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Little Red Tool Box- SWOT Analysis


SWOT Analysis

Internal Organization Analysis                     External Ecosystem Analysis
Strengths Weaknesses Opportunities Threats
Strategy Owners are nimble and can make quick decisions

Attention to detail [internal strengths can be shifted to new external market]

Had a monopoly Market – focused on gov

Barrier to entry [knowledge and talent to do the quality work]

Current Mission statement is outdated

Lack of customer diversification

Angus did not restructure quickly based on the new article  forecasting downsizing of regiment

Had a monopoly Market – only focused gov

Provide same quality shoes to the general public

Can expand in local area [cobblers are in other regions/villages]


Downsize of Black Watch Regiment
Finance On site accounting.  Judith Fraser does all books and is aware of inflow and outflow of the business Declining Sales

Depleting cash flow/bank account

Low accounts receivable

Asset base is weak [out of cash little food; profit margin is razor thin]

Inventory is up sales are down

Negative ROE ROA

All ratios ROE etc are weak

Now: they have 3X as much inventory compared to previous years]


Cannot pay their bills i.e. the butcher


Table 2.8 54% to neg. 25% so the swing on return ratio


Table 2.7 times covered is 13.2 thereby they are not able to meet their external bills


Human Resources Quick decisions [if they chose to be active rather than reactive] i.e. not a lot of bureaucracy No succession planning Elves are potential strategic ally Loss of trade secrets
Operational Proven quality; Internal talent [knowledge]; Quality control; Mobile industry : with local show now; Customer service; Pride in work; Established in the business for a long time; Attention to details; Reputation of Shop [Angus] Too small [too dependant on one person i.e. Angus if he is ill or injured the work stops]


No economy of scale


Transportation of goods take

Outsourcing to elves


If the elves are invited in then they will increase the economy of scale


Have existing inventory to move forward if they can acquire clients

Potential loss of intellectual knowledge to elves
Marketing Brand image is ‘mom and pop’ quality


Strong reputation

Only one product

Niche marketing


Elves [if invited in] can potentially provide additional distribution channels in their local areas



One Client decreasing in size

Competition from elves

Change in brand image if they accept elves

Lack of advertising to general public

Increased competition from other cobblers

Technical Have Trade secrets Outsourcing is an internal threat as trade secrets could be lost Economies of scale with elves could lead to capturing [stealing] market shares of other cobblers Loss of intellectual knowledge to elves

IF they invite  the elves into the operations


An effective business tool to assess both the internal (micro-) and external (macro-) environments of a company is a SWOT analysis.   Using this tool, the organization can assess and analyse its current situation.  The SWOT includes performing a candid internal assessment of the company’s strengths and weaknesses and its external opportunities and threats.   It is important that a company closely examines the competitive advantages and addresses any deficiencies in the business planning process.  This is also a very effective instrument to evaluate potential international business partners and alliances by assessing their overall strengths and weaknesses. You are looking for a “fit” -Synergy!

Based on the data collected, and by responding to the various questions, the strategist must analyze the data and consider the firm’s current situation and available resources.  Managers must determine whether the current strategy is working and, if it isn’t, what other viable options are within the firm’s capability and competencies.

KEY THOUGHT- The test to determine the best strategic option is to ask a series of questions.

  1. Is the proposed option a good fit with the vision and mission statements, and the firm’s available resources?
  2. Will it contribute to building a sustainable competitive advantage for the firm?
  3. Will it create value for shareholders, and strengthen the firm’s survivability?

If the answers are yes TO ALL 3, then there is merit in adopting the strategy.  Strategists must undertake hard critical thinking, analyze the data they have collected for the models, and draw all of the “so what’s” from the data when crafting their strategies.

SWOT is complementary to the TOWS.

I encourage you to adopt both tools when drafting your alternative strategies.

KEY TERM:  So what?  When analysing data, look beyond the surface-level of a fact by asking a series of “so what” questions.  For example: Our competitor is opening a factory in China.  So what?  Well, labour in China is less expensive than our labour.  So what?  Well, our competitor’s cost base will go down. So what?  They will be able to make their product for less than we can.  Ah-ha!  This is one technique that will help you “peel the onion” to reveal deeper meaning from the facts”. Practice-Practice Practice.



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