1. Strategic Management
Session : 8

2. Rationale for SWOT Analysis
To determine the possible threats and opportunities in the environments
To pin point weaknesses and strengths of the firm in comparison with its competitors
Done at the beginning of Strategy Formulation
It is the culmination of external and internal factor analysis

3. Threats and Opportunities
PESTLE Model
Environment Analysis
Five forces analysis
Competitor Analysis

4. Strength and Weaknesses
Internal Resource Analysis
Value Chain Analysis
Total Value Chain
Product Portfolio analysis
Financial, Cultural & Stakeholder Analysis

5. What Are the Company’s Strengths, Weaknesses, Opportunities and Threats ?
S W O T represents the first letter in
S trengths
W eaknesses
O pportunities
T hreats
For a company’s strategy to be well-conceived, it must be
Matched to its resource strengths and weaknesses
Aimed at capturing its best market opportunities and erecting defenses against external threats to its well-being S W O T

6. Identifying Resource Strengths and Competitive Capabilities
A strength is something a firm does well or an attribute that enhances its competitiveness
Valuable skills, competencies, or capabilities
Valuable physical assets
Valuable human assets
Valuable organizational assets
Valuable intangible assets
Important competitive capabilities
An attribute placing a company in a position of market advantage
Alliances or cooperative ventures with partners
Resource strengths and competitive capabilities are competitive assets!

7. Identifying Resource Weaknesses and Competitive Deficiencies
A weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage
Resource weaknesses relate to
Inferior or unproven skills, expertise, or intellectual capital
Lack of important physical, organizational, or intangible assets
Missing capabilities in key areas
Resource weaknesses and deficiencies are competitive liabilities!

10. Identifying a Company’s Market Opportunities
Opportunities most relevant to a company are those offering
Good match with its financial and organizational resource capabilities
Best prospects for profitable long-term growth
Potential for competitive advantage

11. Identifying External Threats
Emergence of cheaper/better technologies
Introduction of better products by rivals
Entry of lower-cost foreign competitors
Onerous regulations
Rise in interest rates
Potential of a hostile takeover
Unfavorable demographic shifts
Adverse shifts in foreign exchange rates
Political upheaval in a country

12. Role of SWOT Analysis in Crafting a Better Strategy
S W O T analysis involves more than just developing the 4 lists of strengths, weaknesses, opportunities, and threats
The most important part of S W O T analysis is
Using the 4 lists to draw conclusions about a company’s overall situation
Acting on the conclusions to
Better match a company’s strategy to its resource strengths and market opportunities
Correct the important weaknesses
Defend against external threats

13. The Three Steps of SWOT Analysis

14. For Discussion: Your Opinion
In doing SWOT analysis, why is it not sufficient just to compile 4 lists (one each for resource strengths, resource weaknesses, market opportunities, and external threats) and then move on?
The most important part of SWOT analysis is using the 4 lists to draw conclusions about a company’s overall situation and then acting on the conclusions in these lists to better match a company’s strategy to its resource strengths and market opportunities, correct the important weaknesses, and defend against external threats.

15. Role and Importance of SWOT
Strategy formulation must take into account
Happenings around the firm
Firm’s own capabilities
Missions and Objectives of the organisation

16. Role and Importance of SWOT
Intimate relationship with strategy
Perceptions of Managers
Conflicting perceptions of swot
Process of creativity
Curbing internal politics of the firm
Threat to Status quo
To overcome the static issue should be repeated every six months

17. SWOT Evaluation
How to identify and classify the strengths and weaknesses
How to evaluate threats and opportunities
BMW-German Home Base
Global warming – Automobile Industry