Name: The SWOT analysis or SWOT method is an acronym of the terms Strengths, Weaknesses, Opportunities and Threats. The SWOT analysis is used as a decision-making tool and to facilitate the development of strategic plans. External factor: an element over which an organization has no influence, linked to the environment in which it evolves.
Opportunities: external factors that have the power to positively influence an organization's competitive position. This method is one of the first models to take into account the external environment of an organization. A number of consulting firms also use the SWOT analysis because it allows them to quickly analyze the situation and present it schematically and more easily to their clients.
A SWOT analysis investigates the current position of an organization at a given time in a forward-looking, as opposed to retrospective, manner. At the same time, the SWOT analysis focuses on the internal functionality (strengths and weaknesses) and the external environment (opportunities and threats) of the organization. Advantages are elements of an organization that have a positive impact on its development and its competitive position.
When this is done, they can become forces that positively influence the development of an organization.
FACTORS THAT INFLUENCE THE EVOLUTION OF AN ORGANISATION
Weaknesses are also related to the internal functioning of the organization, but as a rule they have a negative impact on its development and its competitive position. The ability to clearly identify an organization's internal weaknesses is essential: it enables the improvement of important issues and the redirection of work to make it less vulnerable. As long as they are detected in time, threats can be better predicted and their impact on operations reduced (and vice versa).
Since the organization does not develop by itself in its environment, its future also depends on the decisions of the competition. One of the first aspects that makes a company competitive is its ability to keep costs low. In order to control costs, he must carefully monitor the efficiency of the production technique (is it possible to produce more with less?) as well as the allocation of resources (should labor be replaced by capital?).
For example, if lower social and environmental standards can reduce costs, this does not mean that it does not have a (negative) impact on workers. This strategy is based on the increasing use of new information and communication technology (NICT). It may be preferable for an organization to spend more time finding a suitable person rather than rushing to recruit a candidate who does not match the position.
They are also influential in negotiating the use of their patented products with other companies. The presence or lack of strong economic growth certainly affects the position of various organizations. To avoid this, the marketing department can try to anticipate changes by using different tools, such as the product life cycle, which details the different phases of the product (development, launch, growth, maturity and decline).
The largest, best-performing companies or those most likely to start a price war can negatively impact a company's profitability. However, in certain cases it allows companies to avoid their competitors if they are less willing to compete. Now that you understand the theoretical basis of SWOT analysis, you can have fun and make your own analysis as a student or employee.
LIMITATIONS AND EXTENSIONS
CRITICISMS
OTHER MODELS
Porter’s five forces
The power of negotiation between suppliers and customers can have a decisive impact on the profitability of a company. In general, you can say that customers and suppliers can get better prices when there are only a few companies and potential new entrants appear on the market.
Oligopolistic competition and the presence of cartels
The model of Antoine Augustin Cournot (the French mathematician and philosopher was created to analyze oligopolistic competition (belonging to a market characterized by a small number of sellers for a large number of buyers). It is generally used until the companies decide what quantities to produce – a decision is made in terms of the impact on pricing policy. For example, active companies in the automotive industry have difficulty increasing their production capacity in the short term (building a factory costs time).
For many competitors, competitive pressure in a Cournot industry is generally considered moderate and limited. On the contrary, the model of Joseph Louis François Bertrand (a French mathematician and economist) is used until firms decide on their price levels and can easily increase or decrease the quantity produced. This model is mainly used by companies in industries where it is easy to change the short-term production volume that concerns such competition (eg textile industry).
If there are at least two competitors, competitive pressure in an industry like Bertrand is generally very strong. It is also possible that active competitors within an industry – although this is illegal – explicitly agree to restrict competition. If a cartel is stable, the combined profits of the companies involved will equal the monopolistic profits.
PRACTICAL APPLICATION
FIVE STEPS FOR SUCCESS WITH THE SWOT ANALYSIS
ADVICE
CASE STUDY – TOURISM ORGANISATION IN THE SOUTH OF FRANCE
Analysis of the external environment of the company – threats and opportunities
The increasingly frequent habit of tourists using these websites to book rooms has caused the near disappearance of paper guidebooks, in which tourist infrastructure is often well referenced. In the case of this tourism institution, local government support and promotion of surrounding sites and/or activities (eg places of natural beauty, consecutive sports events, etc.) could, for example, attract more customers. Given the difficulties involved in accessing their establishment, it is recommended that managers support the development of transport infrastructure investment proposals (eg highways, railway lines, airport terminals, etc.).
The unfavorable economic environment related to the crisis has had a direct negative impact on tourists' desires to go on vacation: the estimated spending budget actually seems less important than in 2008. On the other hand, the long-awaited return of economic growth can have a positive impact on the situation of this institution.
Analysis of the internal environment of the organisation – Strengths and weaknesses
This location can also be seen as a disadvantage in the sense that the guesthouses are difficult to access by public transport and are far away from amenities (supermarkets, restaurants, etc.). The availability of various sports activities, including seasonal activities (hiking trails and mountain biking in summer; skiing in winter) near the accommodation is definitely an advantage for the organization. Also, hosting prepared meals for tourists can also establish mutual contact.
The internet connection is slow due to the isolated location, which is quite a disadvantage in this digital age. The SWOT analysis allowed us to identify a certain number of strengths, weaknesses, opportunities and threats of the organization. Advances in technology can be leveraged on the visibility that the Internet offers.
The organization would do well to register its guesthouses on the available platforms where potential customers (people looking for a remote resort) can find them. As consumers have a lower holiday budget than in the past, it could be useful for the organization to. Although the development of the legislative framework can be considered a short-term threat, it is also an obstacle to the development of new structures.
In the long term, they will provide an excellent barrier to entry and allow those who adapt to the new regulatory framework to benefit from stability in the face of competition. Word of mouth could be the most effective method if the organization communicates better with its regular customers to attract them in other seasons as well. Other decisions could be made and other opinions could undoubtedly be considered, but ultimately everything will depend on the priorities set by those responsible for the organization.
SUMMARY
FURTHER READING
BIBLIOGRAPHY
