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PRESENTATION

ON

SWOT ANALYSIS

Presented By:B. Aditya

Aloke

Symbiosis Center for Information Technology, Pune

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SWOT

STRENGTH

WEAKNESS

OPPURTUNITIES

THREATS

But what is SWOT ????

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WHAT IS SWOT ?

A way of painting 360 degree Picture of some

situation or product offering.

A Vision to establish the starting point fordevelopment of Strategies.

An analytical, strategic business development

analysis and planning tool

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INPUT :

Sound Knowledge of Present Situations and Trends.

OUTPUT :

Structured Basic Information Giving the

Understanding of Reality and Strategic Options.

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WHY SWOT ?

Tool in Information Gathering and Planning Process.

Sound Knowledge of Present Situation and Trends.

Output Obtained is Structured.

Low cost way of analysis.

Fairly Simple. Provides Clear vision for Setting goals and Objectives.

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BASIS OF SWOT

It is grounded in the basic principle that strategy-

making efforts must aim at producing a good fit

between :

COMPANYS RESOURCE CAPABILITY

&

ITS EXTERNAL SITUATIONS

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AIM OF SWOT

From a Firms Perspective :Sizing up :

Firms Strength and Weaknesses.

Firms Opportunities and Threats.

Firms Resource Capabilities and Deficiencies.

Simply Speaking :

A clear Overview of the Firms Business

Position.

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Internal Analysis External Analysis

Organizations

StrengthOrganizations

WeaknessOpportunities

to the Org.Threats to the

Org.

Where dointernal and

externalfactors meet?

WHAT CANWE DO

ABOUT IT?

USING METHODOLOGY OF SWOT

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Internal Situation Given by :

Strength

Internal Asset of Know How

Technology

MotivationEntrepreneurship Spirit

Finance

Business Links

Whatever Helps u toExploit Opportunities and

fight off threats.

Weakness

Internal condition

Internal Deficit

Endangers theCompetitive Position of

any Product / Service.

Whatever Hampersthe exploitation ofOpportunities

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External Environment Given by :

Opportunity

Characteristic or Any

External Circumstancewhich favors the demand

of the product or service.

Wherever company is

enjoying an advantage

Threats

Unfavorable Trend

External circumstance

Leading to unfavorableinfluence on the

Companys position.

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PRINCIPLES OF SWOT

Strategic Focus

Strengths and Weaknesses

Opportunities and Threats

Time Frame

Common Pitfalls

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Strengths

Weaknesses

The power thatholds the structure

The pressure thatleads to the downfall

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Strength

It is the one which is done well by thecompany

It is the one which makes the company

establish itself strongly in the market It is the one which gives the company the

efficiency to utilize the opportunities and

the confidence to fight the threats It is the one which gives the company a

unique recognition in the marketplace

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Analyzing Strengths

This analysis helps to make majordecisions in the organization

This analysis serves as the importantaspect in the estimation of theperformance of the company

This analysis also helps in comparing thecompanys performance with its

competitors

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Forms of Strengths

Good Skill or Expertise

Physical Assets

Human Assets Organizational Assets

Intangible Assets

Competitive Capabilities Achievements

Alliances

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Company Resources

Competitive Capabilities

Core and DistinctiveCompetencies

Strategic Assets andMarket Achievements

CompetitiveAdvantage

Building Competitive Advantageon Company Resources

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Weakness

It is the one which acts as a disadvantageto the company

It is the one which causes the downfall ofthe company

It is the one which makes the companylose the marketplace

It is the one which gives the company aninstability in the market

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Forms of Weaknesses

Inefficient Skill or Expertise

Lack of Valuable Assets

Weak Competitive Capabilities

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Companys Competence

Critical component in assessingcompanys situation

Learning and buildup of real proficiency

Competencies are consciously built anddeveloped

To develop organizational ability

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Examples of competence

Skills in merchandising and productdisplay

Expertise in specific technology

Select good locations for retail outlets

Working with customers on new

applications Expertise in just-in-time inventory

practices

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Competitive Capability

Customers deem the competencevaluable and beneficial

Helps differentiate a company fromcompetitors and enhances itscompetitiveness

All are not equal some just survive andothers hold potential for changing basis ofcompetition

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Core Competencies

Competitively important internal activitydone very well.

It is done better than other internalactivities

It becomes core competence as it iscentral to a companys competitiveness

and profitability

Examples of core competencies

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Continued

Can have more than one in resourceportfolio.

Qualifies as a genuine company strength

and resource It resides in its people and intellectual

capital and not in its assets

Cross-department and cross-functionalcombinations of skills, resources andtechnologies

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Examples of Distinctive Competence

Sharps corporation - flat panel display

Toyota and Honda low cost, high quality,design-to-market motor cycles

Intel new generations of powerfulsemiconductor chips

Motorola defect-free manufacture of

cellular telephone equipment Rubbermaid innovative rubber and

plastic products

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Importance

Its importance in strategy making lies with: Competitively valuable capability

Its potential of being a corner stone of strategy

Competitive edge it produces in the marketplace Competitive Advantage

Distinctive competence in activities important tomarket success

Rival companies do not have offsettingcompetencies

Costly and time consuming for rivals to imitate thecompetence

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Competitive Value

Unique to each company

Tests to qualify for sustainable competitiveadvantage:

Is the resource hard to copy? The more it is difficult andexpensive to copy, the greater is its potential competitivevalue

How long does the resource last? The longer the resourcelasts, the greater is its value

Is the resource really competitively superior? Companiesshould always keep the resource competitively superior thanits rivals

Can it be trumped by resources-capabilities of rivals?

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Competitively SuperiorResources

Most companies resources are notcompetitively superior to pass the tests

Most businesses have mixed bag of

resources Only strongest industry leaders posses

competitively superior resource

Significant competitive advantage fromcollection of good to adequate resourcesfor example, Toshibas laptop computers

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Matching Strategy

Create competitive advantage Managers need to take decisive remedial action to upgrade

existing organizational resources and capabilities

Managers have to look towards correcting competitive

weaknesses

Strategy making principle: A companys strategy should be tailored to fit its resources-

taking both strengths and weaknesses into account.

As a rule, managers should build their strategies aroundexploiting and leveraging company capabilities and avoidstrategies that place heavy demands on areas where thecompany is weakest or has unproven ability.

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Selecting Competences andCapabilities

It is the essence of astute strategy making Selection is done to concentrate on and

use to underpin the strategy

Sometimes companies already possesvaluable competences and capabilitiesthat strengthen the resource base

Sometimes the desired competences andcapabilities have to be developedinternally or acquire through allianceshaving the expertise

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OPPORTUNITIES

O t iti

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Opportunities One of the factors outside ones organization

which determine ones success or failure in the

market place.

Managers cant properly tailor strategy to thecompanys situation without first identifying each

company opportunity and appraising the growthand the profit potential each one holds,depending on the prevailing circumstances

Can be plentiful or scarce and can range fromwildly attractive to marginally interesting

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The market opportunities most relevant to acompany are those that offer:

Important avenues for profitable growthThose where a company has the most

potential for competitive advantage

Those that match up well the companysfinancial and organizational resourcecapabilities.

Not every company in an industry is

equipped with the resources to successfullypursue each opportunity that exists in theindustry.

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Threats Factors in a companys external

environment pose threats to its profitabilityand competitive well-being

External threats may pose a degree ofadversity

Threats to a company may be:

Emergence of cheaper or bettertechnologies

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Rivals introduction of new or improved

products

the entry of lower-cost foreign competitorsinto a companys market stronghold

new regulations that are moreburdensome to a company than to its

competitors

vulnerability to a rise in interest rates

the potential of a hostile takeover

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unfavorable demographic shifts

adverse changes in foreign exchangerates

political upheaval in a foreign country

where the company has facilitiesIt is managements job to identify the threats

to the companys future well-being and to

evaluate what strategic action can be takento neutralize or lessen their impact.

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Infosys Technologies Limited

SWOT ANALYSIS

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Strengths

Top Management

Employee as a business partner

Quality standardsClient rooster

Brand Image

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Top Management

The chairman and CEO Mr. N. R. NarayanaMurthy known as top businessman.

The companys top management has

established a value system because it believes

that if a corporation wants to run a marathon, it

requires a value system.

The top management has the vision of a global

growth strategy and positions the company as a

learning organization.

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Quality StandardsThe Quality Standards at Infosys match the best in the

world.

It uses a process oriented approach to project execution.

Infosys was the first Indian company to get immediate ISO

9001/TickIt certification from "Bureau Veritas QualityInternational (BVQi)".

Infosys has been assessed at Level 5 of the Capability

Maturity Model (CMM) of the Software EngineeringInstitute, which evaluates Development, Re-engineering

and Maintenance processes across the enterprise.

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Client Rooster

Growth can only come from repeat business andtrust relationships. The company boasts of regular

clientele from MNCs like Nestle, Reebok and

Apple and alliances with global giants like SAP.

It actually plays a strategic role by helping

clients sharpen their edge over competitors.

Brand Image

Infosys has recently declared that it is worth Rs. 1726.9

crores ($411.2 million) as a brand. This is the extra

value that the name grants to the company.

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WEAKENESSES

Concentration on customized software packages.

Dependence on U.S.A. markets.

Lower productivity of employees in global standard

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Concentration on customized software packages

Customised software packages mainly account forthe companys revenue(96%).

This gets rarely gets high media publicity which is

very important for the public image.

Dependence on USA Market

Earnings from the U.S.A. software market

account for four-fifths of the companys

revenues.

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Lower productivity of employees in global

standards

The current productivity of an Infosys' employee

is US$ 50,000 as against a US industry average of

US$ of 100,000, and US$ 190,000 for CambridgeTechnology Partners, the US industry's most

productive company.

Important point as company is aspiring to be a

global player in the software market.

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OpportunitiesEstablishing software development centers

in America, Asia (Far East), and Europe.

Growth.

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Establishing software development

centers in America, Asia (Far East), andEurope

This will give the company 24-hour software

development capability, as it will be operating in

multiple time zones.

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By raising money through a $75m ADR

(American Depository Receipts) issue to fund its

acquisition and marketing plans, the company

plans to acquire brands/companies in other

markets to fuel growth.

Another aim is to attract global talent by issuingstock options in convertible currency.

Growth

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Threats

Increase in cost.

Increasing competition.

Usage of similar names by unscrupulous

companies.

Government Policies regarding foreign

acquisitions.

I i C

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Increase in Cost

The reason of the success of the Indian software market is

its cost advantages.

Increasing Competition

Infosys in its path of globalization finds competition

growing both above it and around it.

Usage of Similar Names by unscrupulous Companies

The trademark Infosys has been used by many companies.

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Government Policies regarding foreign acquisitions

There is currently a capital of $100 million on

automatic approvals on foreign investments.To get through the procedures of the RBI for

special approvals will result a loss of time and

the possibility of loss of an opportunity.

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Mc Donalds

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McHistory

Ray Kroc opens the Des Plaines restaurant in

1955. First days revenues - $366.12

In 1965, McDonalds goes public with the

companys first offering on the stock

exchange.

In 1967, Jim Delligatti invents the Big Mac

Makadonaldo first opened in 1971 (Japan)

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McHistory

Egg McMuffin is introduced in 1973; Developed

by owner operator Herb Peterson

In 1974 Fred Hill of the Philadelphia Eagles

teams up with McDonalds to create the Ronald

McDonald House Happy Meals (1979)

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Fascinating McFacts

Today, the company operates more than23,500 restaurants in 109 countries

Since its founding in 1955, McDonalds has

sold well over 100 billion hamburgers

McDonalds prepares more than 6.8 million

pounds of French fries every day More than 50,000 students have graduated

from Hamburger University

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Franchising McFacts

Approximately 85% of McDonalds

restaurant businesses world-wide are owned

and operated by franchisees.

All franchisees are independent, full-time

operators.

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SWOT Analysis - Strengths

Brand Equityworld-wide

42% of US fast-food hamburger business

Consistency of food

Successful items: Fries, Happy Meal, Big Mac,

Egg McMuffin, Promotions

Overseas market

Balance sheet position

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Whose food do Americans really

like best?

Best-tasting food?

Wendys 36%*

Burger King 32%McDonalds 21%

Best-tasting burgers?

Burger King 42%

Wendys 32%McDonalds 17%

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SWOT Analysis - Weaknesses

Declining market share

Weak product development

Disgruntled franchisees

Quality and taste of products

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International expansion

Only serving 1% of the worlds population

Growing dining-out market

SWOT Analysis - Opportunities

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Mature/over-stored industry

Strength of competition

More health-conscious consumers

Changing demographics

Fluctuation of foreign exchange rates;Economies

SWOT Analysis - Threats

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COLA WAR

The Cola War

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The Cola WarIntroduction

Coca-Cola and PepsiCo have been the leading softdrink companies for decades.

An ongoing battle for market share has existedbetween these firms for over 75 years.

Each company has tried a number of strategies to gaina sustainable competitive advantage. These strategiesincluded:

Introducing new soft drink products Diversification

Aggressive advertising campaigns

The Cola War

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The Cola WarStrengths

Coca-Cola Company

Maintains global softdrink industryleadership

Positioned as aworld-wide companyacting locally

Maintains its majorfocus on world-wideexpansion of the colamarket

PepsiCo

Has achieved majorsuccess with bothbeverages and snackfoods

Recent divestment ofsuccessful restaurantchains allows focuson cola wars

Has strong BrandEquity

The Cola War

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The Cola WarWeaknesses

Coca-Cola Company

Relationships withbottling subsidiariescould createterritorial and otherlegal problems

Large regionalbottlers may not havethe financialresources to continueexpansion.

PepsiCo

Must split focusbetween managingsoft drink lines andsnack foods lines

Organizationalstructure forinternational sales ofcola products maynot be as strong asCoca-Colas.

The Cola War

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The Cola WarOpportunities

Coca-Cola Company

World-wideeconomicdevelopment andpopulation growth tosustain sales andprofits

Strong brand namesand world-wideidentity as a leader inthe soft drinkindustry

PepsiCoWorld-wide

economicdevelopment and

population growth tosustain sales andprofits

Strong brand namesand world-wide

identity as a leader inthe soft drinkindustry

The Cola War

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The Cola WarThreats

Coca-Cola Company

Political and

economic instability

in many developingregions of the world

Competition from

other national,

regional, and globalsoft drink Companies

PepsiCo

Political and

economic instability

in many developingregions of the world

Competition from

other national,

regional, and globalsoft drink Companies

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MICROSOFTCORPORATION

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Microsoft Corporation SWOT AnalysisStrengths

World's largest software company with global namerecognition and strong reputation for innovative

products

Revenues and profits rising at 30% a year withmerger/acquisition or investment in 92 companies over

past five years

Loyal, hardworking, and diverse workforce (20%

minority, 26% women) who, in addition to good

compensation, have an opportunity to do well financially

through stock purchases

Windows 95 98 2000 series and Windows NT are

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Windows 95, 98, 2000 series, and Windows NT are

globally known as the PC desktop operating system with

a market share of about 88%

Relatively rapid product development processes that

allow for timely updating and release of new products

Software products have high name recognition, broad-

based corporate and consumer acceptance (Word, Excel,

PowerPoint, Access), and numerous powerful features

that are in use worldwide

Top rating from Fortune for best company to work at

and most admired company .

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Employee turnover has increased from 6% for a ten

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Employee turnover has increased from 6% for a ten

year period to 7.4%

Falling sales in the operating systems and server

software sectors

Little or no significant presence in the wireless marketand Windows CE has been disappointing

Not a key player in the Internet space and few products

for Internet applications

Products have a single application focus and do not

work well with or on-top of other products

OpportunitiesCh l b l t l i ti t

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Cheaper global telecommunication costs open new

markets as people connect to the Internet.

Mobile phone applications and exploitation of personal

digital assistants represent a growth industry so that

strategic alliances could provide Microsoft with

opportunity in a market where it currently has little or nosignificant presence.

Popularity among people for Internet access

The demand for personal computers in American and

global markets remains strong despite the growth and

increasing popularity of personal handheld devices .

Threats

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Apple and Linux threaten Microsoft's 88% market share of

the desktop operating market

Between 1993-95, Sun Microsystems, Netscape, Oracle,

IBM, AOL, and other companies moved into the Internet

space and defined it while Microsoft failed to anticipate itsgrowth or popularity

Currency exchange rates affect demand for

application/operation software and hardware, and

fluctuating currencies can negatively impact revenues in the

global marketplace

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Department of Justice antitrust litigation and current

appeal creates uncertainty among employees since its

outcome is not known

Hardware manufacturers (Sun Microsystems, Oracle,

IBM) have collaborated on new platform technologies

that replicate much of the value of Windows

Growing Linux Influence year by year.

Rapid development of mobile devices that willdisplace/replace personal computers

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References

Strategic Management by Phillips Kotler

Case Study : Cola War By Lon Camomile

College of Business

Case Study: Mc Donalds By Bob Wilcox

Case Study : Infosys By Mr. SrinivasBusiness Environment Planning

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Thanks for your Patience !!