How to do a SWOT Analysis

Elizabeth Harrin

A SWOT analysis is a way to identify the strengths, weaknesses, opportunities and threats inherent in your business, project or team. It’s a good way to start a strategy session as it opens up plenty of discussion and prompts you and your team to think creatively about the types of challenges facing the organization.

You don’t need anything special to do a SWOT analysis. Mind mapping software helps when you come to present your results, but you can equally note down your answers in the first instance on paper. You can work alone or with your team, or separately and then bring your individual ideas together to the group for further discussion. It’s a very flexible yet structured way of brainstorming.

First consider what you are SWOT-ing about. Is it the organization as a whole, a department, or a project? When you are ready to get started, work your way through the acronym like this.

Strengths

First, identify your strengths. This is where you are better than your competition perhaps because:

·       You have lower overheads

·       You have access to cheaper resources

·       You are fast to market

·       You have a mature infrastructure.

Hopefully you can think of lots of reasons where you excel and why customers like dealing with you. Consider your strengths from your own internal perspective and also what people outside the department, project or business might say.

Strengths help you uncover the opportunities that you can exploit to advance the company, strengthen customer relationships or develop your products.

Weaknesses

Now look at where you are not so strong. These are areas where you could improve such as:

·       The reason behind customer complaints

·       Being too reliant on one customer

·       Being too reliant on one piece of infrastructure or technology

·       Not having enough staff skilled in all areas.

And so on. There is no benefit in being coy about your weaknesses: embrace them during this part of the brainstorming session, even though it might be uncomfortable.

Opportunities

This is where you consider the trends and challenges that, if embraced, could become real opportunities for your team. If you are struggling to think of some, look at the weaknesses and turn them on their head. What would happen if you overcame your weaknesses and how could you achieve that?

Again, it will help to think about this from your own perspective and then from the perspective of your customers, suppliers or competitors. What are your competitors worried that you will do this year? That’s a threat to them and therefore possibly an opportunity for you.

You may find that some items appear on multiple lists. The opportunity of disruptive technologies, for example, could also be a threat to your business, as we’ll see next.

Threats

This section lets you brainstorm the issues that your company or team is facing or could face in the future. For example:

·       Changes to regulation, policy and law

·       Disruptive technologies

·       Changes to working practices or best practices

·       Financial risks such as the supplier who doesn’t deliver or customers who don’t pay.

Threats can come from competitors as well as the market or local economy. If you don’t know what your competitors are doing then that’s also a threat!   

With these four lists in place you can now move on to refine your SWOT analysis.

Prioritising the SWOT

Prioritise and shortlist the responses you have gathered. Focus on the essentials because you can’t build a strategy around 150 opportunities. You’ll have to pick the items that you feel are the critical elements to work on right now. Include as many as you think you’ll realistically be able to work on.

If you haven’t already, involve your team in picking the items from your list that they consider the most important. Have them add their own as well: they are likely to see things from a different perspective to you so they have something unique to bring to the discussion.

Write up your final SWOT analysis in your mind mapping tool, parking any ideas that didn’t make the final cut in case you can use them in the future.

Create your Strategy

Finally, you’ve now got the information you need to input into the strategy for the team, project or even at a corporate level. To be clear: the SWOT analysis is not your strategy. But it does give you very useful information about what you should be working on: addressing your key threats, capitalising on opportunities where you can, building on your strengths and overcoming the weaknesses that are holding you back. You may need to further refine and prioritise the lists in order to pick the items that best lend themselves to whatever you want to do with the data next.

The data in the SWOT can easily be shaped to form the backbone of a wide-ranging strategy for longevity.

Biggest Global Banks 2015

ANDREW CUNNINGHAM

Chinese banks are assuming an increasingly important position among the world’s biggest banks. But European banks are still the largest geographic grouping in our rankings.

THE BIG GET EVEN BIGGER

At the end of 2014, the first, second and fourth-largest banks in the world, ranked by assets, were Chinese. HSBC was the third-placed bank.

The 10 Chinese banks included in last year’s list of the world’s Biggest Global Banks have all moved up the rankings (with the exception of Industrial and Commercial Bank of China, which was first last year and retains that position this year). Industrial and Commercial Bank of China remains the only bank in the world with more than
$3 trillion in assets at the end of 2014. China Minsheng Bank enters the top-50 ranking for the first time this year, taking the total number of Chinese banks in the top 50 to 11.

Despite the increasing importance of Chinese banks, European banks still make up the largest geographic group within the 50 Biggest Global Banks. Twenty-one European banks from eight different countries feature in the 2015 list, two fewer than in 2014: KfW and Danske Bank dropped off the list this year.

The profile of the 21 European banks that feature among the world’s 50 largest is very different from the profile of those European banks that feature among the world’s 50 safest. European banks hold the first nine places in the ranking of the World’s Safest Banks, but none of these now features among the world’s biggest. (Last year, KfW was placed in both rankings.) Four Nordic banks feature among the World’s Safest this year, but only one, Nordea, makes the Biggest Global Banks.

The United States contributes seven banks to the biggest 50 ranking this year, one more than last year, as a result of the inclusion of Prudential Financial. Japan and Australia contribute four each and Canada three—in all cases, the same number and the same banks as last year.

The combined total assets of the biggest 50 banks in the world was $68,994 billion at the end of 2014, marginally higher than the $68,488 recorded a year earlier. The increase in the size of Chinese banks was offset by declining asset sizes at many eurozone banks (the euro lost 10% of its value against the dollar during 2014) and Japanese banks (for whom a similar devaluation took place).

In this year’s rankings the 50th-placed bank, China Minsheng Bank, had assets of $656 billion. In 2014’s rankings, the 50th-biggest bank, Danske Bank, had assets of $596 billion.

BIGGEST GLOBAL BANKS 2015
Rank	Bank	Country	Total Assets USD Mln
1	Industrial and Commercial Bank of China	China	3,368,190
2	China Construction Bank	China	2,736,416
3	HSBC	United Kingdom	2,634,139
4	Agricultural Bank of China	China	2,610,582
5	JPMorgan Chase	United States	2,573,126
6	BNP Paribas	France	2,522,471
7	Bank of China	China	2,492,463
8	Mitsubishi UFJ Financial**	Japan	2,391,680
9	Crédit Agricole	France	2,140,055
10	Barclays	United Kingdom	2,119,410
11	Bank of America	United States	2,104,534
12	Deutsche Bank	Germany	2,074,424
13	Citigroup	United States	1,842,530
14	Wells Fargo	United States	1,687,155
15	China Development Bank	China	1,685,954
16	The Royal Bank of Scotland	United Kingdom	1,640,023
17	Societe Generale	France	1,588,163
18	Sumitomo Mitsui Financial Group	Japan	1,542,204
19	Banco Santander	Spain	1,537,327
20	Mizuho	Japan	1,534,259
21	Sparkassen-Finanzgruppe (Sparkasse)	Germany	1,523,129
22	Groupe BPCE	France	1,485,126
23	Lloyds Bank	United Kingdom	1,334,316
24	ING	Netherlands	1,205,361
25	UBS	Switzerland	1,074,187
26	UniCredit	Italy	1,024,909
27	Bank of Communications	China	1,024,399
28	Credit Suisse	Switzerland	931,617
29	Goldman Sachs	United States	856,240
30	TD Bank Group	Canada	837,909
31	Royal Bank of Canada	Canada	834,191
32	Rabobank	Netherlands	826,862
33	Nordea	Sweden	812,604
34	Morgan Stanley	United States	801,510
35	Intesa Sanpaolo	Italy	784,785
36	Norinchukin Bank	Japan	779,396
37	China Merchants Bank	China	773,301
38	National Australia Bank	Australia	773,062
39	BBVA	Spain	767,199
40	Prudential Financial	United States	766,655
41	Commonwealth Bank of Australia	Australia	745,527
42	Standard Chartered	United Kingdom	725,914
43	Industrial Bank	China	720,118
44	Bank of Nova Scotia	Canada	714,560
45	Shanghai Pudong Development Bank	China	685,721
46	Commerzbank	Germany	676,956
47	China Citic Bank	China	676,387
48	ANZ Group	Australia	675,733
49	Westpac	Australia	674,639
50	China Minsheng Bank	China	656,175

Source for asset figures: Fitch Solutions, except for ** from bank’s financial statements

Profit Pool Analysis

The profit pool framework was developed by Bain & Co. You will find the key references in a 1998 HBR article by Orit Gadiesh (Chairman of Bain & Co.) and James Gilbert: “Profit Pools: A Fresh Look at Strategy.” The strategy of a firm should be informed by an understanding of the sources and distribution of profits generated in an industry. Gadiesh and Gilbert took a value chain perspective to this when developing the profit pool framework. This is really more of a broad strategic framework, and there are multiple ways to depict profit pools visually. But one common graphic looks as follows:
Even though the concept is quite simple, implementing it in reality is generally quite complex. Profitability in different segments and stages of the value chain may vary a lot by product and customer group, by geography, or by channel. Also, make sure to clarify how you define profits (Accounting profits? Return on investment? Cash Flow?). Finally, the definition of activities in the value chain is not trivial either. The following process will help you map the profit pools.

Step 1: Define the industry and value chain steps.

Key is to look at the industry broadly, beyond it’s traditional boundaries. Include all the activities that are meaningful to influence your organization’s ability to earn profits (today and in the future). Examine the industry from four perspectives (your own, your competitors’, your customers’, and your suppliers’) to make sure that you include all relevant elements. Talk to key analysts and industry players to understand if there are any emerging business models. Some other key questions to consider: Are there activities performed in other industry that could replace parts of what you’re doing? How would your customers define the life cycle of your product? The objective is to come up with a complete list of activities in the value chain, be broad, but not unnecessarily detailed.

Step 2: Determine the size of the pool.

At this point, the goal is to estimate overall industry profits, which will serve as a base line. This may require some estimates for individual companies, and already an initial breakdown of aggregated numbers by product, channel, region, etc. Try to cross-check the numbers by combining different perspectives (e.g. by company, by product). Focus on the larger companies and key products – you can always extrapolate these numbers to smaller players.

Step 3: Break down the profits by activity.

If you are in an industry where all companies focus on an individual step in the value chain, you can just aggregate their respective numbers. If – and this is generally the case – there are a number of vertically integrated or mixed players, you will need to disaggregate each company’s financial data, and make estimates for specific activities. Again, looking at pure players, and looking at large companies who break out their results in 10Ks by segment, will help you solve 80% of the puzzle, so that you can then extrapolate the other 20%. Don’t forget to look at your own company’s economics as a proxy. And finally, here is where creativity comes in!

Overall, the “profit pools” framework can serve a number of purposes:
– help identify new sources of profits for a company;
– rethink the role a company plays in the value chain, potentially helping to refocus;
– assist in product and segment decisions.