SWOT Analysis in the software industry

Topics: Strategic management Pages: 7 (2220 words) Published: August 14, 2015

Table of contents
II.SWOT Analysis: method description4
III.SWOT Analysis: example4
IV.Background and related literature4

List of figures
Figure 1: A basic SWOT Analysis matrix4
Figure 2: SWOT Analysis for Microsoft (see Appendix for larger version)4

List of Tables
Table 1: The steps that have to be followed in order to carry out a successful SWOT Analysis.4

I. Introduction
In the past twenty to thirty years many changes and developments have taken place in the software industry which started off during the 60s mainly in the United States of America and experienced a revolutionary boom since the 1980s (Steinmueller, 1995). There are many different ways and methods of developing software and planning the strategy of a software development company and as it is shown in many recent research projects. Most of these projects are usually concerned with the way that software is developed and not the way that the strategy of the company as a whole is planned (Cusumano, MacCormack, Kemerer, & Crandall, 2003). Another important factor is which techniques and methods are used to analyze company’s environment and how the strategy is formulated and implemented. In this paper we will try to analyze in detail a very popular method for strategic planning which has been mostly used for product portfolio planning and/or strategic planning on an abstract level (Houben, Lenie, & Vanhoof, 1999). We will focus our interest in the software industry and base our research on the case study of the Austrian software industry as it is presented in (Bernroider, 2002). Additionally, we will try to present certain guidelines, in order to carry out a successful SWOT Analysis for any software development company. This is the method of SWOT Analysis, which was developed from Albert Humphrey during the 1960s, as part of a research project for Stanford University. In the following sections we will try to elaborate on SWOT analysis in Section II, show an example for a software development company in Section III and finally present the background of the method and related literature in Section IV.

II. SWOT Analysis: method description
The initials SWOT stand for Strengths, Weaknesses, Opportunities and Threats. These are the basic elements SWOT analysis which is usually presented as a matrix with four main blocks; one for each element of the SWOT analysis.

Figure 1: A basic SWOT Analysis matrix
As it is quite visible in Figure 1 we also have some other categorizations within matrix of SWOT Analysis; elements concerning the organization itself which are called Internal (Strengths and Weaknesses ), elements which are about the company and its relationship with its environment, named External (Opportunities and Threats),

elements which are Helpful for the organization (Strengths and Opportunities) and elements which are Harmful for the organization (Weaknesses and Threats).

First of all we have to define the four main building blocks of our diagram; Strengths: The strengths of an organization are the core competencies of the company, the key factors which enable it to excel in certain aspects and gain all kinds of profit, whether that is purely economical, organizational or other. Weaknesses: As weaknesses we define the flaws that an organization has, something which means that these weaknesses might lead to serious problems in the company’s strategic planning and might even lead to worse situations, such as becoming a serious threat for the organization’s existence. Opportunities: These are certain steps which will help a company to perform better, generate more profits etc. The opportunities can be of many different perspectives, such as entering a new market, or in creating a new business unit and etc. Threats: As threats we name the potential reasons which might harm a company, such as a new entrant in the main market of...

References: 1. Bernroider, E. (2002). Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: An Austrian Study. European Management Journal , Volume 20, No. 5, pp. 562-573.
2. Cusumano, M., MacCormack, A., Kemerer, C. F., & Crandall, B. (2003). Software Development Worldwide: The State of the Practice. IEEE Software .
3. Grundy, T. (2006). Rethinking and reinventing Michael Porter 's five forces model. Strategic Change , Volume 15, No 5, pp 213-229.
4. Houben, G., Lenie, K., & Vanhoof, K. (1999, August). A knowledge-based SWOT-analysis system as an instrument for strategic planning in small and medium sized enterprises. Decision Support Systems , Volume 26, Pages 125-135.
5. Porter, M. (1998). How competitive forces shape strategy. In M. Porter, On Competition (pp. 21-38). Boston, MA.: Harvard Business School Press.
6. Steinmueller, E. (1995). The U.S. Software Industry: An Analysis and Interpretive History. In D. C. Mowery, The International Computer Software Industry. 1995: Oxford University Press.
7. Ward, J., & Peppard, J. (2008). Strategic Planning for Information Systems, third edition. John Wiley & Sons, LTD.
8. Wilson, R. M., & Gilligan, C. (2005). Strategic Marketing Management, Third Edition: planning, implementation and control. Butterworth-Heinemann.
VI. Appendix
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