Enterprise Leadership

Responsibilities
Enterprise Leadership
 Enterprise Leadership
Successfully implementing Six Sigma methodologies within an
organization requires the commitment of the company’s top leadership.
Six Sigma focuses on cross-functional and enterprise-wide processes.
Therefore, leadership and support from the executive staff, specifically
the CEO, is crucial. Successfully implementing Six Sigma
methodologies within an organization requires the commitment of the
organization’s leadership. Six Sigma focuses on cross-functional and
organization-wide processes. Therefore, leadership and support from
the organization’s executive staff, specifically the top leaders, is crucial.
Without this support and leadership, a Six Sigma initiative will fail to
effectively address the organization’s top level system issues.

An important leadership role within a Six Sigma deployment program is

the Project Champion (sometimes called the Project Sponsor).
 Stakeholders
In addition to their tactical qualifications, Champions and executive
leadership must have a firm grasp of the company’s stakeholders. A
stakeholder is anyone who has an interest in the business. This broad
group includes but is not limited to:

Investors
Customers
Vendors
Employees
Employees’ families
Neighboring communities
Local, city, and federal government
Allocating Resources: Staffing Support

Effective Six Sigma projects cannot happen

without the appropriate decision-makers taking
ownership of the project. The Project Champion,
as well as the group(s) funding the project, must
stay involved from the beginning and through
completion. Working with the Project Champion,
the organization leadership must provide
resources in the form of personnel and funds to
accomplish the project.
Allocating Resources: Other Resources
In addition to staffing dedication, the Project Champion must coordinate
acquisition of other resources needed for the project, which could
include:

Software
Hardware
Additional workspace (additional phone, Ethernet, and wireless
connectivity support)
Additional meeting space
Meeting room supplies
Office supplies

The magnitude of these resource requirements will depend, of course,

on the size and length of the project.
Team Management Lesson
Key Concepts and Tools
Team Formation
 What is a team?
A team is a small number of people with
complementary skills who are committed to a
common purpose, performance goals, and
approach for which they hold themselves
mutually accountable

• Small Number
• Complementary Skills
• Common Purpose & Performance Goals
• Common Approach
• Mutual Accountability
Learning Average Retention
Pyramid Rate
Lecture 5%

Reading 10%

Audio-Visual 20%

Demonstration 30%

Discussion Group 50%

Practice by Doing 75%

Teach Others / Immediate Use 90%

 Team Composition and Roles
• Right people should be assigned to the team.
• Each person should be selected based on his or her knowledge and
expertise.
• In addition to selecting the appropriate people, there are also key
roles that are essential to the overall team's success:
- Meeting leader
- Facilitator
- Team member
- Recorder
- Timekeeper
- Encourager/gatekeeper
- Devil’s advocate.
 Five Issues to be Considered
in Team Building

1. Interdependence

2. Goal Specification

3. Cohesiveness

4. Roles and Norms

5. Communication
 Stages of Team Development
(adapted from Forsyth, 1990)
Theory on team development predicts that teams, like individuals,
pass through predictable, sequential stages over time. The most well
known of these models is that of Tuckman (1965), who labeled the
stages of team development as forming, storming, norming,
performing, and adjourning.

Forming Storming Norming Performing

Adjourning
 Stages of Team Development
(continued)
Stage Major Processes Characteristics
Exchange of information; Tentative interactions; polite
1. Forming increased discourse; concern over
interdependency;
(orientation) ambiguity;self-discourse
task exploration;
identification of
commonalties

2. Storming Criticism of ideas; poor

Disagreement over attendance; hostility;
(conflict) procedures; expression of polarization and
dissatisfaction; emotional coalition forming
responses; resistance
3. Norming Agreement on procedures;
Growth of cohesiveness reduction in role ambiguity;
(cohesion) and unity; establishment of increased "we-feeling"
roles, standards, and
relationships
 Stages of Team Development
(continued)
Stage Major Processes Characteristics
Goal achievement; Decision making; problem
4. Performing high task orientation; solving; mutual cooperation
emphasis on performance
(performance) and production

5. Adjourning Disintegration and withdrawal;

Termination of roles;
increased independence and
completion of tasks;
(dissolution) reduction of emotionality; regret
dependency
 Team Leader

The team leader is the person who manages the team: calling and,
if necessary, facilitating meetings, handling or assigning
administrative details, orchestrating all team activities, and
overseeing preparations for reports and presentations.
 Team Members

Team members--typically three to four per team--are the rest of the

people involved in the project. Team members are appointed by the
Team leader or the Stakeholders. The nature of the project dictates
who they are.
Characteristics of a Good Team Leader
• Works for consensus on decisions
• Shares openly and authentically with others regarding
personal feelings, opinions, thoughts, and perceptions about
problems and conditions
• Involves others in the decision-making process
• Trusts, supports, and has genuine concern for other team
members.
• "Owns" problems rather than blaming them on others
• When listening, attempts to hear and interpret communication
from other's points of view
• Influences others by involving them in the issue(s)
 Code of Cooperation

• Should be developed, adopted, improved or

modified by all team members.

• Should always be visible to team members.

• Sets a norm for behavior (Code of Ethics for

your team)
 Code of Cooperation
1. EVERY member is responsible for the team's progress and success.
2. Attend all team meetings and be on time.
3. Come prepared.
4. Carry out assignments on schedule.
5. Listen to and show respect for the contributions of other members;
be an active listener.
6. CONSTRUCTIVELY criticize ideas , not persons.
7. Resolve conflicts constructively.
8. Pay attention, avoid disruptive behavior.
9. Avoid disruptive side conversations.
10. Only one person speaks at a time.
11. Everyone participates , no one dominates.
12. Avoid long anecdotes and examples.
13. No rank in the room.
14. Respect those not present.
15. Ask questions when you do not understand.
16. Attend to your personal comfort needs at any time but minimize team
disruption.

Adapted from the Boeing Airplane Group team Member Training Manual
An Effective Code of Cooperation
1. Help each other be right, not wrong.
2. Look for ways to make new ideas work, not for reasons they won’t.
3. If in doubt, check it out! Don’t make negative assumptions
about each other.
4. Help each other win, and take pride in each other’s victories.
5. Speak positively about each other and about your organization at every
opportunity.
6. Maintain a positive mental attitude no matter what the circumstances
7. Act with initiative and courage, as if it all depends on you.
8. Do everything with enthusiasm; it’s contagious.
9. Whatever you want; give it away.
10. Don’t lose faith.
11. Have fun! Ford Motor Company
 Problems Teams Face
• Participation
• Organization
• Communication
• Group Thinking
 Common Teaming Problems
• Lack of commitment
• Dominating participants
• Reluctant participants
• Unquestioned acceptance of opinions as facts
• Rush to accomplishment
• Attribution
• Wanderlust: (departure from the subject)
• Feuding members
COMMUNICATION ROADBLOCKS
Directing Demoralizing

Interrupting Persuading

Judging Ridiculing

Name Calling Warning

Face-To-Face Communication
100 %

55%

37%

8%
0%
Non-Verbals Tone of Voice Words (Verbal)
 Constructive Feedback
 Starting with the team leader and moving counter
clockwise around the table, each team member
should:
• consider the activities and tasks that the team has been involved
in so far this semester
• then give POSITIVE constructive feedback to another team
member using the constructive feedback structure of
When You : I feel : Because
• each team member, as they receive the feedback, should listen
reflectively and acknowledge that they have received the
feedback (e.g., say ‘Thank You.’)
 Repeat the previous process but this time move
clockwise and give constructive feedback
 Discuss the feedback and determine what team
norms might be appropriate (i.e., useful or needed)
Constructive Feedback

• You ARE expert on

– other people’s behavior
– your feelings

• You are NOT an expert on

– your behavior
– other people’s feelings
 How to Give Constructive
Feedback
1. “When you . . .” Start with a “When you . . .” statement
that describes the behavior without
judgment, exaggeration, labeling,
attribution, or motives. Just state the
facts as specifically as possible.
2. “I feel . . .” Tell how their behavior affects you. If
you need more than a word or two to
describe the feeling, it’s probably just
some variation of joy, sorrow, anger, or
fear.
3. “Because I . .
Now say why you are affected that
.” way. Describe the connection between
the facts you observed and the feelings
they provoke in you.
 How to Give Constructive
Feedback (cont.)
4. (Pause for Discussion) Let the other person respond.

5. “I would like . . .” Describe the change you want the

other person to consider ...

... and why you think the change

6. “Because . . .” will alleviate the problem.

Listen to the other person’s

7. “What do you think . . .” response. Be prepared to discuss
options and reach consensus on a
solution.
 How to Give Constructive
Feedback (Example)
“When you are late for team
1. “When you . . .” meetings,

I get angry ...

2. “I feel . . .”
... because I think it is wasting the
time of all the other team members
3. “Because I . . .” and we are never able to get through
all of the agenda items.”
.......
4. (Pause for
Discussion) “I would like you to consider finding
some way of planning your schedule
that lets you get to these team
5. “I would like . . .” meetings on time. “
“Because that way we can be more
productive at the team meetings and
we can all keep to our tight
schedules.”
6. “Because . . .”
 Team Formation
• Define and describe various types of teams, and determine what team
model will work best for a given situation. Identify constraining factors
including geography, technology, schedules, etc.

• Define and describe various roles and responsibilities, including leader,

facilitator, coach, individual member, etc.

• Define and describe various factors that influence the selection of team
members, including required skills sets, subject matter expertise,
availability, etc.

• Identify and describe the elements required for launching a team, including
having management support, establishing clear goals, ground rules and
timelines, and how these elements can affect the team’s success.
 Team Facilitation
• Describe and apply techniques that motivate team
members and support and sustain their participation and
commitment.

• Facilitate the team through the classic stages of

development: forming, storming, norming, performing,
and adjourning.

• Identify and use appropriate communication methods to

reports progress, conduct milestone reviews, and
support the overall success of the project.
 Team Dynamics
• Identify and use various techniques to overcome
various group dynamic challenges, including
overbearing/dominant or reluctant participants,
feuding and other forms of unproductive
disagreement, unquestioned acceptance of
opinions as facts, groupthink, floundering,
rushing to accomplish or finish, digressions,
tangents, etc.
Organizational Roadblocks
Barriers to Change
 Barriers to Change
Barriers to change or organizational
improvement (also called ―roadblocks‖) are
defined as anything that blocks or filters the
implementation or realization of continual
improvement. The most significant barriers
are often inherent in an organization’s very
structure and culture.
 Using Communication Plans
While vertical and horizontal structures may
exist, one of the most effective ways to
reduce the problems associated with the
communication barriers that may be
encountered is to create a communication
plan.
 Sample Communication Plan
As seen in the chart below, some elements that should be considered
for a communication plan include:
The audience
The message to be delivered (specific to each group)
How the message will be communicated
Frequency and timing of updates
Responsible person(s) or team(s)
Plan for feedback
 Overcoming Cultural Barriers
The cultural barriers to organizational
improvement are rooted in reactionary
attitudes and beliefs, such as mutual distrust
and fear of change, along with strategic
shortcomings, such as management’s failure
to create a shared organizational vision.
 Overcoming Cultural Barriers
A basic methodology for overcoming cultural barriers includes the following steps.

1. Establish a sense of urgency. Examine the market to identify crises, potential crises,
and major opportunities, and then discuss them with the rest of the organization.

2. Form a powerful guiding coalition. Assemble a group with enough power to lead the
change effort and encourage its members to operate as a team.

3. Create or modify a vision. Create a vision to help direct the change effort and
develop strategies for achieving that vision.

4. Communicate the vision. Use every vehicle possible to communicate the new vision
and strategies, including the example of the guiding coalition.
 Overcoming Cultural Barriers
5. Empower others to act on the vision. Change systems or structures that seriously
undermine the vision. Encourage risk-taking and nontraditional ideas, activities, and
actions.

6. Plan for and create short-term wins. Plan for visible performance improvements,
and recognize and reward the employees involved in them.

7. Consolidate improvements and produce still more change. Use increased

credibility to continue changing systems, structures, and policies that don’t fit the vision. If
necessary, reinvigorate the process with new projects, themes, and change agents. As
needed, hire, promote, and develop employees who can implement the vision.

8. Institutionalize new approaches. Articulate the connections between new behaviors

and organizational success while instilling the vision in the next generation of
organizational leaders.
 Change Management
Change management is the practice of
planning and directing changes in an
organization. Change management implies it
is possible to introduce change deliberately
and steer its development, rather than allow
change to occur naturally and unpredictably.
 Types of Change Agents
A change agent is an individual from inside or outside an organization
who facilitates change within that organization. A change agent may or
may not be the initiator of the change effort.

There are two types of change agents:

Internal change agents are employees within the organization who

are commissioned by management to facilitate the change process.
The employees may be at the operative, management, or upper-
management level.

External change agents are people outside the organization who are
hired to help facilitate the process.
 Motivation and Quality
People are the key to quality, but no two people
are alike in their abilities to perform or in their
motivation and persistence to perform. Quality
professionals can provide the systems, tools, and
methods for quality improvement, but all of the
employees must get on board for a quality
improvement effort to be successful.
 Motivation
Motivation can be defined as an emotion or desire
within a person causing that person to act.
Managers need to understand employee
motivation and needs so they can build and
sustain employee enthusiasm. In the event that
different or opposing outlooks surface,
management must know how to help employees
recognize common goals and work together to
achieve them.
 Organizational Process
Management and Measures
Impact on Stakeholders
 What is a stakeholder?
A stakeholder is anyone who has an interest
in the business. This broad group includes
investors, customers, vendors, employees,
employees' families, neighboring
communities, as well as local, city, and
federal government. Each stakeholder will
have a different interest based on its
relationship with the business.
 What is an owner?
Quality narrows the definition of owner to a
process owner, a senior manager responsible for a
process. This Process Owner will lead the
improvement effort for his or her area of
responsibility, identify all stakeholders within the
process and thoroughly understand all the relevant
process elements, process flows, and process
boundaries as well as associated measurements
to enable process improvement.
 Which Stakeholders and Owners
Should be Included on My Project?
 Organizational Process
Management and Measures
Critical-to x (CTx) Requirements
 Critical-To (CT) Matrix
Creating a critical-to (CT) matrix helps translate customer feedback into
project goals and objectives. By identifying the vital few qualities that outweigh
the trivial many, a CT matrix shows the qualities to focus on for the greatest
impact. This is accomplished by sorting the customer’s needs into the following
characteristics:

 Critical-to-quality (CTQ)
 Critical-to-delivery (CTD)
 Critical-to-cost (CTC)

These characteristics are weighed against a fourth characteristic: Critical-to-

process (CTP). A formula is applied that will help to reveal customer
satisfaction, business success, and product/service quality.
 Critical-To Satisfaction Relationship Matrix

The customer satisfaction needs are quality, price, and delivery. The supplier
satisfies these needs by reducing defects, cost, and cycle time to satisfactory
levels.

Critical-to-Customer-Satisfaction = CTQ and/or CTP and/or CTD

A Critical-to‖ (Customer Satisfaction) Relationship Matrix (Prioritization

Matrix) identifies priority operations, parts, tools, or tool characteristics that
relate to systems, sub-systems, parts, or part features.

Remember: Y = f(X) or product depends on process. Highest-scoring process

characteristics should receive priority attention.
 Organizational Process
Management and Measures
Benchmarking
 Benchmarks
Benchmarking is the process of identifying best practices in organizations with
comparable processes or comparable customer issues for the purpose of
determining the current state and a desired future state. It is a critical
component of a robust quality program in managing business processes. For
example, customer satisfaction scores for a hotel may be compared to those
for a bank or hospital. There are several important differentiating factors to
consider:

 Benchmarking is not just for acquiring competitive information for

comparison.
 Benchmarking involves setting objectives.
 Just like Six Sigma, benchmarking should be considered a process that is
ongoing and becomes a way of doing business.
 Advantages of Benchmarking
 Measures current status
 Enables non-arbitrary goals/targets to be established
 Identifies performance gaps
 Identifies better organizations
 Improves existing processes and performance
 Seeks a competitive edge
 Promotes a learning culture
 Serves as a continuous improvement process
 What to Benchmark
When considering what to benchmark, bring together a team of people positioned to respond to
the following questions:
 What can we benchmark (processes, methods, results, etc.)?
 What are the most critical measures of success for the organization?
 Revenue
 Production levels
 Marketing campaigns
 Customer satisfaction
 Maintaining cost levels
 Of those areas, which are causing the most trouble?
 What does the customer desire in the organization’s marketplace?
 In which direction is the industry moving, and how is the organization positioned to move in that
direction?
 What competitive pressures affect the organization’s performance?
 What product features are critical for customers?
 What issues exist in the manufacturing process?
 What issues exist for customer service?
 What performance trends in the organization may signal problems ahead?
 The Benchmarking Process
Benchmarking must focus on key process indicators. The core process steps
for a benchmarking program:

1. Identify what to benchmark.

2. Select organizations with comparable processes or comparable customer
issues.
3. Determine data collection methods.
4. Analyze the data and findings.
5. Establish goals based on the data analysis.
6. Develop action plans to obtain the goals.
7. Implement the action plans.
8. Conduct ongoing evaluation and re-evaluation of goals and benchmarking
data.
 Benchmarking as a Project
Planning
1. Identify what is to be benchmarked
2. Identify comparative companies
3. Determine data collection methods and collect data
Analysis
1. Determine current performance ―gap‖
2. Project future performance levels
Integration
1. Communicate benchmark findings and gain acceptance
2. Establish functional goals
Action
1. Develop action plans
2. Implement specific actions and monitor progress
3. Recalibrate benchmarks
Maturity
1. Leadership position attained
2. Practices fully integrated into process
 Four Benchmarking Levels
Level 1: Internal
Comparing a process in one function with that of another function or comparing the same
process across locations. Data are fairly easy to collect; however, focus is limited and
possibly biased.
Level 2: Competitive
Comparing with direct competitors, either locally, nationally, or worldwide. The organization
may not be viewed as a competitor when comparing with other organizations outside the
local market area. In this case, the data can be more relevant, but difficult to collect.
Typically, there will be resistance from a local direct competitor. Also, ethical and legal
issues can be a concern.
Level 3: Functional
Comparing processes to other organizations with similar processes in the same function,
but outside the industry.
Level 4: Generic
Finding organizations that have best-in-class processes and approaches from which one
may learn and translate to improvements at one’s own organization. When you think outside
the box, there is a high potential for discovering innovative practices and usually little
resistance to partnering with a non-competitor. There can be problems and high costs in
translating practice learned to one’s own work environment.
Business Performance
Measures
Balanced Scorecard
 Balanced Scorecard
The balanced scorecard (BSC) is a strategic
measurement and management system that
translates an organization’s strategy into four
perspectives:
Financial: To achieve financial success, ―How
should we appear to our shareholders?”
Customer: To achieve our vision, ―How should
we appear to our customers?
Internal business processes: To achieve
shareholder and customer satisfaction, ―What
business processes must we excel at?
Learning and growth: To achieve our vision,
―How will we sustain our ability to change and
improve?
Business Performance
Measures
Key Performance Indicators (KPIs)
Key Performance Indicators (KPIs)
There are numerous performance indicators used in Six
Sigma projects.
 Defects per Unit (DPU)
 Defects per Million Opportunities (DPMO)
 Throughput Yield, also called Yield
 Rolled Throughput Yield (RTY)
 Parts per Million (PPM)
 Cost of Poor Quality (COPQ)
Financial Measures
Project Financial Benefits
 Project Financial Benefits
“How much value does the organization realize as a direct result of this
project’s success?”

The financial factors are:

 Cost-benefit analysis
 Return on assets (ROA)
 Return on investment (ROI)
 Net present value (NPV)
 Financial Benefits Defined
Just as there are costs associated with COPQ, there are also financial benefits
of implementing changes that result from successful Six Sigma projects.

These financial benefits may include:

 Additional revenue from increased sales
 Cost avoidance or mitigation
 Faster return on investments
 Lower production costs
 Lower costs associated with customer service
 Increased cash flow
 Enhanced profitability of existing services or products
 Increased revenue of existing sources
 Increased value in organization stock or perceived value
 Cost-Benefit Analysis
To perform a cost-benefit analysis for the project, complete these steps:
Step 1: Identify the project benefits.
 Quantify the expected financial benefits assuming the project reaches the expected
value.
 Express the benefits in financial amounts with specific time limits. For example, the
project should realize an increase in sales of $156,000 per year beginning year two
that should last for three years.
Step 2: Identify the project costs.
• Limit the project costs to those dollars expended as a result of the project.
Step 3: Calculate whether benefits exceed costs.
Step 4: Determine whether the project should be implemented.
• Even if the benefits do not exceed the costs, senior management may elect to
complete the project. For example, improving the customer satisfaction rating of
checking and savings account customers of the bank is a benefit that may not exceed
the cost of a project, but could impact future consumer-lending relationships. If this is
the case, determine what could be done to enhance the benefits and minimize the
project costs.
• A cost-benefit analysis may also be initiated after a project has been completed to
determine whether the project should have been undertaken in the first place.
 Cost-Benefit Analysis: Results
The results of a cost-benefit analysis may be any of the following:

• The overall benefits and costs are compared to determine whether

benefits exceed costs on a straight dollar-for-dollar basis.

• The benefits and costs are used within a ratio such as ROA or ROI.
These ratios can express on a relative basis the expected return for
use of the assets or the investment in the project.

• The information may also be used in a NPV equation if there is an

issue with benefits and costs being strung out over a longer period
of time.
 Cost-Benefit Analysis:
Hard Dollars vs. Soft Dollars
Hard dollars are those that allow companies to do the same amount of business with
fewer employees (cost savings) or handle more business without adding people (cost
avoidance).

Soft dollars are those such as increased customer satisfaction, reduced time to market,
cost avoidance, lost profit avoidance, improved employee morale, enhanced image for
the organization, and other intangibles that may result in additional savings to the
organization but are harder to quantify.

One should note that each organization may define hard and soft dollars differently. Soft
dollars are typically high and have potential for future value, while hard dollars are low
and may not even show a break-even relationship with the project costs.

Soft dollars are real but are harder to quantify and forecast, and they may be viewed
differently from company to company.
 Return on Assets (ROA)
Return on assets (ROA) is sometimes used for Six
Sigma projects to determine whether the use
of organization assets is warranted based on the
return realized.

The formula for ROA is:

ROA = Net Income/Total Assets

When applied to a project:

• Net income refers to expected earnings that result directly from the
project’s results.
• Total assets refer to the value of the assets applied to a project.
 Return on Investment (ROI)
Return on investment (ROI) is also used for Six Sigma
projects to determine whether the investment in the project
is warranted based on the return realized.

The formula for ROI is:

ROI = Net Income/Investment

When applied to a project:

• Net income refers to expected earnings that result directly from the
project’s results.
• Investment refers to the value of the outlay made in the project.
 Net Present Value (NPV)
A NPV allows the calculation of the current benefit of a
project for each window of time and over the total duration
of the project for all time periods. If the project NPV is
positive, then the project is usually approved for further
consideration.
 SWOT
Analysis

S W O T
SWOT Analysis

Learning Objectives
What is
is SWOT
SWOTAnalysis?
Analysis?

Aim of SWOT Analysis

Who needs SWOT Analysis?

How to conduct SWOT Analysis?

Benefits & Pitfalls of SWOT Analysis

Brainstorming & Prioritization in SWOT Analysis

Tips & Exercise for SWOT Analysis

Example text
Go ahead and replace it with
your own text. This is an
example text.

Your own footer Your Logo

 What is SWOT Analysis?

Acronym for Strengths,

Weaknesses, Opportunities,
Strengths and Threats.
Technique is credited to
Stanford University in the
1960s and 1970s.

Planning tool used to

understand Strengths,

Oppurtunity
SWOT Weakness
Weaknesses, Opportunities, &
Threats involved in a project /
Analysis business.
Used as framework for
organizing and using data
and information gained from
situation analysis of internal
and external environment.
Technique that enables a
Threats group / individual to move from
everyday problems / traditional
strategies to a fresh
perspective.
What is SWOT Analysis?

STRENGTHS

Characteristics of the business or a team

that give it an advantage over others in
the industry.
Positive tangible and intangible
attributes, internal to an organization.

Beneficial aspects of the organization

or the capabilities of an organization,
which includes human competencies,
process capabilities, financial
resources, products and services,
customer goodwill and brand loyalty.

Examples - Abundant financial resources,

Well-known brand name, Economies of
scale, Lower costs [raw materials or
processes], Superior management talent,
Better marketing skills, Good distribution
skills, Committed employees.
What is SWOT Analysis?

OPPORTUNITIES
Chances to make greater profits in the
environment - External attractive factors
that represent the reason for an
organization to exist & develop.
Arise when an organization can take
benefit of conditions in its
environment to plan and execute
strategies that enable it to become
more profitable.
Organization should be careful and
recognize the opportunities and grasp
them whenever they arise. Opportunities
may arise from market, competition,
industry/government and technology.
Examples - Rapid market growth, Rival
firms are complacent, Changing customer
needs/tastes, New uses for product
discovered, Economic boom, Government
deregulation, Sales decline for a substitute
product .
What is SWOT Analysis?

WEAKNESSES

Characteristics that place the firm at a

disadvantage relative to others.

Detract the organization from its

ability to attain the core goal and
influence its growth.
Weaknesses are the factors which do
not meet the standards we feel they
should meet. However, weaknesses
are controllable. They must be
minimized and eliminated.

Examples - Limited financial resources,

Weak spending on R & D, Very narrow
product line, Limited distribution, Higher
costs, Out-of-date products / technology,
Weak market image, Poor marketing skills,
Limited management skills, Under-trained
employees.
 What
SWOT is SWOT
ANALYSIS Analysis?
- THREAT

THREATS

External elements in the environment that

could cause trouble for the business -
External factors, beyond an organization’s
control, which could place the
!
organization’s mission or operation at risk.
Arise when conditions in external
environment jeopardize the reliability
and profitability of the organization’s
business.
Compound the vulnerability when they
relate to the weaknesses. Threats are
uncontrollable. When a threat comes, the
stability and survival can be at stake.
Examples - Entry of foreign competitors,
Introduction of new substitute products,
Product life cycle in decline, Changing
customer needs/tastes, Rival firms adopt
new strategies, Increased government
regulation, Economic downturn.
SWOT Analysis

Learning Objectives
What is SWOT Analysis?

Aim of
of SWOT
SWOTAnalysis
Analysis?

Who needs SWOT Analysis?

How to conduct SWOT Analysis?

Benefits & Pitfalls of SWOT Analysis

Brainstorming & Prioritization in SWOT Analysis

Tips & Exercise

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Aim of SWOT Analysis?

To help decision makers

share and compare ideas.

To bring a clearer
common purpose and
understanding of

S W factors for success.

To organize the
important factors linked
to success and failure
in the business world.
To analyze issues that
have led to failure in
the past.

O T To provide linearity to
the decision making
process allowing
complex ideas to be
presented
systematically.
Take Excellent Notes!

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SWOT Analysis

Learning Objectives
What is SWOT Analysis?

Aim of SWOT Analysis

Who needs SWOT Analysis?

How to conduct SWOT Analysis?

Benefits & Pitfalls of SWOT Analysis

Brainstorming & Prioritization in SWOT Analysis

Tips & Exercise

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Who needs SWOT Analysis?

• When the team has not met its

targets
2 • Customer service can be better
• Launching a new business unit to
pursue a new business
• New team leader is appointed

Business Unit

Management Company
• When supervisor has issues with
work output • When revenue, cost & expense
• Assigned to a new job targets are not being achieved
1 • New financial year – fresh targets 3 • Market share is declining
• Job holder seeks to improve • Industry conditions are
performance on the job unfavorable
• Launching a new business venture
 Who needs SWOT Analysis?
SWOT Analysis is also
required for / during...
Effectiveness in Market
Product Launch

Decision Making

Personal Development Planning

Competitor Evaluation

Product Evaluation
Strategic Planning

Brainstorming Meetings

Goods & Services Evaluation

SWOT Analysis

Learning Objectives
What is SWOT Analysis?

Aim of SWOT Analysis

Who needs SWOT Analysis?

How to
How to conduct
conduct SWOT
SWOT Analysis?
Analysis?

Benefits & Pitfalls of SWOT Analysis

Brainstorming & Prioritization in SWOT Analysis

Tips & Exercise

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How to conduct SWOT Analysis?

1. Analyze Internal & 2. Perform SWOT Analysis 3. Prepare Action Plans

External Environment & Document
How to conduct SWOT Analysis?

1. Analyse Internal & External Environment

How to conduct SWOT Analysis?
How to conduct SWOT Analysis?

1. Analyse Internal & 2. Perform SWOT Analysis 3. Prepare Action Plans

External Environment & Document
 How to conduct SWOT Analysis?

2. Perform SWOT Analysis & Document

Carry your findings forward - Make sure that the
SWOT analysis is used in subsequent planning.
Revisit your findings at suitable time intervals.

Evaluate listed ideas against

Objectives - With the lists compiled,
sort and group facts and ideas in
relation to the objectives.
List Strengths,
Weaknesses,
Create a workshop Opportunities, & threats
environment - Encourage an
atmosphere conducive to the free
flow of information.
Select contributors - Allocate research & information gathering
Expert opinion may be tasks - Background preparation can be
required for SWOT carried out in two stages – Exploratory and
Detailed. Information on Strengths &
Weaknesses should focus on the internal
factors & information on Opportunities &
Threats should focus on the external factors.
Establish the objectives - Purpose of
conducting a SWOT may be wide /
narrow, general / specific.
How to conduct SWOT Analysis?

1. Analyse Internal & 2. Perform SWOT Analysis 3. Prepare Action Plans

External Environment & Document
How to conduct SWOT Analysis?

3. Prepare Action Plan

Once the SWOT analysis has been completed, mark each point with:

Things that MUST be addressed immediately

Things that can be handled now

Things that should be researched further

Things that should be planned for the future

SWOT Analysis

Learning Objectives
What is SWOT Analysis

Aim of SWOT Analysis

Who needs SWOT Analysis?

How to conduct SWOT Analysis?

Benefits &
Benefits & Pitfalls
Pitfalls of
of SWOT
SWOT Analysis
Analysis

Brainstorming & Prioritization in SWOT Analysis

Tips & Exercise

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Benefits & Pitfalls of SWOT Analysis

Benefits of SWOT Analysis

Benefits of
SWOT
Analysis

Knowing the Competion Forecasting

Reviews a company's Provides a variety of information
competitors & benchmarks critical to forecasted variables.
against them to configure Threats, for e.g., can impact a
strategies that will put the Decision Making Tool business's forecast. By
company in a competitive understanding the company's
Provides well-rounded
advantage. advantages & disadvantages,
information that prompt
forecasts will be more accurate.
well-informed decisions.
Benefits & Pitfalls of SWOT Analysis

Benefits of SWOT Analysis

Besides the broad benefits, here are few more benefits of conducting SWOT
Analysis:

Helps in setting of objectives for strategic planning

Provides a framework for identifying & analyzing strengths,

weaknesses, opportunities & threats

Provides an impetus to analyze a situation & develop suitable

strategies and tactics

Basis for assessing core capabilities & competencies

Evidence for, and cultural key to, change

Provides a stimulus to participation in a group experience

Benefits & Pitfalls of SWOT Analysis

Pitfalls of SWOT Analysis

Can be very subjective. Two people rarely come up with the same
final version of a SWOT. Use it as a guide and not as a prescription.

May cause organizations to view circumstances as very simple due

to which certain key strategic contact may be overlooked.

Categorizing aspects as strengths, weaknesses, opportunities &

threats might be very subjective as there is great degree of
uncertainty in market.
To be effective, SWOT needs to be conducted regularly. The pace
of change makes it difficult to anticipate developments.

The data used in the analysis may be based on assumptions that

subsequently prove to be unfounded [good and bad].

It lacks detailed structure, so key elements may get missed.

SWOT Analysis

Learning Objectives
What is SWOT Analysis?

Aim of SWOT Analysis

Who needs SWOT Analysis?

How to conduct SWOT Analysis?

Benefits & Pitfalls of SWOT Analysis

Brainstorming
Brainstorming &
& Prioritization
Prioritization in
in SWOT
SWOT Analysis
Analysis
Tips & Exercise

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Brainstorming & Prioritization in SWOT Analysis

Brainstorming Prioritization

Output from Brainstorming exercise is Prioritized

Begin brainstorming by asking the At the end of the Brainstorming exercise:

following questions: • Reduce the list of strengths & weaknesses to
• What opportunities exist in our no
external environment? more than five distinctive competencies and
• What threats to the institution exist debilitating weaknesses
in • Strengths that are distinctive
our external environment? competencies
• What are the strengths of our • Weaknesses that are debilitating
institution? • Reduce threats and opportunities to the five
• What are the weaknesses of our most
institution? critically important of each.
SWOT Analysis

Learning Objectives
What is SWOT Analysis?

Aim of SWOT Analysis

Who needs SWOT Analysis?

How to conduct SWOT Analysis?

Benefits & Pitfalls of SWOT Analysis

Brainstorming & Prioritization in SWOT Analysis

Tips & Exercise

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 Tips & Exercise

TIPS

Do’s Don’ts
 Be analytical and specific. х Try to disguise weaknesses.
 Record all thoughts and ideas. х Merely list errors and mistakes.
 Be selective in the final evaluation. х Lose sight of external influences and
 Choose the right people for the trends.
exercise. х Allow the SWOT to become a blame-
 Choose a suitable SWOT leader or laying
facilitator. exercise.
 Think out of the box х Ignore the outcomes at later stages of
 Be open to change the
planning process.
Tips & Exercise

TIPS

Introduce the
SWOT method
and its purpose in Be willing to
When your organization breakaway from
conducting a to gain traditional
SWOT analysis, acceptance. methods.
designate a
leader or group
facilitator.

Discuss and record

the results. Prepare a
While doing a written summary of
SWOT analysis the SWOT analysis to
for your job, give to participants.
invite someone
to brainstorm
with you.
Tips & Exercise

EXERCISE

Assume that a car manufacturing company has recently launched its

products. Perform a SWOT analysis for the same.
Tips & Exercise

EXERCISE
Helpful

STRENGTHS WEAKNESSES
• No Competition in the EV • High Price
Segment. • Low aesthetic appeal
• Environment friendly • Small driving range [up to
• Economic to Drive [Rs. 0.4 80 KM]
per km] * • Competition from gasoline
• Government subsidies vehicles
[8%
excise duty] *
OPPORTUNITIES THREATS

• Huge untapped EV • Government incentives

External

market to gasoline vehicles

• Growing demand of • Entry of competitors
green • Stringent safety
technologies requirements anticipated
• Rising fuel costs • Availability of hybrid vehicles
• Growing road congestion
in urban cities
* Hypothetical figures Harmful
Tips & Exercise

EXAMPLE

Mc Donald’s SWOT Analysis

Tips & Exercise
Mc Donald’s
SWOT Analysis INTERNAL

STRENGTHS WEAKNESSES

• Ranks very high on the Fortune Magazine's most • Failing pizza test market thus limiting the
admired list ability to compete with pizza providers.
• Community oriented • High training costs due to high turnover.
• Global operations all over the world • Minimal concentration on organic foods.
• Cultural diversity in the foods • Not much variation in seasonal products .
• Excellent location • Quality concerns due to franchised operations.
• Assembly line operations. • Focus on burgers / fried foods not on healthier
• Use of top quality products options for their customers.

OPPORTUNITIES THREATS

• Opening more joint ventures. • Marketing strategies that entice people from
• Being more responsive to healthier options. small children to adults.
• Advertising wifi services in the branches. • Lawsuits for offering unhealthy foods.
• Expanding on the advertising on being • Contamination risks that include the threat of
more socially responsible e-coli containments.
• Expansions of business into newly developed • The vast amount of fast food restaurants that
parts of the world. are open as competition.
• Open products up to • Focus on healthier dieting by consumers.
allergen free options • Down turn in economy affecting the ability to eat
such as peanut free. that much.
EXTERNAL
Tips & Exercise

Points to Ponder

• Keep your SWOT short and simple, but remember to include important details.
For
example, if you think your communication skills is your strength, include specific
details,
such as verbal / written communication.

• When you finish your SWOT analysis, prioritize the results by listing them in
order of the
most significant factors that affect you / your business to the least.

• Get multiple perspectives on you / your business for your SWOT analysis. Ask
for input
from your employees, colleagues, friends, suppliers, customers and partners.

• Apply your SWOT analysis to a specific issue, such as a goal you would like to
achieve or
a problem you need to solve. You can then conduct separate SWOT analyses on
individual
issues and combine them.