SWOT & PESTELWeek 8 Business IT/Systems

Organisations

• ‘John Bryson quotes Sun Tzu, from the Art of War :

•“So it is said that if you know others and know yourself, you will not be imperilled in a hundred battles; if you do not know others but do know yourself, you win one and lose one; if you do not know others and do not know yourself, you will be imperilled in every single battle.”

Organisation Definition

• At this stage I would like to keep an organisation definition very broad:

‘constructs formed by social groupings to achieve a specific goal using designed and coordinated activities’ *

* adopted but also have a look at Farnham & Horton;

Organisation Analysis

• History of Organisations

– Organisations have always been an integral feature of civilisation

– However, since the start 20th Century and the onset of large organisation more research has focused on organisations

• Organisations as Systems

– Organisations can be viewed as systems and as such can be categorised with commonalities and differences

Organisation Perspectives

– Accounts

– School

– Retail

– Local Authority

– Airport

– Manufacture

– Hospital

– Hotel

– Leisure Centre

– Pharmaceutical Company

– Bank

– Expectations Setting

– Industry (Nationalised/Private)

The range of organisation types is large:

Differences & Common Factors

• Differences factors:

– Cultural

– Social

• Common factors:

– People

– Objectives

– Structure

• The fourth factor?:

– Management: the organisations activities and its members efforts are directed and controlled towards the objectives

Interaction of people in order to achieve objectives which forms the basis of an organisation. Some form of structure is needed by which people’s interaction and efforts are channelled and coordinated.

Group Example

Organisation Classification• The classification of organisation is an interesting

and well documented subject area (see for example Blau and Scott) the detail of which we do not need to focus on at this time.

• However, a good starting point for us to take is considering organisations as ‘open systems’:

– ‘Organisations which take inputs from the environment (outputs from other systems) and via activities transform these inputs into outputs (inputs to other systems) to achieve some objective.

Organisation as an Open System

Environmental Interactions• Organisations are strongly influenced by a range

of volatile, external and environmental factors.

• Open Systems are open to and continually interact with the external environmental’ of which it is part

• In order to be:

– Effective, Survive and Grow

• It must respond to the:

– Opportunities, Challenges, Risks and Limitations;

presented by the external environment.

External Environment

Common Techniques – Decision Matrix

Support Technique - PESTEL:• One popular technique for analysing the general

environment is the PESTEL analysis:

– Political

– Economic

– Socio-Cultural

– Technological

– Environmental and

– Legal influences

This can be viewed as a ‘organisational macro’ perspective.

Ref: Lynch, R. Corporate Strategy, fourth edition, Financial Times Prentice Hall (2006), p. 84

Further Support Technique - SWOT

• A more ‘organisational micro’ perspective of analysing the organisation

• Tied in with the concept of Synergy (Ansoff) :

– Synergy results when the whole is greater than the sum of the component parts

• Seen as positive in common field mergers e.g. Product expansion

• Seen as negative in different field mergers e.g. Different operating methods or markets

SWOT• A SWOT analysis starts with defining an objective. A

SWOT analysis usually incorporated into strategic planning.

– Many feel it is bets to first segment the organisation area first.

• Strengths: characteristics of the business or team that give it an advantage over others in the industry.

• Weaknesses: are characteristics that place the firm at a disadvantage relative to others.

• Opportunities: external chances to make greater sales or profits in the environment.

• Threats: external elements in the environment that could cause trouble for the business.

SWOT (or ‘WOTS up’!)

SWOT

SupportCapitalise

Invest Identify

http://www.youtube.com/watch?v=mH1EljfXp-0&feature=relatedhttp://www.youtube.com/watch?v=mH1EljfXp-0&feature=related

SWOT analysis

• STRENGTHS – inward looking

• WEAKNESSES – inward looking

• OPPORTUNITIES – outward looking

• THREATS – outward looking

20

SWOT analysis

INTERNAL

STRENGTHS

Assets Expertise

WEAKNESSES

Resources Manpower

EXTERNAL

OPPORTUNITIES

Market niche

Trend

THREATS

Competition

“Red Tape”

Limitations of SWOT

• The volume of S, W, O, Ts can become unmanageable

• Can lead to disagreements

• Leads to the question, “so what do we do now?”

SWOT Analysis - Method

SO

(exploitation of strength to gain an advantage)

WT

(minimise/avoid a weakness or threat)

SWOT Analysis - method

1. LIST Internal STRENGTHS & WEAKNESSES

2. LIST External OPPORTUNITIES & THREATS

3. PRIORITISE THE LISTS and GIVE RANK

4. PRODUCE A SWOT MATRIX = 4 sets of possible strategies:-

SWOT MATRIXStrengths (S)

Make a LIST

Weaknesses (W)

Make a LIST

Opportunities (O)

Make a LIST

SO Strategies

WO Strategies

Threats (T)

Make a LIST

ST Strategies

WT Strategies

Internal

External

SWOT Example

Using the steps from previous slides provide a SWOT analysis and matrix for an SME researching :

e.g. “Consumer E-commerce”

Strengths

S1. Strong Government support

S2. Tradition of retail innovation

S3. Potential customer confidence

S4. Development of search engines

S5. Capability of focused marketing

S6 Good benchmarks with trusted brands

Weaknesses

W1 Lack of culture awareness in SMEs

W2 Possible outsourcing costs of design

W3 Inexperience of internet marketing

W4 Limited payment systems

W5 Limited knowledge of possible market

W6 Lack of employee skills

Opportunities

O1 Possible increase in market share

O2 Potential for cheaper goods (volume)

O3 Potential for growth via “virtual means”

O4 Set up costs reducing

O5 Continuous development of technology

Threats

T1 Consumer Reluctance

T2 Problems with delivery and

after sales support

T3 Fears over data security

T4 High profile of bad experiences

T5 Viruses and fraud

T6 In-store ‘fight backs’

SWOT MATRIX eg:

SO StrategiesS5. Capability for focused marketing

O1. Possible increase in market share

WO Strategies

ST Strategies WT Strategies

Action point = INTERNAL PRODUCT/SERVICE ANALYSIS TO DECIDE ON AREA TO FOCUS MARKETING CAMPAIGN