SWOT Analysis – Comprehensive Study Notes

SWOT = “Strengths–Weaknesses–Opportunities–Threats” analysis / matrix.
Widely regarded as the most popular strategic-analysis tool available to managers.
Purpose: evaluate factors that are helpful or harmful to a specific business, strategic business unit (SBU), project, or venture.
NOT designed for entire industries or sectors; it is firm- or project-specific.

After this lesson you should be able to:
- Assess internal $\text{Strengths}$ and $\text{Weaknesses}$ as well as external $\text{Opportunities}$ and $\text{Threats}$ for a firm, SBU, project, or venture.
- Recognise core advantages of the SWOT framework.
- Apply the tool, demonstrated with the sportswear company Under Armour.

Managers list and categorise the most relevant factors:
- Internal & helpful → Strengths.
- Internal & harmful → Weaknesses.
- External & helpful → Opportunities.
- External & harmful → Threats.
Analysis is performed from the single-organisation viewpoint; each firm has its own unique list.
There are no rigid, step-by-step guidelines—SWOT is intentionally flexible and adaptable.

Appropriate units of analysis: individual organisations, SBUs, projects, specific business ventures.
Inappropriate for: whole industries, macro sectors, or entire markets; sectors can be attractive/unattractive, but they do not themselves possess threats or opportunities—those belong to each firm.
Key managerial caveat:
- Do NOT confuse external factors (O/T) with internal factors (S/W). Misclassification is common and erodes usefulness.

Founded $1996$ ; focus: “high-performance” athletic products for college & professional athletes—initially in the United States.
Business model built around season-specific performance apparel and visible technology marketing.

Production of sports apparel geared toward seasons ⇒ product–weather fit.
Broadening portfolio of brands & trademarks strengthens market positioning.
Development of the concept of “visible technology” (e.g., compression wear with highly marketed performance claims).
High-profile athlete/celebrity endorsements amplify brand visibility and credibility.

Heavy revenue dependence on North America (≈ $90\%$ of $2013$ sales).
Manufacturing is outsourced to third parties ⇒ exposure to supply-chain disruptions & limited direct control over production quality.
Absence of proprietary personal fitness devices; gap versus competitors integrating wearables.
Merchandise viewed as consumer discretionary ⇒ vulnerable during economic downturns when consumers cut non-essential spending.

Geographic expansion beyond North America to capture a larger share of the global sportswear market.
Direct-to-Consumer (DTC) channel growth via company-owned retail stores:
- Higher operating costs but potentially higher gross margins than wholesaling.
Capitalise on the rising convergence of sports gear & technology:
- Develop/sell connected fitness products and dedicated sports/health apps.
Leverage growing worldwide interest in health, wellness, and active lifestyles.
Take advantage of investor appetite for high-growth, globally scalable sports brands; easier access to capital for expansion.

Intense competition for limited retail shelf space in speciality chains (e.g., Foot Locker, Finish Line) could pressure margins.
Escalating technology & innovation costs required to remain a sector leader.
Rising labour costs among Asian manufacturing partners may erode profitability.
Possible backlash from human-rights groups over alleged supplier abuses; reputational and legal risk.

Provides a snapshot of current position (S/W) and environment (O/T).
Forms a foundation for strategic option generation:
- Exploit strengths to seize opportunities.
- Convert weaknesses into strengths.
- Protect against threats using existing strengths.
The process itself encourages cross-functional dialogue and holistic thinking.

Flexibility: simple framework, adaptable to any context without rigid procedural rules.
Comprehensive yet concise: integrates internal & external viewpoints on a single page/matrix.
Universality: graspable by multidisciplinary teams—marketing, operations, finance, HR, etc.

Misclassifying internal vs. external factors—double-check categorisation.
Listing events instead of conditions; an event (e.g., “Olympic Games $2024$ ”) is external and time-bound, whereas a condition (e.g., “global interest in sports”) is broader.
Producing a long, unfocused list → prioritise factors by materiality and time horizon.
Using SWOT to analyse an industry—remember: sectors themselves do not have S/W/O/T.

SWOT is a foundational, user-friendly diagnostic tool that enables managers to map out internal capabilities and external conditions.
When correctly applied, as illustrated by Under Armour, it supports informed strategic decision-making and resource allocation.
Ultimately aids managers in positioning their organisations to leverage strengths, remedy weaknesses, pursue opportunities, and mitigate threats.

End of study notes.