Strategic Management

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. S W O T 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

6. Identifying Resource Strengthsand 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 competitivecapabilities arecompetitive assets!

7. Identifying Resource Weaknessesand 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 deficienciesarecompetitive liabilities!

10. Identifying a Company’sMarket Opportunities • Opportunities most relevant to acompany are those offering • Good match with its financial andorganizational 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 inCrafting 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 conclusionsabout a company’s overall situation • Acting on the conclusions to • Better match a company’s strategy to itsresource 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?

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