Strategic & Scenario Planning in Ranching: Conducting a SWOT Analysis - Part 3 Back »

As mentioned in the article Strategic and Scenario Planning Ranching to Weather the Storm, strategic planning in ranching is a 10 step process. Conducting a SWOT analysis is step 2 in that process after conducting a complete ranch inventory.

SWOT stands for “strengths, weaknesses, opportunities, and threats.”  While it is a basic, straightforward model, it has been a popular business practice for many years because it helps provide direction and serves as a basis for the development of business plans (Johnson et al, 2005).

Conducting a SWOT analysis may not be an easy task, however, no special training, software or other skills are required. The most important requirement for conducting a SWOT analysis is being truly honest about your own ranch operation (Johnson et al, 2005)

To better understand the SWOT components, strengths (S) and weaknesses (W) originate from within the operation; they are internal factors that influence ranch or farm performance and are leverage points for change. The opportunities (O) and threats (T) originate from outside the operation; they are external factors (Gates et al, 2007).

SWOT Example

The best way to organize the different parts of a SWOT is utilize a 2x2 matrix. An example is shown in Table 1.

Table 1. 2x2 matrix for SWOT analysis. Source: Strategic and Scenario Planning in Ranching: Managing Risk in Dynamic Times. Manual No. EC924.

Strengths

  1. Rotational grazing system.
  2. Low cost producer.
  3. College degree.

Weaknesses

  1. Grazing system is labor intensive.
  2. Poor marketing efforts.
  3. Lack of good pasture watering system.

Opportunities

  1. Young person graduating from college who wants to get started in ranching.
  2. Nearby ethanol plant opening.
  3. Hunting and fishing opportunities.

Threats

  1. Lack of labor availability.
  2. Prolonged drought.
  3. Rising corn prices.

 

Completing a SWOT Analysis

There are different factors to consider when completing each category of the SWOT analysis. Below are some example questions to consider when conducting a SWOT (Gates et al., 2007)

Strengths

  • What does your operation do well?
  • What do neighbors and other people see as your strengths?
  • Why do customers like what they buy?

Weaknesses

  • What does your operation not do well?
  • What do neighbors and other people see as your weaknesses?
  • What can I improve?

Opportunities

  • What will markets be doing in the short term and long term?
  • What are my competitors’ weakness?
  • What new relationships could I develop?

Threats

  • What are short and long term weather patterns?
  • Shortage of qualified labor available for the operation?
  • Are there changes in consumer tastes?

Conclusion

Conducting a SWOT analysis is a critical step in the strategic planning process. The SWOT analysis allows you to evaluate the current position of your ranch operation and determine management plans of the future. The SWOT will also help you discover the factors that are important when accomplishing the desired vision for your operation and what factors may prevent you from accomplishing it.

References:

  • Gates, R.N., B.H. Dunn, J. Davis, A. Arenzo, M. Beutler. 2007. Strategic and Scenario     Planning in Ranching: Managing Risk in Dynamic Times. Manual No. EC924.       South
  • Dakota State University, King Ranch Institute for Ranch Management, Texas A&M
  • University-Kingsville.
  • Johnson, J., B. Bennett, S. Beavers, B. Duckworth, W. Polk, B. Thompson. 2005. Developing Business Plans for Agricultural Producers. Department of Agricultural
  • Economics, Texas Cooperative Extension, Texas A&M University.
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