SWOT

• 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