Developing Strategy: 
The SWOT Analysis Part II

Last month we started our review of a process called SWOT: an acronym for a review of organizational strengths, weaknesses, opportunities and threats. Last month we started with external analysis, and this month we take a look at the internal part of the process so important to our success. Keep in mind SWOT allows for our reflection. SWOT does not identify particular strategies, but rather identifies issues that may later need to be strategically addressed. Particular attention is paid to the critical success factors in the firm’s industry. The SWOT analysis looks at two dimensions of each of the four categories - “Internal” issues and “External” issues.

Internal: Strengths Weaknesses

External: Opportunities Threats

What are considered Strengths?

Strength can be thought of as any internal attribute of the organization that is helpful in achieving the corporate objectives. Strengths positively impact your company’s profitability and competitive well-being. Positive impacts could include such things as a strong cash position, a strong corporate culture of success, superior manufacturing capability, or any other positive attribute that can be identified or quantified. Does your organization have a strength that is obvious to all and allows for a competitive advantage in the marketplace? Is it location, price, or yourself with specific expertise no one else has? All of these and many other attributes should be considered strengths.

What is considered a Weakness?

A weakness can be thought of as any internal attribute of the organization that is a hindrance in achieving the organizational objectives. Weaknesses pose obstacles to your business’s profitability and competitive well-being. Negative obstacles could be the same category of issues stated above such as poor cash position, weak corporate culture, weak manufacturing capability, or any other negative attribute. Is there something within your practice or dispensary that is not allowing you to meet your goals? Is there a weakness in staffing, location, or inventory? All of these must be considered weaknesses that need to be eliminated in order to maximize success.

Identifying Strengths and Weaknesses

Our focus here is on several things:

1. Resources- what resources do we bring to the table to serve the needs of our target markets. I have seen many independent opticians sit and wonder what happened (myself included) when the typical referrals from ophthalmologists dried up many years ago with the advent of in-office optical dispensaries. If you do not compete favorably with other providers in your market, you must try to find some niche to fill that allows you to maximize your resources and make you a standout. Even though this is a simple concept, many find grasping the concept elusive.
   

2. Competencies- are we up to date with the current trends in the field? I often hear supposed experts discuss the ills of new development in the industry. “By golly,” they say, “those new-fangled things are not nearly as good as my old school technology.” If Henry Ford felt the way many of our “experts” do, then we would all be driving horses and buggies. Embracing new technology and modes of practice are important in the turbulent eye care marketplace, and we must develop the competencies to provide those products or services.
   

3. Capabilities- do we have the capability within the organization to successfully compete? Are we capable of delivering excellent products and services that allow us to stand out in the marketplace? There are a million questions regarding our capabilities, and we must understand what our parameters for success are, and remain within the limitations of those parameters. For example, don’t promise things you may not be able to deliver on time. It is better to over-achieve than under-achieve, especially in the eyes of your patients.
   

4. Context- all the above items, our capabilities, our competencies and our resources must be matched with the market we serve. If we provide skills and/or services not valued, then we will not succeed no matter what. We must fit contextually within the marketplace.

The Process

To begin the Strength and Weakness portion of your SWOT, first focus on the internal factors that either do now, or could in the future, impact your business. Consider the critical success factors that pertain to your business’s internal and external environment. Where does this information come from? It should draw upon your research about the company in particular, as well as the industry and external environment in general. Typically, the number of issues identified should be approximately ten for the Strength section and ten for the Weakness section. Although, the actual number of issues identified is unimportant. Rather, the depth of the research is far more critical. Note that you are not proposing strategies or solutions here. You are identifying critical issues that will need to be addressed in subsequent strategy development sections.

Again consider the following hypothetical example of the “all natural” soda company that was used in the external section last month:

Strengths

1. Marketing Philosophy

2. Social Responsibility

3. Creative Products

4. Diverse Product Line

5. Mass Customization

6. Product Specialization

7. Ethics Program

8. Quality Products

Weaknesses

1. Inexperienced Mgmt Team

2. Expensive Retail Price Structure

3. Weak Marketing Processes

4. Limited Distribution

5. Limited Financial Capability

6. Small Company

7. Informalities of Company

8. Little Brand Recognition

9. Collection Practices for Receivables

Now to move forward in the process, consider your strengths and weaknesses, and include all the staff and stakeholders so as to gather as much information as you possibly can. List your Strengths and your Weaknesses.

An important component to this process is understanding what to do with this information once it has been gathered. Are there implications for your organization? How can you use it to develop your organization’s strategy? Are there things you do well that can be emphasized in your marketing strategies? Are there things you need to improve? Hopefully the SWOT analysis, with key stakeholders contributing to the process, will allow those issues to become crystallized. Again, SWOT will not identify particular strategies, but will emphasize areas that need to be addressed. Take a look at the strengths and weaknesses you have listed. Are there areas of significance that stand out? If so, be sure to highlight them as well.

Conclusion

To develop a clear understanding of our strengths and weaknesses requires a systematic process based on objective analysis, with the key word being objective. Often that is difficult to accomplish, because we naturally tend to think we are on the right path when in reality we may need substantial improvement to reach our full potential. We must overcome this tendency and really gain a clear picture of what our target population feels about how we conduct our business. How are we perceived in the marketplace? Are we seen as the first-line provider in our market, or are we somewhere back in the pack? I can only hope that you will consider this article when developing strategies for your organization. It is imperative that we manage strategically in an economy like the one in which we currently find ourselves. Implementing strategy will not necessarily assure success, but it will allow us to have a better chance of maintaining that competitive advantage we seek.