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-Competition regulation
NO LIMITS ON COMPETITION
-Safety regulations
the government adopted some of the
modern safety regulations
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2.Economic
-Economic growth
SOUND ECONOMIC GROWTH
-Interest rates & monetary policies
interest rates under control / a sound monetary policies]
-Government spending
government spending is significant and is it under control
-Taxation
the taxation HAS encouraged the industry .
-Exchange rates
there well managed exchange controls and is it helping the industry.
-Inflation rates
[ THE inflation is well under control ]
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3.SOCIAL
-Health consciousness & welfare, feelings on safety
the people are becoming safety / health consciousness.
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4.Technological
Industry focus on technological effort
the industries focused on using improved technology.
New inventions and development
new inventions are being encouraged for developments.
=========================
THE NEWLY ADOPTED OBJECTIVES
-to increase sales volume by 20% every year
over the next 5 years.
2. Levels of Strategy
1. Mission/Domain- Before identification of strategy can occur, one must
clearly identify the mission or domain of the organization. The domain of an o
rganization consists of the population it serves and the functions it performs (
satisfies) for that population. Sometimes the domain is defined in terms of pro
ducts or services offered (rather than functions performed), but this tends to b
e more limiting because it defines the mission more in terms of means rather tha
n ends.
4. Functional Strategies
- How do organizational functional units contribute to the business level strate
gies? How can functional strategies be integrated to achieve competitive advanta
ge?
1. Marketing Strategies- How do we communicate our strengths to th
e customer? How do we identify customer requirements and changes in customer req
uirements?
2. Human Resource Strategies- How do we recruit, train, develop, m
otivate, compensate, and place employees so that behavior is directed toward the
competitive strategy and works to build competitive advantage?
3. Financial Strategies- How do we secure financial resources nece
ssary to carry our competitive strategy?
4. Operations Strategies- How do we design our processes to produc
e products and/or service that meet customer requirements as specified in our st
rategy?
5. Information System Strategies- How do we provide decision maker
s, at all levels, with information necessary to make decisions consistent with s
trategy?
6. Technological (R & D) Strategies- How do we develop products co
nsistent with customer requirements as specified in strategy?
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Q2. What do you understand by SWOT analysis? Explain how it is important
for the organizations in taking strategic decisions. Illustrate your answer with
the help of an example.
Definition of SWOT
SWOT analysis is a general technique which can be applied across diverse functio
ns and activities, but it is particularly appropriate to the early stages of pla
nning for CORPORATE STRATEGY . Performing SWOT analysis involves generating and
recording the strengths, weaknesses, opportunities, and threats relating to a g
iven task. It is customary for the analysis to take account of internal resource
s and capabilities (strengths and weaknesses) and factors external to the organi
sation (opportunities and threats).
THE NECESSITY FOR SWOT
Strengths
Strengths usually describe things that the company excels at doing. All strength
s listed should support a competitive advantage that the corporation has over it
s rivals. These can be tangible (fast delivery of products to customers) or inta
ngible (excellent customer service promotes very high customer satisfaction). As
these are internal attributes they should all be within the company s control. As
k questions such as:
What does the company do well?
What resources (physical and personnel) does the company possess?
What advantages does the company have over its rivals?
Do not forget to include key strengths that the people in the organization posse
ss which includes things such as their experience, knowledge, educational backgr
ound, business connections, and job skills. Tangible assets such as plant capaci
ty, state of the art equipment and facilities, strong supply chains, available c
apital (or access to credit), loyal customers, patents, copyrights and superior
information systems.
Strengths
The Strengths can be considered as anything that is favourable towards the busin
ess for example:
Currently in a good financial position (few debts, etc)
Skilled workforce (little training required)
Company name recognized on a National/Regional/Local level
Latest machinery installed
Own premises (no additional costs for renting)
Excellent transport links (ease of access to/from the Company)
Little/non-threatening competition
THE SWOT ANALYSIS --STRENGTHS
-helps to identify the core compentences
-helps how to maximize the strengths to gain
the maximum results --sales/profit/market share/competitive position.
========================================
Weaknesses
Weaknesses are factors that the company controls that impair its ability to comp
ete with other firms. Weaknesses are any areas in which you need to improve to m
aintain a competitive edge in your market. Ask questions such as:
Which departments need to be improved?
What resources does the company lack?
What skill sets do the employees lack that competing firm s workforces have?
What services does the company fail to offer?
Weaknesses
Recognizing the Weaknesses will require you being honest and realistic. Don t leav
e anything out as this is an important part as to realize what needs to be done
to minimize this list in the future. Here are a few examples:
Currently in a poor financial position (large debts, etc)
Un-Skilled workforce (training required)
Company name not recognized on a National/Regional/Local level
Machinery not up to date (Inefficient)
Rented premises (Adding to costs)
Poor location for business needs (Lack of transport links etc)
Stock problems (currently holding too much/too little)
Too much waste
THE SWOT ANALYSIS --WEAKNESS
-helps to identify the weak points in terms of skills/manpower/
resources etc
-how to improve / overcome these weak factors.
==================================================
Opportunities
Opportunities are the external factors that will allow your business to succeed
against its rivals. Since these are external factors, they may not be under cont
rol of the company. Ask questions such as:
What opportunities for new products or services exist in your market?
Are new markets available that could provide opportunities for growth?
Have new technologies been developed that will allow us to compete more effectiv
ely?
Have consumer lifestyles, wants and desires shifted?
Are the target customers economically healthy?
Do previously resolved internal problems give the company a competitive edge?
Usually, opportunities reflect the areas where you can excel by changing the com
pany s marketing strategy. Should new products be launched? Should existing produc
ts be promoted to new customer groups? If possible, identify the time frame for
each opportunity. Is it something the company must capitalize on by a certain da
te or will the opportunity last indefinitely?
Opportunities
Keeping in mind what you have listed as your Company Strengths, SWOT Analysis ca
n now influence the Opportunities for the business. These can be seen as targets
to achieve and exploit in the future for example:
Good financial position creating a good reputation for future bank loans and bor
rowings
Skilled workforce means that they can be moved and trained into other areas of t
he business
Competitor going bankrupt (Takeover opportunity?)
Broadband technology has been installed in the area (useful for Internet users)
Increased spending power in the Local/National economy
Moving a product into a new market sector
THE SWOT ANALYSIS -- OPPORTUNITIES
-helps to identify gaps in the market which can be converted into
opportunities.
-helps to identify the gaps in performance , which can be exploited.
=======================================
Threats
Threats are factors beyond the control of the company that reduces its competiti
veness in the marketplace, adversely affect marketing strategy, or in a worst ca
se scenario, potentially lead to the total demise of the business (think buggy w
hip manufacturers when automobiles became popular). Although the company has no
control over external factors, the key is to identify the threats and draw up co
ntingency plans to negate the threat or soften the impact should an event arise.
Ask questions such as:
Are consumer preferences shifting away from company business lines?
Is price competition from competitors affecting company profit margins?
Are new technologies making the company s products or processes obsolete or unaffo
rdable?
Are new competitors entering the market space?
Are suppliers increasing prices?
Are raw material costs going up due to scarcity or catastrophic events?
Is the general economy on the downswing?
Classifying threats by the degree of impact and the likelihood of their occurren
ce is often useful to help identify which threats need to be planned for immedia
tely.
Threats
The final part of the analysis will also be seen as the most feared- the Threats
. It has to be done and therefore taking into account what you have listed as yo
ur weaknesses, the threats will now all seem too clear. Examples
Large and increasing competition
Rising cost of Wages (Basic wage, etc)
Possible relocation costs due to poor location currently held
Local authority refusing plans for future building expansion
Increasing interest rates (increases borrowing repayments, etc)
End of season approaching (if you depend on hot weather, etc)
Existing product becoming unfashionable or unpopular
THE SWOT ANALYSIS --THREAT
-helps to identify the various threats like
competition/social /political/economic/technological etc
and to take preventive action.
=========================================
THE SWOT ANALYSIS --STRENGTHS
-helps to identify the core compentences
-helps how to maximize the strengths to gain
the maximum results --sales/profit/market share/competitive position.
THE SWOT ANALYSIS --WEAKNESS
-helps to identify the weak points in terms of skills/manpower/
resources etc
-how to improve / overcome these weak factors.
THE SWOT ANALYSIS -- OPPORTUNITIES
-helps to identify gaps in the market which can be converted into
opportunities.
-helps to identify the gaps in performance , which can be exploited
THE SWOT ANALYSIS --THREAT
-helps to identify the various threats like
competition/social /political/economic/technological etc
and to take preventive action.