Do Your SWOT Analysis, Now!

Then go right ahead, and do a SWOT
analysis for yourself and find out the strengths with which you can accept the
opportunities knocking at your door and combat threats as well.

Knowing your company's inherent qualities is always welcome and it results
in better performance. Strengths, Weaknesses, Opportunities and Threats (SWOT)
are an integral part of an organization's strategic planning process.

It is a framework that helps an organization to have a close look at the
internal and external factors influencing the organization. While the strengths
and weaknesses of an organization are linked with internal factors,
opportunities and threats are considered as external factors.

SWOT is an instrument for strategy formulation and selection. It allows
senior management to arrive at a simple 'go ahead or stop' decision based on
the info available.

It
is not limited to any particular section of organization based on its size. In
fact, SWOT analysis could be applied to any organization, right from small and
medium businesses to large corporates and conglomerates.

With IT becoming a strategic initiative, it is imperative for every IT
company to offer products and services that adds value to an organization's
business, either by contribution to revenues or by reducing operational expenses
and business risks.

Further, today, the market is flooded with a plethora of products and
services. Thus, it is imperative for any company to analyze its strengths and
weakness in each of the market segments they address.

They also have to position their products and services to differentiate
themselves from their competitors' offerings. A SWOT analysis would help an
organization to achieve its objectives.

SWOT - An analysis

A SWOT analysis can be carried out by an organization, which has a deep
understanding of its market characteristics, dynamics in terms of potential
segments, customer preferences, spend potential, competing products and their
positioning. However, to get a meaningful insight, it has to assess how its
resources and capabilities can be used as a basis for developing a competitive
advantage.

Strengths

Every organization has its own strengths and weaknesses. For example, an
organization could have a dominant market share in a geography compared to other
geographies. In the other case, one of the product lines may have a dominant
market share compared to the rest in the offering.

Kamesh Ramamoorthy

It is a matter of perspective. For instance, a company is very small and
hence has the ability to move fast. It is important to note that companies that
are in a bad position also have strengths. Whether these strengths are adequate
is an issue to be analyzed.

Weakness

Organizations may have some innate weaknesses. For example, it could be the
internal cost structure that doesn't allow it to offer products or services
below certain price points. Or it may be losing its market share to competition,
which is offering products or services at a much competitive price.

At the same time, companies that are extremely competent in what they do may
have some weaknesses. Like a dissatisfied customer base or poor reference base
of customers. How badly these weaknesses will affect the company is a matter of
analysis.

Opportunities

Identifying the unarticulated needs of the market and satiating them with a
suitable product or a solution has always been a challenge. This is what gives
an organization an edge over competition. Every firm has one opportunity or the
other to gain from. These could range from tapping into newer markets,
introducing new products or exploiting different channels of marketing.

Threats

A threat could be internal or external. Internal threat could be attrition
of talented and experienced resources or fall in productivity levels. External
threat could be in the form of mergers or takeover. Threat could also be in the
form of competition from low-priced products from local vendors interested in
short-term gains.

After SWOT

After doing a SWOT analysis, one needs to evaluate the results and try to
corroborate the findings with the customer experience and specific examples. In
case of gross mismatch of the findings with the general perception, we could try
and identify some assumptions, which were incorrect and re-do the same.

Typical human behavior would be to focus on the weaknesses and procrastinate
instead of taking decisions. Rather, it would be advantageous if one could focus
on the strengths and capitalize on them. Of course, at the same time, addressing
the weaknesses too!

Clear action points need to be arrived at and decisions taken to move forward
with specific initiatives. An organization can consolidate its position by
capitalizing on its strengths, thereby offsetting some of its weaknesses.

For example, an organization can capitalize on technology innovation or on a
satisfied reference base of customers and positioning it as a niche player for
customers who value premium services. It could also focus on rationalization and
concentrate its efforts on those product lines that contribute to the
bottom-line.

If market penetration is an issue, an organization could increase its reach
in the market by allying with established and credible partners. Potential
opportunities could be tapped by redefining the entire value chain right from
design, development and marketing of its products thereby optimizing the TCO to
the customer.

Tips on SWOT

A judicious balance is required as regards the details of information
collated (detail versus perception). There might be cases of overload of
information in some cases, while in others there might be extreme paucity of
information.

Just focus on what is required to arrive at a 'go-no go' decision. The
purpose is to allow you to take an informed decision and not to validate every
piece of data/information available. The SWOT analysis is valid for the current
period only.

Kamesh Ramamoorthy is Executive Vice President (Enterprise Solutions) at
Ramco Systems