SWOT ANALYSIS & BENCHMARKING

BY: ASHISH MURCHITE MAMTA KUMAWAT NIDHI JOSHI PRIYANKA JAIN SMRUTI PRIYADARSINI
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SWOT ANALYSIS

S W O T represents the first letter in

y y y y

S trengths W eaknesses O pportunities T hreats

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SWOT

A widely used framework for organizing and using data and information gained from situation analysis Encompasses both internal and external environments One of the most effective tools in the analysis of environmental data and information It is an instrument within strategic planning

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SWOT

Factors affecting an organization can usually be classified as: Internal factors

y y

Strengths (S) Weaknesses (W)

Strengths

Weaknesses

External factors
y y

Opportunities (O) Threats (T)

Opportunities

Threats

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SWOT: INTERNAL FACTORS

Strengths
y

Positive tangible and intangible attributes, internal to an organization. They are within the organizations control

Weaknesses
y

Factors that are within an organizations control that detract from its ability to attain the core goal. In which areas might the organization improve?

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SWOT: EXTERNAL FACTORS

Opportunities
External attractive factors that represent the reason for an organization to exist and develop. What opportunities exist in the environment which will propel the organization? y Identify them by their time frames
y

Threats
External factors, beyond an organizations control, which could place the organizations mission or operation at risk. The organization may benefit by having contingency plans to address them should they occur y Classify them by their seriousness and probability of occurrence
y

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FOR THE EXTERNAL FACTORS

Seriousness of Impact
Low High

High

Minimum resources if any

Must plan for

Probability of occurrence

Low

Forget it

Maintain flexibility in plan

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IDENTIFYING RESOURCE STRENGTHS AND COMPETITIVE CAPABILITIES

A

strength is something a firm does well or an attribute that enhances its competitiveness
y y y y y y y y

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 competitive capabilities are competitive assets!

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COMPETENCIES VS. CORE COMPETENCIES VS. DISTINCTIVE COMPETENCIES

A competence is the product of organizational learning and experience and represents real proficiency in performing an internal activity A core competence is a well-performed internal activity central (not peripheral or incidental) to a companys competitiveness and profitability A distinctive competence is a competitively valuable activity a company performs better than its rivals
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COMPANY COMPETENCIES AND CAPABILITIES

Stem from skills, expertise, and experience usually representing an

Accumulation of learning over time and y Gradual buildup of real proficiency in performing an activity
y

Involve deliberate efforts to develop the ability to do something, often entailing

Selecting people with requisite knowledge and skills y Upgrading or expanding individual abilities y Molding work products of individuals into a cooperative effort to create organizational ability y A conscious effort to create intellectual capital
y

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CORE COMPETENCIES A VALUABLE COMPANY RESOURCE

A competence becomes a core competence when the well-performed activity is central to a companys competitiveness and profitability Often, a core competence is knowledge-based, residing in people, not in assets on a balance sheet A core competence is typically the result of cross-department collaboration A core competence gives a company a potentially valuable competitive capability and represents a definite competitive asset
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EXAMPLES: CORE COMPETENCIES

Expertise in integrating multiple technologies to create families of new products Know-how in creating operating systems for cost efficient supply chain management Speeding new/next-generation products to market Better after-sale service capability Skills in manufacturing a high quality product Capability to fill customer orders accurately and swiftly
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DISTINCTIVE COMPETENCE A COMPETITIVELY SUPERIOR RESOURCE

A distinctive competence is a competitively valuable activity that a company performs better than its competitors A distinctive competence is a competitively potent resource source because it
y

Gives a company a competitively valuable capability unmatched by rivals Can underpin and add real punch to a companys strategy Is a basis for sustainable competitive advantage

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EXAMPLES: DISTINCTIVE COMPETENCIES

Toyota
Low-cost, high-quality manufacturing of motor vehicles

Starbucks
Innovative coffee drinks and store ambience

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DETERMINING THE COMPETITIVE POWER OF A COMPANY RESOURCE

To qualify as competitively valuable or to be the basis for sustainable competitive advantage, a resource must pass 4 tests:
1. Is the resource hard to copy? 2. Is the resource durable does it have staying power? 3. Is the resource really competitively superior? 4. Can the resource be trumped by the different capabilities of rivals?
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IDENTIFYING RESOURCE WEAKNESSES AND COMPETITIVE DEFICIENCIES

A weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage Resource weaknesses relate to
y

Inferior or unproven skills, expertise, or intellectual capital Lack of important physical, organizational, or intangible assets Missing capabilities in key areas

Resource weaknesses and deficiencies are competitive liabilities!

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IDENTIFYING A COMPANYS MARKET OPPORTUNITIES

Opportunities most relevant to a company are those offering

Good match with its financial and organizational resource capabilities Best prospects for profitable long-term growth Potential for competitive advantage

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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
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ROLE OF SWOT ANALYSIS IN CRAFTING 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
y

Using the 4 lists to draw conclusions about a companys overall situation Acting on the conclusions to

Better match a companys strategy to its resource strengths and market opportunities Correct the important weaknesses Defend against external threats
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THE THREE STEPS OF SWOT ANALYSIS

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CREATE A PLAN OF ACTION

What steps can you take to:

Capitalize on your strengths y Overcome or minimize your weaknesses y Take advantage of some new opportunities y Respond to the threats
y

Set goals and objectives, like with any other plan

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MAJOR BENEFITS OF SWOT

ANALYSES
Simplicity Flexibility Integration and synthesis Collaboration Lower costs

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FOR A PRODUCTIVE SWOT

ANALYSIS
Stay focused. Be specific and avoid grey areas. Keep your swot short and simple. Avoid complexity and over analysis Collaborate with other functional areas Examine issues from the customers/ stakeholders perspective Look for causes, not characteristics Separate internal issues from external issues

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WHAT IS BENCHMARKING
Benchmarking is an improvement process that is used to identify best practice within a peer group and facilitate its incorporation into your organization Best practice refers to techniques, methods or processes that are more effective at delivering a desired outcome. Incorporating best practice into your organization can lead to greater efficiency and effectiveness and a happier customer.

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OBJECTIVES OF BENCHMARKING

Identify best and most efficient means of performing various value chain activities Learn what is the best way to perform a particular activity from those companies who have demonstrated that they are best-inindustry or best-in-world at performing the activity Learn what other firms do to perform an activity at lower cost Figure out what actions to take to improve a companys own cost competitiveness
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TYPES OF BENCHMARKING

There are four types of benchmarking: Strategic Benchmarking Functional Benchmarking Best Practices Benchmarking Product Benchmarking

   

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ETHICAL PRINCIPLES IN BENCHMARKING

Avoid actions implying an interest in

Restraint of trade Market and/or customer allocation schemes y Price fixing y Bribery
y y

Refrain from acquiring trade secrets by any means viewed as improper Be willing to provide same type of information to a benchmarking partner Communicate early to clarify expectations and avoid misunderstandings Be honest and complete

Treat benchmarking interchange as confidential Use information obtained only for stated purposes Respect corporate culture of partner companies Use benchmarking contacts designated by partner company Be fully prepared for each exchange Provide partners with agenda and questionnaire prior to exchange Follow through with commitments to partner in a timely manner Understand how partner wants information provided used

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THE BENCHMARKING PROCESS

Benchmarking has a defined process

1. 2. 3.

4. 5. 6. 7.

Identify the process that will be benchmarked consider what metrics will be measured Measure results in own organization Identify a benchmarking partner (look for one with favourable results or to the metric being measured or known best practice) Measure the process Analyze the conditions that determine the favourable results Determine an action plan to take your organization to the favourable results Review Benchmarking results and conduct regular reviews with your peer(s).

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BENEFITS OF BENCHMARKING
Benchmarking helps identify the gaps between the organization that is undertaking the benchmarking assessment and best practice. Undertaking benchmarking can lead to improvements being incorporated into processes and systems delivering gains in efficiency and effectiveness Benchmarking can help align improvement activity with strategic goals and objectives provides realistic and achievable targets

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PROBLEMS WITH BENCHMARKING

Problems with benchmarking occur where

y y y y y y

Data is not obtained for the process being measured and analysis becomes subjective No peer group/best practice identified (including data available) The gap between current state and best practice is captured but nothing is done about it Assumed best practice isn't best practice Benchmarking happens as a one off event and not reviewed periodically benchmarks give no indication of future capabilities

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T HANK YOU

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