Patrick J. Kidd - SWOT Analysis -

SWOT Analysis
TOWS

See some Models for SWOT analysis
- (see Strategies)
SWOT Analysis (SWOT = TOWS) = situation analysis
- situation analysis = taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization's plans and the external factors and trends affecting it.
  - sharing this information across departments
  - using this information to create "customer value"
- Analysis
  1. Analysis at the level of:
    1. the entire organization
    2. the business unit
    3. the product line
    4. the specific product
  2. Detailed analysis
    1. Internal (marketing mix) factors = Controllable factors
      - the firm itself = internal company information
        
        4Ps = Controllable factors
      - Strengths
      - Weaknesses
    2. External company information = environmental factors = Uncontrollable factors
      - Marketing Environment is determined by Environmental Scanning
        
        Firms cannot control these external factors. (Uncontrollable factors)
        
        industry trends
        
        competitors
        
        present & prospective customers
  3. Identify the critical factors
  4. Translate the SWOT analysis results into specific actions (strategies) to help the firm grow and succeed. (see Strategies)
    - build on strengths
    - correct weaknesses
    - exploit opportunities
    - avoid threats

Strategies = the methods (actions) that a company uses to meet its stated goals

Setting strategic goals = long-term goals (derived directly from the mission statement)
Analyzing the organization and its environment
- Environmental analysis = scanning the environment for Threats and Opportunities = external factors
- Organizational analysis = understanding the company's Strengths and Weaknesses = internal factors
- SWOT Analysis = Assessing organizational strengths and weaknesses (internal) and environmental opportunities and threats (external)
  - S = attempt to capitalize on organizational strengths (brand name recognition, surplus cash, dedicated workforce, managerial talent, technical expertise, weak competition, etc.)
  - W = attempt to overcome organizational weaknesses (lack of experience or knowledge about ecommerce, etc.)
  - O = attempt to take advantage of environmental opportunities
  - T = attempt to cope with environmental threats (e.g. changing consumer tastes, hostile takeover, new products, new competitors, etc.)
Matching the organization and its environment = the final step in strategy formulation

Levels of Strategies (hierarchy)

Corporate-level strategies = identify the businesses that the company will be in and how these businesses will relate to each other

top management directs overall strategy for the entire organization
overall strategy formulation

manage a portfolio of businesses (see business units, below) = portfolio analysis

Growth-Share matrix - Boston Consulting Group

BCG Matrix	Relative Market Share (cash generation)
Market growth rate (cash usage)	Star high share, high growth	Question mark = problem child low share, high growth requires lots of cash just to maintain market share
Market growth rate (cash usage)	Cash cow dominant share, slow growth	Dog low share, low growth

SBU = strategic business unit
Relative Market Share = (Sales by SBUs) / (Sales by industry leader)
- = (Sales by SBUs) / (Sales by the entire industry) (Is this a valid measure????)
References
Alternative Corporate-level strategies (for each BU mapped on this matrix)
1. build the SBU's share by investing more
2. hold the SBU's share at about its current level by investing just enough
3. harvest = milk the SBU's short-term cash flow
4. divest = phase out the SBU or sell the SBU for cash

Market-Product analysis matrix

Market-Product Analysis		Products
Market-Product Analysis		Current	New
Markets	Current	Market Penetration sell more	Product Development new product (danger of product cannibalism)
Markets	New	Market Development sell elsewhere	Diversification new business (related or unrelated diversification)

Alternative Corporate-level strategies (for the BUs)
1. Concentration strategy = focusing on one product or product line
2. Growth (= focus on internal activities that will result in growth)
  - Penetration = marketing penetration = boosting sales of present products
  - Market development = geographic expansion = expanding to new geographic areas
  - Product development = developing improved products for current markets
  - Diversification = expanding into related or unrelated products or market segments
    - Related diversification = adding new, but related products or services to an existing business
    - Conglomerate diversification = diversifying into products or markets that are not related to the firm's present businesses
3. Integration (= focus on external activities that will result in growth)
  - horizontal integration
    - acquiring control of competitors in the same or similar markets with the same or similar products
  - vertical integration
    - owning or controlling the inputs to the firm's processes and/or
      owning or controlling the channels through which the products or services are distributed.
4. Investment reduction
  - Retrenchment = reduction of activity or operations
  - Divestment = selling or liquidating one or more of the firm's businesses
    In finance and economics, divestment or divestiture is the reduction of some kind of asset, for either financial or social goals. A divestment is the opposite of an investment.

Business-level strategies = Competitive strategies = identify the ways a business will compete in its chosen line of products or services = a plan to establish a profitable and sustainable competitive position against the forces that determine industry competition.
business units = operating groups = strategic business segments = product-marketing units (PMUs) = strategic business unit (SBU)
business unit = an organization that markets a set of related products to a clearly defined group of customers.
Business unit managers set the direction for their products and markets = specific strategy formulation
- Competitive strategies (by Michael Porter):
  1. cost leadership = becoming the low cost leader in an industry = Price
  2. differentiation = seeking to be unique in its industry along some dimension that is valued by buyers (e.g. durability, safety, user-friendly-ness, quality, etc.) = Product
  3. focus = selecting a market segment and serving the customers in that market niche better than competitors = market niche
Functional Strategies = identify the basic courses of action that each department in the firm will pursue so that it contributes to the attainment of the business's overall goals
- Departments = specialized functions = (e.g. information systems, finance, R&D, marketing, manufacturing, HR)
- Groups of specialists actually create value for the organization.
- strategy implementation = very specific strategy formulation - hierarchy of strategic directions = they make things happen
- Cross-functional teams = a small number of people from different departments (employees, suppliers, customers) in an organization who are mutually accountable to a common set of performance goals.

Levels of Plans (hierarchy) - Managerial responsibilities are defined at each level
1. Strategic plans
  - set by the board of directors and top management
  - long-range
  - decisions about resource allocations, company priorities, steps needed to meet strategic goals
2. Tactical plans
  - set by upper and middle management
  - shorter-range
  - decisions about implementing specific aspects of the company's strategic plans
3. Operational plans
  - set by middle and lower-level managers
  - short-range
  - decisions about targets for daily, weekly, or monthly performance
4. Contingency plans
  - developing alternative plans in case things go awry = dealing with the unknown and unforeseen = hedging against changes that might occur = planning for change
5. Crisis management plans
  - crisis = unexpected emergency requiring immediate organizational response
  - crisis management = an organization's methods for dealing with emergencies
    - who will be in charge, how the organization will respond, etc

Models for SWOT analysis
Use this first model to list all the SWOT items.

SWOT	Positive	Negative
Internal	Strengths	Weaknesses
External	Opportunities	Threats

and
Use the following model to list the Strategies for each combination of SW and OT. (see Strategies)
Note that the colours match in both these models.
The part in yellow is the same as the part in yellow of the model shown above.

Use a spreadsheet (MS-Excel or MS-Word) to create a list in each cell of this table
SWOT		Internal
SWOT		Strengths	Weaknesses
External	Opportunities	SO Strategies	WO Strategies
External	Threats	ST Strategies	WT Strategies

Please use both of these models together.

References for SWOT analysis
- SWOT Analysis Tool for Small Business - http://cbae.nmsu.edu/~dboje/sbc/pages/page3.html
- http://www.netmba.com/strategy/swot/
- marketingteacher.com - SWOT Analysis
- SWOT Analysis - http://www.quickmba.com/strategy/swot/
- Quality Guide - SWOT Analysis - http://erc.msh.org/quality/ittools/itswot.cfm
- SWOT - http://businessmajors.about.com/sitesearch.htm?terms=swot
  - SWOT Expert - http://www.swotexpert.com/
- SWOT analysis - Wikipedia
- nmmbc15.htm#SWOT...
- bckhr02.htm...