4. SWOT Matrix
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Transcript of 4. SWOT Matrix
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Strategy Formulation
SWOT analysis
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Learning Objective
Explain the components
of a SWOT Analysis.
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SWOT Analysis
Identifying
internal strengths (S)
and weaknesses (W)
and also examining
externalopportunities (O)and
threats (T)STRATEGIC MANAGEMENTDecember'08
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SWOT Analysis
South-Western College Publishing
S
W
OT
Things the company does well.
Things the company does not do well.
Conditions in the external environmentthat favor strengths.
Conditions in the external environmentthat do not relate to existing strengthsor favor areas of current weakness.
Internal
External
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SWOT Analysis
Production Costs Marketing Skills Employee Capabilities
Financial Resources Available Technology Company/Brand Image
Strengths and Weaknesses
INTERNAL
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Wal- Mart SWOT Analysis
Wal-Mart is powerful retail brand.
Wal-Mart has grown substantially over recent years and has
experienced global expansion.
Wal-Mart has a core competence involving its use of IT tosupport its international logistics system.
A focused strategy is in place for HRM and development.
Strengths
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Wal- Mart SWOT Analysis
Wal- Mart is the Worlds largest grocery retailer and
control of its empire, despite its IT advantages, could leaveit week in some areas due to the huge span of control
Since Wal-Mart sell products across many sectors, it may
not have the flexibility of some of its more focused
competitors. The company is global, but has a presence in relatively few
countries Worldwide.
Weaknesses
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SWOT Analysis
Opportunities and Threats
EXTERNAL
Social
Demographic
Economic
Technological
Political/Legal
Competitive
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Wal- Mart SWOT Analysis
To take over, merge with, or form strategic alliances with
other global retailers.
There are tremendous opportunities for future business
expansion.
New locations and store types offer Wal-Mart
opportunities.
Opportunities exist for Wal-Mart to continue with its
current strategy of large, super centres.
Opportunities
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Wal- Mart SWOT Analysis
Being number one means that Wal-Mart is the target of
competition, locally and globally. Being a global retailer means that Wal-Mart is exposed to
political problems in the countries where it has operations.
Intense price competition.
Threats
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Environmental Scanning &
MonitoringEnvironmental scanningis a concept from businessmanagement by which businesses gather information
from the environment, to better achieve a sustainablecompetitive advantage.
To sustain competitive advantage the company must
also respond to the information gathered from
environmental scanning by altering its strategiesand
planswhen the need arises.
http://en.wikipedia.org/wiki/Sustainable_competitive_advantagehttp://en.wikipedia.org/wiki/Sustainable_competitive_advantagehttp://en.wikipedia.org/wiki/Strategyhttp://en.wikipedia.org/wiki/Marketing_planhttp://en.wikipedia.org/wiki/Marketing_planhttp://en.wikipedia.org/wiki/Strategyhttp://en.wikipedia.org/wiki/Sustainable_competitive_advantagehttp://en.wikipedia.org/wiki/Sustainable_competitive_advantage -
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Environmental Scanning & Monitoring-
Techniques
SWOT
I ndustry Analysis
Techniques
Competi tor Analysis
PEST QUEST
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SWOT(Strength-Weakness-Opportunity-Threat)
Identification of threats and Opportunitiesin the environment (External) and strengths
and Weaknessesof the firm (Internal) is thecornerstone of business policy formulation;it is these factors which determine the
course of action to ensure the survival andgrowthof the firm.
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SWOT Analysis
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The SWOT analysis is an extremely useful tool for understandingand decision-making for all sorts of situations in business andorganizations. SWOT is an acronym for Strengths, Weaknesses,
Opportunities, Threats. SWOT analysis came from the research conducted at Stanford
Research Institute from 1960-1970. The background to SWOTstemmed from the need to find out why corporate planning failed.The research was funded by the fortune 500 companies to find out
what could be done about this failure. The Research Team wereMarion Dosher, Dr Otis Benepe, Albert Humphrey, Robert Stewart,Birger Lie.
It all began with the corporate planning trend, which seemed toappear first at Du Pont in 1949. By 1960 every Fortune 500 company
had a 'corporate planning manager' (or equivalent) and'associations of long range corporate planners' had sprung up inboth the USA and the UK.
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Strategic and Creative Use of S.W.O.T
Analysis : Orienting to An Objective
If SWOT analysis does not start with defining a desired
end state or objective, it runs the risk of beinguseless. A SWOT analysis may be incorporated intothe strategic planningmodel.
An example of a strategic planning technique thatincorporates an objective-driven SWOT analysis is
SCANanalysis.
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http://en.wikipedia.org/wiki/Strategic_planninghttp://en.wikipedia.org/wiki/Strategic_planninghttp://www.mbatoolbox.org/stories/storyReader$19http://www.mbatoolbox.org/stories/storyReader$19http://en.wikipedia.org/wiki/Strategic_planning -
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SWOT: Studying Internal & External
Environment
The aim of any SWOT analysis is to identify the key
internal and external factors that are important to
achieving the objective. SWOT analysis groups key
pieces of information into two main categories: Internal factorsThe strengthsand
weaknessesinternal to the organization.
External factorsThe opportunitiesand
threatspresented by the external
environment.
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If a clear objective has been identified, SWOTanalysis can be used to help in the pursuit of that
objective. In this case, SWOTs are:
Strengths: attributes of the organizationthat are helpful to achieving the objective.
Weaknesses: attributes of the organizationthat are harmful to achieving the objective.
Opportunities: externalconditions that are
helpful to achieving the objective.
Threats: externalconditions that areharmful to achieving the objective.
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Examples of SWOTs
Strengths and Weaknesses
Resources: financial, intellectual, location
Cost advantages from proprietary know-how
Creativity / ability to develop new products
Valuable intangible assets: intellectual capital
Competitive capabilities
Big campus selection
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Opportunities and Threats Takeovers
Market Trends
Economic condition
Mergers
Joint ventures
Strategic alliances Expectations of stakeholders
Technology
Public expectations
Competitors and competitive actions Poor Public Relations Development
Criticism (Editorial)
Global Markets
Environmental conditions
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Uses of SWOT Analysis
Corporate planning
Set objectivesdefining what the organisation is intending to do
Environmental scanning Internal appraisals of the organisations SWOT, this needs to include an
assessment of the present situation as well as a portfolio of products/services
and an analysis of the product/service life cycle
Analysis of existing strategies, this should determine relevance from theresults of an internal/external appraisal. This may include gap analysis(compare its actual performance with its potential performance which willlook at environmental factors)
Strategic Issuesdefinedkey factors in the development of a corporate planwhich needs to be addressed by the organisation
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http://en.wikipedia.org/wiki/Gap_analysishttp://en.wikipedia.org/wiki/Gap_analysishttp://en.wikipedia.org/wiki/Gap_analysis -
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Develop new/revised strategiesrevised analysis of
strategic issues may mean the objectives need tochange
Establish critical success factorsthe achievement
of objectives and strategy implementation
Preparationof operational, resource, projects plans
for strategy implementation
Monitoring resultsmapping against plans, taking
corrective action which may mean amendingobjectives/strategies.
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Also;
Use SWOT analysis for business planning,
strategic planning, competitor
evaluation, marketing, business andproduct development and research
reports.
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Handling SWOTs
Strengths (maintain, build and leverage)
Opportunities (prioritise and optimise)
Weaknesses (remedy or exit)
Threats (counter)
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SWOT Analysis
Strengths, Weaknesses,
Opportunities, and Threats
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SWOT Planning and OrganizingTool
organizational strategic planning
public policy development
personal career planning
Helps focuson key issues
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Strengths and weaknesses are generally
internalfactors.
Opportunities and Threats are generally
externalissues.
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Strengths
Consider from both the view of the firm (product) aswell as from customers and competitors
Realistic and not modest
Ones strength is anothers weakness
Questions:
What are the firms advantages over others?
What does the firm do well?
What makes you stand out from your competitors?
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Weaknesses
Consider from internal and external viewpoint Be truthful so that weaknesses may be overcome as
quickly as possible
Ones strength is anothers weakness
Questions.
What is done poorly?
What can be improved?
What should be avoided?
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Opportunities and Threats
Primarily external in nature
Represent characteristics of:
the research environment
growth in potential markets
changes in the competitive, economic, political/legal,
technological, or socio-cultural environments
A threat to some is an opportunity to another.
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Questions on opportunities:
Is there a product/service area that others havenot yet covered?
Are there emerging trends that fit with your
company's strengths?
Questions on threats:
Are your competitors becoming stronger?
Are there emerging trends that amplify one of
your weaknesses?
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For acompanya strengthcould be:
marketing expertise location of your business
innovative product
company image any other aspect that adds value to your
product or service
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For a companya weaknesscould be:
lack of marketing expertise
undifferentiated products and service (i.e. in
relation to your competitors)
location of your business
damaged reputation
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For a companyan opportunitycould be:
a developing market such as the Internet. mergers, joint ventures or strategic alliances
a new international market
a market vacated by an ineffective competitor any external factor that may create demand or
the possibility for increased profitability
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For a companya threatcould be:
a new competitor in your market price wars with competitors
a competitor has a new, innovative product or
service competitors have superior access to channels
of distribution
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Word of Caution:
SWOT analysis can be very subjective.
Do not rely on it too much.
Two people rarely come-up with the same final
version of SWOT.
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SWOT for Southwest Airlines
Organizational (Internal) Strengths Highly productive pilots and ground crews
Low Costs
Weaknesses
Inability to provide nonstop long distance travel
Opportunities
Ability to add scheduled flights to new cities
Low prices enable market share growthThreats
Difficulty securing new gates at existing airports
Low cost rival Jet Blue - competition
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Suggestions for conducting SWOT Analysis:
Be realistic; no need to inflate strengths or be indenial about shortcomings.
Distinguish between where your technology is today,
and where it could be in the future.
Be specific. Avoid grey areas.
Always analyze in the context of your competitive
environment.
Keep your SWOT short and simple.
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Using the SWOT Analysis
Weaknesses should be looked at in order toconvert them into strengths.
Try to match your strengths with externalopportunities.
Threats should be converted intoopportunities.
Strengths and opportunities should be
matched.
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Expanding Your SWOT Analysis
Delve deeper into the details of thetechnology.
Include more detailed competitor information
in the analysis.
Take a closer look at the business
environment.
Expand the reach of a SWOT analysis throughsurveys.
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THANK YOU