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The SWOT analysis enables companies to identify the positive and negative
influencing factors inside and outside of a company or organization.
Besides businesses, other organizations, in areas such as community health and
development and education have found much use in its guiding principles. The
key role of SWOT is to help develop a full awareness of all factors that may affect
strategic planning and decision making, a goal that can be applied to most any
aspect of industry
Strengths
A firm's strengths are its resources and capabilities that can be used as a basis
for developing a competitive advantage. Examples of such strengths include:
patents
strong brand names
good reputation among customers
cost advantages from proprietary know-how
exclusive access to high grade natural resources
favorable access to distribution networks
Weaknesses
The absence of certain strengths may be viewed as a weakness. For example,
each of the following may be considered weaknesses:
In some cases, a weakness may be the flip side of a strength. Take the case in
which a firm has a large amount of manufacturing capacity. While this capacity
may be considered a strength that competitors do not share, it also may be a
considered a weakness if the large investment in manufacturing capacity
prevents the firm from reacting quickly to changes in the strategic environment.
Opportunities
The external environmental analysis may reveal certain new opportunities for
profit and growth. Some examples of such opportunities include:
Threats
Changes in the external environmental also may present threats to the firm.
Some examples of such threats include:
STRATEGIC WINDOW
Period of time that is temporary between competitive abilities in an
organization and the markets existing needs.
EXAMPLE
This past year when Toyota had all of those recalls on their vehicles because of
the brake failures and other flaws in the design, the other big car company's such
as Ford and GM had a strategic window to take a major share of the market by
stealing Toyota's customers. However, even though these companies did
prosper well, I don't believe that they took the strategic window as much as they
could. I believe if they wanted to, they could have put Toyota under for good.
Strategic Business Unit
An autonomous division or organizational unit, small enough to be flexible and
large enough to exercise control over most of the factors affecting its long-term
performance.
Strategic business units are absolutely essential for multi product organizations.
These business units are basically known as profit centres. They are focused
towards a set of products and are responsible for each and every decision /
strategy to be taken for that particular set of products. Strategic business units
can be best explained with an example.
Example of Strategic business units The best example of strategic business
unit would be to take organizations like P&G or LG in focus. These organizations
are characterized by multiple categories and multiple product lines. For example,
HUL may have a line of products in the shampoo category, Similarly LG might
have a line of products in the television category. Thus to track the investments
against return, they may classify the category as a different SBU itself.
if the company have multi-sector business then it is suitable to use some
strategic business units.
let,s take example of Nestle , SA
They have business in coffee (Nescaf), bottled water, other beverages
(including Aero (chocolate) & Skinny Cow), chocolate, ice cream, infant foods,
performance and healthcare nutrition, seasonings, frozen and refrigerated foods,
confectionery and pet food.
of course each business must be treated as a strategic business unit so each
SBU can concentrate in each market by their own executives , instead of led by 1
centralized CEO
each SBU manager/CEO will be given autonomy to some extent of degree to
lead their own SBU
and usually each SBU shares functional programs and facilities with other SBUs,
and Head Company will give strategic direction in the development of the SBU.
But if a multinational company has only 1 business , like ben & jerry with ice
cream or starbuck with the coffee, they dont need some strategic business units,
their ice cream is already a strategic business unit, so dont mix a strategic
business unit as a strategy that chan be chosen to apply or not. (LOOK at the
definition of a strategic business unit below)