International SAMANM Journal of Marketing and Management

ISSN 2308-2399 April 2014, Vol. 2, No. 2

Strategy Formulating by SWOT and QSPM Matrix (Case

Study: Sanitary Ware Company of Golsar Fars)

Mina Salehi1, Jalal Ebrahimi Askari2, Shaghayeghe Behrouzi3

___________________________________________________________________________________________________

Abstract
The present study aimed to formulate strategy of sanitary Ware Company of Golsar Fars to
increase the production and growth of products of this company. Thus, at first the mission and
vision were investigated and by the analysis of internal and external environment of the
organization, the strengths, weaknesses, opportunities and threats of the company were evaluated
by internal factor evaluation and external factor evaluation matrix . Using SWOT matrix, the
suitable strategies were formulated for the company. Then, the competitive position of the
organization was found via competition evaluation matrix. Later, according to SWOT matrix and
competition evaluation matrix, company strategies were prioritized by QSPM method.
Keywords: Mission, Comprehensive framework of strategy, CPM matrix, SWOT matrix, QSPM
matrix
_______________________________________________________________________________

1. Introduction

In the current world, various changes are occurred in various fields. In the past decade, wide and
rapid changes were occurred in politics, economy, technology industry and business and now the
changes are observed. The increase of speed of these changes is due to the change in technologies,
free activities of world markets, increase of innovations, reduction of life cycle of products and
erosion of the temporal and spatial distances in technology and information. Thus, the

1
MA In Industrial Management-Operations Research Trends, Department Of Management, Science And Research, Islamic
Azad University, Fars, Iran; E-Mail: Mina_Salehi333@Yahoo.Com
2
MA Of Business Management, Expert Of Customs Affairs, Tehran Customs;Email: Jalalebrahimi18@Gmail.Com
3
MA In Industrial Management-Operations Research Trends, Department Of Management, Science And Research, Islamic
Azad University, Fars, Iran;E-Mail: Shaghayegh_Behrouzi@Yahoo.Com
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organizations are faced with the markets in which considerable competition and new and
increasing needs of customers are unique features. For survival in these markets, we need exact
identification of our environment to respond to its changes, if necessary (Abasi et al., 2013). The
present study evaluated and collected initial information in the comprehensive framework of
strategy formulating by providing related worksheets and is provided and by management and its
experts, at first mission and statement are provided and then for more recognition of organization,
internal factor evaluation and external factor evaluation were applied. In comparison of the
balance of key strengths and weaknesses and strategic opportunities and threats, SWOT matrix
was used and Profile Matrix (CPM) was used. In decision making stage, by using Quantitative
Strategic Planning Matrix (QSPM), the identified strategies were evaluated and judged as
objectively without personal bias (Amini et al., 2013).

2. Theoretical Basics And Review Of Literature

Strategic management is the process by which top management of the institution determines the
performance and long-term orientation of the organization by the collaboration of all the levels of
organization. This process is fulfilled via correct strategy formulation, consistent implementation
and continuous evaluation (Kamal Abadi et al., 2010). Strategic management process encompasses
three stages: Strategy formulation, strategy implementation, strategy evaluation. Strategy
evaluation is the first stage of strategic management process. Strategy formulation aims for
determining the company mission, identification of the factors in external environment threatening
the organization or creating the opportunities, identifying the strengths and weaknesses of
organization, determining the long-term goals, considering various strategies and selecting special
strategies to continue activity. In this stage, the type of activity of company, the activities being
eliminate, resources allocation method, decision making about development or variety of activities
are done (David, 2011). There are various methods and techniques to analyze the strategic items in
strategic management process and SWOT is the most common method evaluating the
opportunities, threats, strengths and weaknesses (Motefaker et al., 2013). This matrix was
introduced in 1511 by Albert Hamfry (Parhizgar et al., 2010). A research project in Stanford
University in 1511, 1571 by the data of 911 fortune organizations guided it (Khorshid and
Ranjbar, 2010). SWOT is an acronym of internal strengths and weaknesses of business and
environment opportunities and threats (Parhizgar et al., 2010). SWOT matrix is a strategic
planning tool that is applied for evaluation of strengths and weaknesses of an organization and
coping environmental opportunities and threats (Khorshid and Ranjbar, 2010|).

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3. Study Method

The present study was practical-applied study that is done by SWOT matrix method and
formulated strategy of a company. For information analysis of internal and external environment,
open questionnaire was used and the founders of the company were interviewed. Then, the
collected information was classified and a list of the most important weaknesses and strengths,
threats and opportunities was provided and for re-evaluation was presented to the founders of
company and then the mean of their comments was used for data analysis.

4. Introduction Of Company

Golsar Fars Company in the kilometer 5 of Shiraz-Sepidan road was registered in 1984 to meet the
increasing demand of products in sanitary ware company and it was used in 1993. By being
successful in market, the development projects and increase of capacity were operated since 1996
continually and in some different phases. Now, this unit with the production of 17000 ton final
products is one of the greatest domestic manufactures and one of successful exporters of these
products in foreign markets. Golsar Fars Company by using specialized experts and high technical
knowledge and by relying on the experiences and learning of competition and effective presence
in domestic and foreign markets put improving the quality of products and quantitative
development of production on priority of future movements. The increase of quality level,
products variety (more than 100 types of different products) and innovation in design opened new
markets to Golsar products as besides being present in the market of all provinces in the country
with more than 180 sale agents exported its products to more than 13 countries in the world.

5. Methodology

Based on the advantages of disadvantages of each of strategic planning methods and the initial
recognition of sanitary ware Golsar Fars Company and its environmental conditions, “David”
method is selected as basic method and by required changes consistent and was designed with the
conditions of this project and later the details are mentioned. Before dealing with the details of
method and project executive methods, it can be said that each design and program is done by a
road map and model for its correct and step-wise implementation. Thus, in this project, it is

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attempted to select the best method for implementation of project and project implementation
stages are taken based on it by which the required condition for successful implementation of
project is provided. The presented framework in Figure 1 is a comprehensive model of strategic
management process and it is common and acceptable. This model never guarantees company
success but presents a practical method for formulation of strategies, implementation and
evaluation (R David, 2010).

Figure 1: Comprehensive framework of strategy formulating (Arabi, 2010)

6- Mission

The production and supply of excellent sanitary ware in Iran and Middle East markets for the
consumers of sanitary and ceramic ware consumers, to provide the stable profit for the
stockholders via making customers happy, using knowledge-based structure and committed
employees and useful interaction with business partners and social responsibility.

7- External factors evaluation

In evaluation of external environment, we analyze the industry and environment. The focus on
identification of industry events and its evaluation provided the update control of company and
external environment evaluation led to recognition of key opportunities and key threats.
To analyze the industry, there are two techniques as:

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7-1 The analysis of industry by External Factor Evaluation (EFE) technique: This technique is
including 5 steps: Identify 10 to 20 external factors (opportunity and threat). Give weight ranging
0, 1 (the sum of weights for all the opportunities and threats is 1). Rank each of the factors as 1 to
4 (company strategies in the next stage should be controlled based on this output) (score 1 is the
poorest reaction and 7 is the best reaction and 2 is average reaction and 3 is above average).
Multiply each rank by its weight (weighted score of each factor is considered in this stage). The
general weight sum of ranks is obtained (this ranks weight show the general condition of
organizations). The highest number is 4, lowest 1 and the mean is 2.5. If the number if more than
2.5, the environment is more entrepreneurial and if the number is lowers than 2.5, the company is
faced with serious threats. Based on the selected method of Golsar in formulating strategic plan,
the study of environmental factors of organization is done in two headlines of macro
environmental factors (total industry) and factors of specialized environment of business (sanitary
ware industry). In the study of macro factors by PEST method, four macro factors political,
economic, social and technological are estimated. In the analysis of specialized environment
factors of business, by using porter methodology, four forces as: threat of new competitors,
bargaining power of suppliers’ customers, alternative products and providers are evaluated. The
required information for the analysis of specialized environment of business is collected and
classified via market studies, competitors’ performance analysis, evaluation system of suppliers
and evaluation system of customers’ satisfaction. Golsar Fars company to identify the
opportunities and threats in organization analyzed PORTER (special environment of sanitary ware
industry) and PEST analysis (macro environment of industry) and in accordance with Figure 2, the
information is shown as opportunity (O), threat (T) in EFE matrix. PEST: Political, economic,
technological and social factors (total industry). PORTER: competitors and new entrants,
customers’ bargaining power, substitute products, suppliers (sanitary ware industry).

Figure 2: The evaluation of environmental factors of organization

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External factor evaluation matrix is shown in table 1:

Table 1: External factor Evaluation matrix

7-2 The analysis of industry by CPM technique

The inputs of this matrix are important factors of organization and in this matrix the organization
is evaluated with its competitors. At first, the important factors of success in this industry are
listed and a weight ranging 0, 1 is given to them. The sum of weights should be equal to 1. Then,
each of the factors is ranked as 1, 4, do it for your company and the competitor company. Multiply
industry weight by rank of your company and competitors companies and finally the scores of
each company are added and the company with high score is in a good condition compared to its
competitors. CPM matrix is shown in Figure 4. Sanitary ware Golsar Fars Company to identify the
existing success factors in marketing and sanitary ware sale applied 4P’s model as shown in
Figure 3. In this approach, the performance of main competitors of the company and major
importers of sanitary ware are compared n various fields with the condition of company and
existing success factors in the market were extracted by this factor.

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Table 2: CPM matrix

The research of sanitary ware market

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Figure 3: 4P model
8- Internal factor evaluation
The internal strategic evaluation is including operational fields of business (strengths and
weaknesses). Strengths are the items in which our competitors cannot imitate us in these cases and
strength is created by main competence of organization and the strategies are designed as the
weaknesses are improved and strengths are emphasized. The required information of internal
environment is obtained of management analysis, markets, financial affairs/accounting,
production/operation, research and development and existing information systems.
Internal Factor Evaluation (IFE) matrix: The matrix by which internal factors are analyzed is IFE
matrix and the stages of matrix are as followings:
Make a list of internal factors (10 to 20 strengths and weaknesses). Give weight ranging 0, 1 (the
sum of weights is 1). Rank each of the factors as 1 to 4. Multiply each score by its weight and
weighted score is obtained. Add weighted scores for weaknesses and strengths. The highest
weighted score for each organization is 4, lowest 1 and the mean is 2.5. The analysis of internal
factors of sanitary ware company of Golsar Fars: One of the main inputs of strategic planning
process in Golsar Fars Co. is the analysis of measurement of internal processes performance.
These inputs are collected via managers’ dashboard system (the indices in Nashr Danesh software)
in the company and were given to the strategic planning process. Now, more than 350
performance indices are measured in Golsar Company. Of which, about 40 main are indices of

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BSC strategic goals of Golsar. To extract the required data to formulate the environmental plans,
the company measured and analyzed environment performance indices. The result of all the
analyses as internal environment analysis of strengths (S), weakness of organization (W) are
shown in IFE matrix of table 3:
Table 3: Internal factor evaluation matrix
EFE Opportunities Weight Rank Product
S1 High quality of manufacturing 0.08 4 0.32
products
S2 Satisfaction of beneficiaries of 0.08 3 0.24
financial performance
S3 Using the composition of experts 0.05 2 0.1
with high knowledge and
valuable experience
S4 Using R&D active unit 0.05 4 0.2
S5 Organizational attachment and 0.08 4 0.32
high responsibility of employees
S6 Low rate of waste (good 0.08 4 0.32
performance of product process)
S7 Capability and export 0.04 3.5 0.28
S8 Having mechanized lab 0.06 3 0.18
Threats Weight Rank Product
w1 The lack of using study 0.06 3 0.18
instruments in controlling errors
and waste
w2 Weakness in after sale services 0.05 3 0.15
w3 The lack of adequate access to 0.08 3.5 0.28
information of market,
competitors, society and industry
w4 The weakness of internal and 0.05 2.5 0.125
external logistic system
w5 The lack of balance of production 0.08 3 0.24
line
w6 Weakness in training sector of 0.07 2 0.14
employees
w7 The lack of online sale systems 0.05 3 0.15
Sum 1 3.225

9- SWOT analysis matrix

SWOT analysis is an important support tool for decision making and it is used as an instrument for
organized analysis of internal and external environments of organization (Kilter, 1988). In SWOT
analysis, internal and external factors are investigated to identify the opportunities, strengths and
weaknesses of organization in future and for better coping with them, suitable strategies are
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formulated. This matrix is shown in the following Table. One of the important tools mangers
compared the information of internal and external factors and based on main strategies can present
different types of strategies, the possible strategies are considered as SO, WO, ST, WT groups
(Karbasi, 2007). Table 4 shows SWOT matrix of sanitary ware Golsar Fars Company.
Table 4: SWOT matrix
SWOT matrix
O1 Low customs tariffs of
government to export
product
O2 The lack of substitute
products
O3 Having access to high
quality raw materials
O4 Technology economic
spending of low pressure
O5 More demands than
supply for products
O6 Unsaturated market
O7 The increase of the
culture and health of society
T1 The control system of
government in stability of
price of factories products
despite the existence of
subsidy and increases of
costs
T2 Rapid changes in various
management levels in state
organizations of industries
and the related policy
change of the industries
T3 The price fluctuation of
raw materials
T4 The weakness of
transportation system
T5 The increases of import
of similar products with
S1 High quality of manufacturing
products
S2 Satisfaction of beneficiaries of
financial performance
S3 Using the composition of experts with
high knowledge and valuable experience
S4 Using R&D active unit
S5 Organizational attachment and high
responsibility of employees
S6 Low rate of waste (good performance
of product process)
S7 Capability and export
S8 Having mechanized lab
Developing share and development of
market
(S202),(S201),(S101),(S405),(S401),(S20
5)
Improving customer satisfaction (s102)
Increasing production capacity (s605),
(s305), (s105)
Development of sale agents (s206),(s106)
Giving trademark (s107)
Stable relation with suppliers (s203)
Increasing competitive ability (s402),
(s303)
Promotion of production technology
(s304)
Increase income (s406)
Increase export (s701)
Increase of competitive ability
(S3T7),(S3T5),(S1T5)
Giving trademark (S1T7)
Increasing organization flexibility (S4T2)
Identification of existing markets (S4T5)
Control expenditures (S6T1)
Development of share and development
of markets in the abroad (S7T7)
Reduction of costs (S8T1)
W1 The lack of using study
instruments in controlling errors and
waste
W2 Weakness in after sale services
W3 The lack of adequate access to
information of market, competitors,
society and industry
W4 The weakness of internal and
external logistic system
W5 The lack of balance of production
line
W6 Weakness in training sector of
employees
W7 The lack of online sale systems
Improving the performance of process
(w106),(w105),(w104),(w505)
Customer relationship management
(w305)
Improving information and
communication system (W701)
Developing the suppliers
(w4T4),(w4T3)
Improving production line performance
(W5T5)
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cheap prices
T6 Not opening LC for
Iranians due to the sanctions
and obligation of the
company for cash purchase
T7 The competitor
companies with famous
brand in geographical region
of the activities

10- Quantitative Strategic Planning Matrix

The matrix that is made in this stage is QSPM matrix as shown in Figure 8.
The characteristics of this matrix are shown as:
 Analytical technique to identify relative absorption of possible strategies
 It takes the inputs from stage 1 and stage 2.
 It acts based on internal and external success criteria factors
 It requires knowledgeable biases
Strategies: 1- Development of share and development of market, 2- improving customer
satisfaction, 3- increasing production capacity 4-Development of sale agents, 5- Improving
trademark, 6- Stable relation with suppliers, 7- Increase of competitive ability, 8- Improving
production technology, 9- increasing income, 10- increasing export, 11- increasing organization
flexibility, 12- identification of new markets, 13- costs control, 14- reduction of costs, 15-
improving processes performance, 16- customer relationship management, 17-improving
communication and information system, 18- Development of suppliers, 19- Improving production
line performance.
Table 5: QSPM matrix

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Table 6: QSPM matrix

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11- Conclusion
Strategic planning is an attempt to take fundamental decision and the activities showing the nature
of an organization (other existences) and what it does and they reasons of these activities (Braison,
2009). The present study attempted to identify and introduce sanitary ware of Golsar Fars and then
the information is analyzed. Finally, the following strategies were extracted and were prioritized
based on the results of QSPM matrix:1- Increasing competitiveness power, 2- Promoting
trademark, 3- Development of market share, 4- Increasing income, 5- Reduction of costs, 6-
Improving production line performance, 7- promoting customer satisfaction, 8- Sale agents
development, 9- increasing export, 10- increasing product capacity, 11- costs control, 12-
increasing flexibility of organization, 13- customer relationship management, 14- improving
production technology, 15- improving processes performance, 16- identification of new markets,
17- improving information and communication system, 18- stable relationship with suppliers, 19-
improving production line performance.

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