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SWOT Analysis: An Introduction. Arturo B. del Ayre, R.E.E., M.B.M. 05 November 2008 Cold Rolling Mills. Over-all Picture. Overview.

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swot analysis an introduction

SWOT Analysis: An Introduction

Arturo B. del Ayre, R.E.E., M.B.M.

05 November 2008

Cold Rolling Mills

overview
Overview
  • The strategy is to look at the organizations current performance (strengths and weaknesses) and factors in the external environment (opportunities and threats) that might affect the organizations’ future.
purpose of swot analysis
Purpose of SWOT Analysis
  • Help decision makers share and compare ideas
  • Bring a clearer common purpose and understanding of factors for success
  • Organize the important factors linked to success and failure in the business world.
  • Analyze issues that have led to failure in the past
  • Provide linearity to the decision making process allowing complex ideas to be presented systematically.
internal external analyses
Internal-External Analyses

Internal Analysis:

  • Examine the capabilities of the organization by analyzing the organization's strengths and weaknesses.

External Analysis:

  • Look at the main points in the environmental analysis, and identify those points that pose opportunities for the organization, and those that pose threats or obstacles to performance.
strengths operational definition
Strengths: Operational Definition
  • Something that we truly do well,
  • Something that we excel at versus the competition,
  • Something that we can build on;
  • Something that truly differentiates our business,
  • A key metric that is improving, etc.
weakness operational definition
Weakness: Operational Definition
  • A real gap, a deficiency, a problem, or a key metric that is going south;
  • Something we’re not doing very well and that we should be doing better;
  • Something that’s dated that no longer applies—even though it used to;
  • Something important that we really don’t know or aren’t sure about.
opportunity operational definition
Opportunity: Operational Definition
  • A favorable external condition
  • Something (that we haven’t acted on or taken advantage yet) that could impact us positively.
  • New things that can be done to potentially improve the business—that turn into recommendations and actions.
threats operational definition
Threats: Operational Definition
  • Something external to the business that can potentially impact us negatively:
    • competitors
    • changing conditions in the marketplace,
    • the overall economy,
    • government regulations, etc.
  • Part of the playing field that can’t be ignored.
  • Some internal threats, e.g. hanging onto the status quo when change is required
strengths questions
Strengths: Questions
  • What makes us stand out from competitors?
  • What advantages do we have over other businesses?
  • What are the major sources of our revenue and profit?
  • What is our market share of our various product lines?
strengths questions cont d
Strengths: Questions, cont’d
  • Do we have strong brands?
  • Is the marketing/advertising effective?
  • What is our major focus as a company?
  • Do we have a pool of skilled employees?
  • Is the morale of the employees high?
strengths questions cont d1
Strengths: Questions, cont’d
  • Are there rewards in place to create an atmosphere conducive to excellence?
  • What is the cost of capital?
  • What is the stock price track record?
  • Do we harness information technology effectively?
strengths questions cont d2
Strengths: Questions, cont’d
  • Do we manage our inventories efficiently?
  • Have we demonstrated the ability to adapt and change?
  • Are we able to innovate?
  • How have we withstood international competition?
weakness questions
Weakness: Questions
  • What do our customers complain about?
  • What are the unmet needs of our sales force?
  • What are the least profitable product lines for the company?
  • In what areas is the company not able to recover costs?
weakness questions cont d
Weakness: Questions, cont’d
  • Which are the weak brands?
  • Is the marketing/advertising effective?
  • Is the company not focused?
  • Is the company able to attract talent?
  • What are our biggest expenditures?
weakness questions cont d1
Weakness: Questions, cont’d
  • Are we able to raise money when it needs to?
  • Does the stock price history inspire confidence?
  • Will we be able to stand price pressure from competitors?
  • Have we been able to bring new ideas and products to the market place?
weakness questions cont d2
Weakness: Questions, cont’d
  • Do employees feel facilitated to perform their best?
  • Do employees have faith in management?
  • Are the corporate governance standards high enough?
  • Are we losing out to competitors on the technology front?
opportunities questions
Opportunities: Questions
  • Are there emerging trends that fit with our company's strengths?
  • What are the interesting trends? Is our company positioned to take on those trends?
  • Is there a product/service area that others have not yet covered?
  • What favorable circumstances are we facing?
  • Are we entering new markets?
  • Are we advanced in technology?
threats questions
Threats: Questions
  • Are our competitors becoming stronger?
  • Are there emerging trends that amplify our weaknesses?
  • Do we see other external threats to the company's success?
  • Internally, do we have financial, development, or other problems?
threats questions cont d
Threats: Questions, cont’d
  • What obstacles do we face?
  • What is our competition doing?
  • Are the required specifications for our products or services changing?
  • Is changing technology threatening our position?
  • What policies are local and national lawmakers backing? Do they affect our industry?
swot to strategies
SWOT to Strategies
  • Turn NEGATIVES into POSITIVES
  • Opportunities  Strengths [S-O Strategies]
  • Weaknesses  Opportunities [S-O Strategies]
  • Threats  Strengths [S-T Strategies]
  • Threats  Weaknesses [W-T Strategies]
objectives strategies policies
Objectives, Strategies, Policies
  • Objectives  Specific Results that an organization seeks to achieve in pursuing the basic mission, usually employing SMART.
  • Strategies  Action Plans to undertake in response to or in anticipation of the environment to accomplish the objectives.
  • Policies  Implementing Guidelines to achieve the objectives and strategies.
objectives strategies policies1
Objectives, Strategies, Policies

Example:

  • Objective  Garner 90% market share of Domestic Steel Market by 2009.
  • Strategy Develop new products to cater to local steel fabricators
  • Policy Hire marketing staff with local experience; or 10% discount on cash purchases for local steel fabricators.
operational strategies
Operational Strategies
  • Cost [cost reduction and waste elimination],
  • Quality/Reliability [quality for products, reliability for facilities and equipment],
  • Flexibility [ability to respond to changes in volume requirements, product or service requirements, or changes in product mix] and
  • Availability [products and services available on short notice through inventory maintenance].
rumelt s criteria for strategies
Rumelt’s Criteria for Strategies
  • Consistency – a strategy should not present inconsistent goals and policies.

“Red flags” of inconsistent strategies:

    • Managerial problems continue despite personnel changes. Problems tend to be issue-based rather than people-based.
    • Success of one means failure of another department.
    • Policy problems and issues brought to top for resolution.
  • Consonance– a strategy must represent an adaptive response to the external and internal environment.
rumelt s criteria for strategies1
Rumelt’s Criteria for Strategies
  • Feasibility – a strategy must neither overtax available resources (abilities, competencies, skills and talents) nor create unsolvable problems.
  • Advantage – a strategy must provide for the creation and/or maintenance of a competitive advantage in resources, skills and position.
prioritization
Prioritization
  • Key points: Once the SWOT analysis has been completed, mark each point with:
    • Things that MUST be addressed immediately.
    • Things that can be handled now.
    • Things that should be researched further.
    • Things that should be planned for the future.
brainstorming do s and don ts
Brainstorming Do’s and Don’ts
  • Don't be modest - be realistic.
  • Respect: No criticism or ridiculing of any ideas
  • Encourage everyone to participate.
  • Avoid lengthy discussions on the pros and cons of an idea, this will be done later during the investigation phase.
  • Problems  Results  Tasks
    • Action Plan (summary of idea), a list of further investigation requirements, responsible person and deadline
workshop
Workshop

A. Brainstorming

  • Internal – External Factors
  • Strengths, Weaknesses, Opportunities, Threats
  • Problems  Results  Tasks
  • SWOT Template

B. SWOT to Strategies

  • SWOT Matrix of Strategies

C. Prioritization [Problems  Results  Tasks]

references
References
  • Stevenson, William J. (1992). Production / Operations Management, 4th Edition
  • Allen, Tim (2003). Strategic Management. Prentice Hall
  • Bonacorsi, Steven (2006). SWOT Analysis. Advanced Integrated Technologies Group