Post on 14-Jan-2015
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• A firm's strengths are its resources and capabilities that can be used for developing a competitive advantage.
• Strong brand names • Good reputation among customers • Affiliation/registeration with some
reknowned Institutions.
• The absence of certain strengths are a weakness.
• Lack of patent protection • A weak brand name • Poor reputation among customers • High cost structure • Lack of access to key distribution
channels
• In some cases, a weakness may be the flip side of a strength.
• For example, a firm has a large amount of manufacturing capacity.
• While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.
• The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include:
• An unfulfilled customer need • Arrival of new technologies • Loosening of regulations • Removal of international trade barriers
• Changes in the external environmental also may present threats to the firm. Some examples of such threats include:
• Shifts in consumer tastes away from the firm's products
• Emergence of substitute products • New regulations • Increased trade barriers
• To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed.
• The SWOT matrix, can be changed into what is known as the TOWS Matrix that is shown on the next slide:
TOWS Analysis STRENGTHS WEAKNESSES
OPPORTUNITIES
THREATS
S-O STRATEGIES W-O STRATEGIES
S-T STRATEGIES W-T STRATEGIES
• S-O strategies pursue opportunities that fit well the company's strengths.
• W-O strategies overcome weaknesses to pursue opportunities.
• S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats.
• W-T strategies make a defensive plan to prevent the firm's weaknesses from making it susceptible to external threats.
• Albert Humphrey (1960s-70s)1.Satisfactory• Opportunity• Fault• Threat• SOFT Analysis
• Urick and Orr (1964)
• From SOFT to SWOT
• LET ME TELL YOU . . . .
• SWOT IS A USELESS THING
• Planned Strategy:
• 1-Goal or objective
• 2-SWOT
• 3- Evaluation SWOT Results
• 4- Action
Aim
Assess
Activate
Apply
Goal or objective Apply SWOT
Evaluate SWOT Results
Take action
Strengths and Oppertunities
• In business since 19xx.MD has xx years of experience in the industry and as head of the company.
• Sales and profits have grown steadily
Weakness and Threats
• Jnr. Manager has no experience or education for his position of Sales Manager
• Marketing assistant has little marketing experience
A SWOT analysis with the objective of: "To double the business in the next three years." .
• Sales and profits were Rs.xx million in 19xx.
• MD responds personally to all customer complaints
• MD wants to get involved in the field of marketing
• "We have an excellent reputation for quality," MD
• MD says that he is not a good executive
• Employees feel free to complain directly to MD
• MD can't find a good General Manager at the salary he wants to pay
• Company is having trouble selling GEMA (its new product)
• MD is worried about converting 5,000 GEMA into cash
• Manufactured Products," "Modifications" and "Repairs" have Gross Profit margins greater than 50%
• Stock held increased too much during recent months with resulting interest cost of RS.4,000 a month
• MD can't break the habit of getting involved in everything
• The company does not appear to have historical trend data
• They spent Rs.992,000 advertising GEMA and they have trouble selling it.
• No track record of previous years growth rate
• Difficulties in Selling new product• What is more realistic then? . . . . .• Redefine the objective as to INCREASE
THE BUSINESS IN NEXT 3 YEARS.
• Step 1 – Information collection –In the here and now…
“BE REALISTIC! AVOID MODESTY.”
• Step 2 – What might be…
• Step 3 – Plan of action…
• Assemble SWOT group.• Manage necessary components.• Set up meeting times• Distribute/ complete the tool to individuals• In the group meeting, combine individual
answers. Collaborate on each category. Complete the analysis.
• Discuss how to use the information gathered from the SWOT for your next steps.
• SWOT may result in an exercise for the sake of an exercise (i.e. useless).
• Trust . . . . 1- in your SWOT Team2- in your abilities to face the challenges the weakness and threats• Ability and willingness to implement
change• Diversity• Time