? Are all the programs and activities needed ?
What are the accomplishments of current programs or activities ? What is being done well, poorly?
Are current (baseline) performance measures established ? If so, are expected levels of performance being met ? Why or why not ? If baseline have not been established, what plan is in place to do so ?
What do the customers think of the current program? How successful are consumer needs being met ?
What benchmarking information can be utilized to compare the quality and cost of the enterprise's program with those of other enterprises? How does the enterprise compare with recognized standards?
Are planning, budgeting, quality and other management efforts integrated?
Programs may take the forms of sub-contracting program in the case of garments, furniture and electronics assembly or vehicle maintenance programs in the case of car rental, taxi operations or trucking services. Sub-programs, projects or tasks may take the form of quality control and inspection in the case of sub-contracting and parts fabrication and rehabilitation for vehicle maintenance. The performance of the enterprise in running these programs should be evaluated using own existing company existing standards, against targets and benchmarks.



What are the Strengths and Weaknesses?

What is the enterprise's capacity to act?
What advantages or strengths exist ? How can the strengths be built on ?
What disadvantages or weaknesses exist ? How can the weaknesses be overcome ?
How are the needs and expectations of customers changing ? What opportunities for positive change exist ? Does the plan accommodate that change ?
Examples

Strengths
R and D complete
Possesses copyrights, patents,
Well established market
Initial product can evolve into range of offerings
Located near a populated area as market
Very focused management/staff
Complete line of products
Flexible decision-making systems
Possession of improved technology
Trained Personnel
Committed personnel
Financial stability
Strong and established brands/products
Strong ties and linkages with suppliers


Weaknesses
Overdependent on borrowings - Insufficient cash resources
Absentee Board of Directors
Management by unqualified family members
Small business premises
Absence of strong sales/marketing expertise
Overdependence on few key staff
Emerging new technologies may move market in new directions
No formal organizational structure
Unskilled labor, lack of employment commitment
Inferior technology
Weak brand name



External Analysis

External analysis or assessment identifies the opportunities and threats present in the current environment and anticipates changes in the future environment. This portion of the SWOT provides an essential backdrop for strategic planning and policy development.. It is an analysis of the key external elements or forces that affect the environment in which the organization functions.

The first step in conducting the external assessment is to analyze the environment

What elements of the current external environment are relevant to the organization ? How ?

What elements are most critical ? Which are likely to facilitate or impede the organization?

What are the major current issues or problems? Are these local, regional or national or global in scope? Why are these issues or problems of such importance?

What current events or policy issues have captured the attention of the public? How do these affect the enterprise?



Using a plastic film for food packaging industry as an example, the relevant elements could include the 1) number and volume of demand for product packaging, 2) Sources of plastic pellets as raw materials 3) Foreign currency exchange rates 4) number and volume of production outputs of toll packaging companies 5) New production technologies 6) Financing costs and others.

In terms of the critical elements, items 1,2,4 and 5 are the most critical. These involve markets and production. Since the raw materials are basically imported, its availability is major determinant to produce the plastic film sheets. Similarly since imports require foreign exchange, the rate of currency exchange substantially determine production costs and eventually selling prices. relatively high prices would force its market to seek for cheaper substitutes. Items 3,5 and 6 can be dealt more easily by the enterprise because they affect costs which can be passed on to the customers. Likewise, production arrangements such as tolling services could be done to share in added costs.

A trucking or a bulk hauling container transport enterprise on the other hand could have relevant elements such as 1) Volume of exports and imports 2) Cost of truck acquisition 3) Foreign currency exchange rates 4) Cost of truck fuel 5) Labor costs 5) Road Traffic conditions and others. In terms of critical elements, volume of exports, cost of truck and fuel are the most critical elements.

In both of the enterprises mentioned, environmental issues are common. In the case of the plastic film manufacturing, the use of recyclable material is an issue. In the trucking business, smoke belching is an issue. Both issues are national in scope and this will have to be taken into consideration by both enterprises.

The second step is doing a "what if" scenario of the environment

What forces are at work that might affect or alter the key elements of the environment ? Are trends likely to continue or are reversing ?

What major issues or problems are anticipated ? What affects could they have on the enterprise?

What implications do these future forces and environmental changes (trends and issues) hold for the enterprise ?

What are the most likely scenarios for the future ?

Forces such globalization, recession, depression, economic boom, political turmoil, environmental ideological movements, war and others of global nature could affect the smallest of the enterprises. These forces affect business. In both mentioned enterprises, alterations of the order could simultaneously or sequentially affect the critical elements of the enterprises. War in the Middle East and global terrorism could affect the supply and prices of plastic resins and oil prices which the Philippines basically imports. Similarly, these could push prices up. On the other hand the resulting economic degradation could reduce incomes and affect the markets. In view of these an understanding of the scenarios and ability to forecast trends could prepare the enterprises for possible downsizing or expansion depending on the forecasted scenario. It is therefore important that enterprises are aware of the forces that affect their enterprises' key elements.

By gaining a thorough understanding of both the internal and external environment, the enterprise will be in a better position to respond to the environment. When preparing a SWOT analysis, consider that the strategic plan will be a document that other people may someday see. Although it is important to be factual in listing the enterprise's weaknesses, care should be taken in how these statements are worked so that this information will not be misinterpreted. [Pro-labor may use this for other purposes.] For instance, statements summarizing problems or weaknesses can be written to stress opportunities for improvement.

Enterprises may find the following list helpful. These factors are representative of relevant or appropriate issues to consider during an Internal and External Assessments.

INTERNAL: STRENGTHS AND WEAKNESSES EXTERNAL: OPPORTUNITIES AND THREATS
1. Overview of the Enterprise Scope

Historical Perspective and Significant Event

Customer expectations/public image

Structure of Programs, Projects

Enterprise Accomplishments

Examination of existing performance measures as the ideal gauge of success

2.Oganizational Aspects

Size/composition pf work force (number of employees, professional, technical, clerical etc.)

Organizational structure and processes (divisions, departments, units, quality of management styles, key management and policy/operating characteristics)

Location of enterprise's office/s

Human resources (training, experience, compensation, benefits, turnover rates, morale)

Capital assets, capital improvements needs

Information technology; degree of automation, telecommunication, ITt plans, data collection, tracking and monitoring system

Key organizational events, areas of change, impact on organization, enterprise's responsiveness to change

Labor

3)Financial Aspects

Size of Budget, Cash Position, Equity, Financial management

Comparison of operating costs














1. Demographics Focus on Customers

Characteristics (age,education,geographic, special needs)

Trends and their impact (population, shifts, emerging demographic characteristics

2. Economic Variable

Unemployment rate, interest rates, etc.

Extent to which customers and service population are affected by economic conditions

Expected future economic conditions and impact on the enterprise and customers

Enterprise response to changing economic conditions

Currency exchange rates

3) Impact of Government Laws and Regulations

Current Legislations

Anticipated impact of future legislations and regulations

Impact of current and outstanding court cases

Local government requirements ]

Environmental regulations

4)Technological Development

Impact of technology on current enterprise's operations (products and services in the market place, telecommunications etc.

Impact of anticipated technological advances

5)Public Policy Issues

Current Events

War and Terrorism

Ideological Movements











Data Sources for the Internal and External Assessments

There are hundreds of sources where enterprises can find useful information. The following list of sources may be useful:

Internal Assessment

Annual Reports

Employee Surveys

Annual Progress Review Meetings

Customer Surveys/Feedback

Program Evaluation

Internal Data Bases

Internal Plans

Performance Measurements

Production Outputs

Sales Volumes

Production Cost Data

Quality Assessment Surveys

ISO Reports

External Assessment

Statistical Reports and Databases (NCSO)

Local government legislations, National Laws, Congress and Senate

Government Agencies and Departments (Finance, Customs, CB, DENR)

Court Decisions (SCRA, OG)

National Professional Organizations, Business Clubs, Business Schools

Interest and Advocacy Groups

University and College Libraries (Theses and MRR collections, Researches)

Agency Advisory and Government Boards

Key Resource Persons and Industry Experts