Transcript
SWOT and Transformation: Re-Thinking Operations
Daniel F. DuranWhittier College
BSAD 333: Managing Multinationals
Introduction
All companies face competition– For resources, customers, sales revenues, and profitsAll
companies face uncertain industry environments– Managers must position the organizations strategically in
order to compete successfully• This is what we call business definition• Requires that managers understand the dynamics of their
firms’ markets before formulating strategies
Introduction (cont.)
Rapidly growing markets (emerging industries) tend to be less competitive & often attract new entrants– Usually provide sufficient room in competitive space for
making some mistakesMature, concentrated markets provide firms with
very little breathing room– Mistakes by one firm can significantly impact entire industry
• One firm’s price reductions can set off industry-wide price war
SWOT Analysis
Acronym derived from Strengths, Weaknesses, Opportunities, and Threats
– Used for analyzing industry environments and firms’ internal strengths and weaknesses
Performed in a 2-step process:1. Managers thoroughly evaluate their firm’s internal strengths
and weaknesses and its environmental (external) opportunities and threats
2. Managers use the evaluation developed in the first step to place the firm in one of the quadrants of the SWOT matrix
Stimulates communication outside normal channelsResult is varied information from diverse sourcesProvides an ‘outsiders’ perspective in the SWOT– Sales -Inventory control– Production -Quality control– Advertising -Research & development– Finance– Customer service
Benefits of the SWOT Analysis…
Simple process which lowers costsNo extensive training requiredFlexible-enhances strategic planningIntegration-synthesizes qualitative & quantitative
informationCollaboration-encourages interdepartmental
coordination
SWOT Analysis (cont.)
Advantages of SWOT Analysis:– Easy to use– Can be helpful framework for getting managers to
think constructively about their firms’ external environments and internal strengths and weaknesses
SWOT Analysis
Strengths (based onanalysis of): Strategies R&C’s Performance
Opportunities (based onanalysis of): General Environment Industry Environment Main Competitors
Weaknesses (based onanalysis of): Strategies R&C’s Performance
Threats (based onanalysis of): General Environment Industry Environment Main Competitors
Objective of SWOT
SWOT Analysis
OvercomeWeakness Grow
DiversifyRestructure
Numerous EnvironmentalOpportunities
Major EnvironmentalThreats
SubstantialInternal
Strengths
CriticalInternal
Weaknesses
SWOT Analysis (cont.)
Drawbacks of SWOT Analysis:– Subjective– Biased by managers’ perceptions of their firms’
strengths and weaknesses• For example, managers of strong firms will likely view
environmental phenomena as opportunities, while his counterpart in a weak company will likely view them as threats
– The use of SWOT Analysis is likely to yield few clear-cut recommendations
SWOT-Driven Strategic Planning
Utilizing a SWOT for strategic planning requires:– Looking beyond the firm’s current products– Matching strengths with opportunities (translate
strengths into capabilities)– Investing in key areas: customer support, R&D,
promotion, employee training)– Converting weaknesses into strengths– Understanding that weaknesses that cannot be
converted into strengths become limitations
Directives for a Productive SWOT Analysis…
Stay focusedSearch extensively for competitorsCollaborate with other functional areasExamine issues from the customers’ perspectivesSeparate internal issues from external issues
Keys to Staying Focused
Focus on specific products & marketsAdapt the marketing mix to address environmental issuesExamine overall strategic business unitsMake certain you have 1 SWOT analysis for each product/market combination
Search Extensively for Competitors
Do not overlook any competitor (current or future)Consider:– Product competitors– Generic competitors– Total budget competitors
Collaborate with Other Functional Areas
Stimulates communication outside normal channelsResult is varied information from diverse sourcesProvides an ‘outsiders’ perspective in the SWOT– Sales -Inventory control– Production -Quality control– Advertising -Research & development– Finance– Customer service
Examine Issues from the Customers’ Perspectives in the SWOT
What do our customers believe about us as a company?What are their perceptions of:– Product quality– Customer service– Price/value– Convenience– Promotional
Customer Segment Evaluations Should be Benchmarked
Consider internal customers (employees)Consider all relevant stakeholders:– Investors & stockholders– Suppliers– Customers– Governmental– Societal
Concerns Beyond External Issues
Internal issues (strengths & weaknesses)Biggest problem with SWOTS– failure to understand the difference between internal
& external issues
The Elements of the SWOT Analysis
Strengths & Weaknesses:– A strength is meaningful only when it addresses
customer needs– A customer-focused SWOT can uncover potential
weaknesses– Weaknesses associated with customer needs should
be minimized– Determine where resources are available & lacking– Match strengths with market opportunities– Strengthen weaknesses or minimize their negatives
The Elements of the SWOT Analysis
Opportunities & Threats:– Changes in the external environment can impede the
ability to deliver value to customers– Changes can occur in:
• market growth• competition• overall economy• political/legal environment• technology• sociocultural issues
One Way to Conduct a SWOT Analysis-SWOT Matrix
4 cells categorizing the SWOT:strengths, weaknesses, opportunities & threatsAssess magnitude and importance of each– Based on customer perceptions, not managers
Developing Sustainable Competitive Advantages
Capabilities allow the firm to better serve customer needs (competitive advantage)Sources of competitive advantage:– customer loyalty -brand equity -distribution– patents & trademarks -salesforce -culture
Capabilities that do not solve customer needs are of little value– Must have a core competency
How to Achieve a Competitive Advantage
Operational excellence-efficiencyProduct leadership-research & development, technology, productsCustomer intimacy-relationship marketing
Strategies Converting Strengths or Threats into Opportunities
Find new markets for a firm’s products (conversion strategy)– May require significant financial resources– Must identify major liabilities that continue to occur
Minimize or Avoid Weaknesses or Threats Which Cannot Be Converted
Become a niche marketerReposition the productRealize your limitations– Diversify to minimize risks of operating in a
single market
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