Important Announcement & Lets Breathe !!!

Quiz 3 : Time (30 Minutes) Please mention your complete Name and Enrolment number.

Of the three environments that we discussed last time , Which one is the most important in a General Sense? Why?

Environment

PESTLE

SWOT

Defining the SWOT?

SWOT analysis (alternately SWOT Matrix) is

a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportun ities, and Threats involved in a project or in a business venture.(Wikipedia, 2012)

The SWOT !!!

Developed in the 1960-70s Credited to Albert Humphrey From Stanford University He Used Data from Fortune 500 Companies Objectives are always set after conducting the SWOT

Helpful

Harmful

Internal

Strength

Weaknesses

External

Opportunities

Threats

Source:( Xhienee, 2012)

Strengths

Brand Name Industry Ranking Patents and Processes Management Alliances Employee Commitment

Weaknesses

Lack of Strategic Direction Limited Financial Resources Weak R & D Spending Narrow Product Line Limited Distribution Out of Date Product or Technology Poor Marketing Alliances with weak firms Under Trained Employees

Opportunities

Market Growth Rival Firms collapse /Complacent Changing Customer Needs Opening of Foreign Markets New Segments Economic Boom New Technology Government Deregulation Demographic Shifts New Distribution Method

Threats

Entry of Foreign Firms Substitute Products PLC Decline Changing Customer Needs Rival Firms adopt new Strategies Increased Government Regulation Economic Downturn Foreign Trade Barriers Poor Performance of Ally Firms

Benefits of SWOT !!!

Simple process which lowers costs No extensive training required Flexible-enhances strategic planning Integration-synthesizes qualitative & quantitative information Collaboration-encourages interdepartmental coordination

Directives for a Productive SWOT Analysis

Stay focused Search extensively for competitors Collaborate with other functional areas Examine issues from the customers perspectives Separate internal issues from external issues

Keys to Staying Focused

Focus on specific products & markets. Adapt the marketing mix to address environmental issues. Examine overall strategic business units. Make 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

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 Promotional

Customer Segment Evaluations Should be Benchmarked

Consider internal customers (employees) Consider all relevant stakeholders:

Investors & stockholders Suppliers Customers Governmental Societal

SWOT-Driven Strategic Planning

Utilizing a SWOT for strategic planning requires: Looking beyond the firms 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

Developing Advantages

Sustainable

Competitive

Capabilities allow the firm to better serve customer needs (competitive advantage) Sources of competitive advantage:

customer loyalty -brand equity -distribution patents & trademarks -sales force -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-efficiency Product leadership-research & development, technology, products Customer intimacy-relationship marketing

Strategies Converting Strengths or Threats into Opportunities

Find new markets for a firms 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 marketer Reposition the product Realize your limitations Diversify to minimize risks of operating in a single market

How could each of the following be a strength or weakness?

Highest quality product in the industry Significant excess production capacity Excellent relationship with a single supplier Sizable amount of cash on hand Offering a product that is designed to suit everyones needs

10 Mins Break

Classroom activity : Lets Develop a SWOT

See you next week!!!