STRATEGIC MANAGEMENT

SWOT Matrix
 The SWOT Matrix
A firm should not necessarily pursue the more lucrative
opportunities. Rather, it may have a better chance at
developing a competitive advantage by identifying a fit
between the firm's strengths and upcoming
opportunities. In some cases, the firm can overcome a
weakness in order to prepare itself to pursue a
compelling opportunity.
To develop strategies that take into account the SWOT
profile, a matrix of these factors can be constructed.
The SWOT matrix (also known as a TOWS Matrix) is
shown below:
 S-O strategies pursue opportunities that are a good fit to the
company's strengths.
W-O strategies overcome weaknesses to pursue opportunities.
S-T strategies identify ways that the firm can use its strengths to
reduce its vulnerability to external threats.
W-T strategies establish a defensive plan to prevent the firm's
weaknesses from making it highly susceptible to external threats.

Strengths Weaknesses

OPPORTUNITIES S-O strategies W-O strategies

THREAT S-T strategies W-T strategies

Strengths and weaknesses are ?????to the company and can be directly
managed by it, while the opportunities and threats are ????? and the
company can only anticipate and react to them. Often, swot is presented in
a form of a matrix as in the illustration below:
 Benefits
SWOT tool has 5 key benefits:
Simple to do and practical to use;
Clear to understand;
Focuses on the key internal and external
factors affecting the company;
Helps to identify future goals;
Initiates further analysis.
 Limitations
Although there are clear benefits of doing the analysis,
many managers and academics heavily criticize or dont
even recognize it as a serious tool.[2] According to many, it is
a low-grade analysis. Here are the main flaws identified by
a research:
Excessive lists of strengths, weaknesses, opportunities and
threats;
No prioritization of factors;
Factors are described too broadly;
Factors are often opinions not facts;
No recognized method to distinguish between strengths
and weaknesses, opportunities and threats.
 Where can I find strength/Weakness?

Some strengths or weaknesses can be recognized instantly

without deeper studying of the organization. But usually
the process is harder and managers have to look into the
firms:
Resources: land, equipment, knowledge, brand equity,
intellectual property, etc.
Core competencies
Capabilities
Functional areas: management, operations, marketing,
finances, human resources and R&D
Organizational culture
Value chain activities
 Strength/Weakness?
Brand Images(Strength/Threat?)
Profit Margin(Strength/Threat?)
 Guidelines for successful SWOT

Guidelines for successful SWOT

The following guidelines are very important in writing a successful swot
analysis. They eliminate most of swot limitations and improve it's results
significantly:
Factors have to be identified relative to the competitors. It allows
specifying whether the factor is a strength or a weakness.
List between 3 5 items for each category. Prevents creating too short or
endless lists.
Items must be clearly defined and as specific as possible. For example,
firms strength is: brand image (vague); strong brand image (more
precise); brand image valued at $10 billion, which is the most valued
brand in the market (very good).
Rely on facts not opinions. Find some external information or involve
someone who could provide an unbiased opinion.
Factors should be action orientated. For example, slow introduction of
new products is action orientated weakness.
 SWOT analysis of Company "A"
Strengths
Second most valuable brand in the
world valued at $76 billion
Diversified income (5 different brands
earning more than $4 billion each)
Strong patents portfolio (15,000
patents)
Investments in R&D reaching 4 billion a
year.
Competent in mergers & acquisitions
Have an access to cheap cash reserves
Effective corporate social responsibility
(CSR) projects
Localized products
Highly skilled workforce
Economies of scale or economies of
scope
Weaknesses
Investments in R&D are below the
industry average
Very low or zero profit margins
Poor customer services
High employee turnover
High cost structure
Weak brand portfolio
Rigid (bureaucratic) organizational culture
impeding fast introduction of new
products
High debt level ($3 billion)
Brand dilution (the firm has too many
brands)
Poor presence in the world's largest
markets
 Opportunities
Market growth for the main firm's
product
Growing demand for renewable
energy
New technology, that would drive
production costs by 20% is in
development
Our country accession to EU
Changing customer habits
Disposable income level will increase
Government's incentives for 'specific'
industry
Economy is expected to grow by 4%
next year
Growing number of people buying
online
Interest rates falling to 1%
Threats
Corporate tax may increase from 20%
to 22% in 2013
Rising pay levels
Rising raw material prices
Intense competition
Market is expected to grow by only
1% next year indicating market
saturation
Increasing fuel prices
Aging population
Stricter laws regulating environment
pollution
Lawsuits against the company
Currency fluctuations
 ADVNACED SWOT
A more in-depth SWOT analysis can help you better understand your companys competitive
situation. One way to improve upon the basic SWOT is to include more detailed competitor
information in the analysis. You can note the internet-related activities such as trade
organization participation and outside links to the sites. This will better help you spot
opportunities for and threats to your company. You can also take a closer look at the business
environment. Often, opportunities arise as a result of a changing business environment.
Some examples are:
A new trend develops for which demand outstrips the supply of quality options.
A customer segment is becoming more predominant, but their specific needs are not being
fully met by your competitors.
A customer, competitor, or supplier goes out of business or merges with another company.
You can also enhance a SWOT analysis through surveys. You can learn more about your own
as well as competitor sites and businesses. Areas you can research include
1) Customer awareness, interest, trial, and usage levels
2) Brand, site, and/or company image
3) Importance of different site or product attributes to your customers
4) Product and/or site performance.
Whether using a basic or more advanced approach to SWOT analysis, you are sure to come
away with newfound insights. Use these to increase your companys effectiveness and as
input into your business or marketing plan.
 Advanced SWOT
Step 1. Identify strengths, weakness, opportunities and
threats.
Step 2. Prioritize them.
Strengths and weaknesses
Importance (.01-01,Not Imp-Very Imp)
Rating(1-3,Minor-Major)
Score.
Opportunities and threats
Importance (.01-01,No Impact-Very High Impact)
Probability(1-3,Low-High)
Score
 NAME OF IMPORTANCE RATING SCORE
STRENGTH
GOOD TEAM WORK 0.7 1 0.8
GOOD BRAND 0.9 2 1.8
NAME OF IMPORTANCE PROBABILITY SCORE
WEEKNESSES
LESS TECHNICAL 0.6 3 1.8
MEN
BUDGET 1 3 3
CONSTRAIN
 BRAIN GAME
You have recently joined as an executive in a Private Bank Korotoa.
No sooner you joined the bank, you found a good working environment in
your branch. A new branch manager has joined from an International bank
who is well reputable in banking sector. He is very much knowledgeable
but abide by rules. He believes in innovation. He is a work mania too. He
likes to keep liaison with other clients during office time and starts
working after that. He likes his staffs to be present at that time. Few
employees are finding it difficult to coup up with this situation. A new
bank Padma has started operating. They are planning to hire new staffs.
Requirements.
1. Following swot, find out the strength, weakness, opportunities and
threat of your bank.
2. Following Advanced swot, prioritize the strength & weakness.

 Thank you
See you in next class