Amity Business School

Amity Business School

MBA Class of 2010, Semester II

BESA

1
 Amity Business School

• Environmental analysis comprises scanning, monitoring,

analyzing, and
• forecasting the business situation. Scanning is to get the
relevant information
• from the information overload. It is to focus on the most
relevant information.
• Monitoring is to check the nature of the environmental
factors. Analyzing
• requires data collection and use of different required tools
and techniques.
• Forecasting is to find the future possibilities based on the
past results and
• present scenario.
 Designing Profiles Amity Business School

• After analyzing the environmental factors they are

recorded into the profiles.
• Such profiles record each component or variables into
left side and their
• positive, negative, or neutral indicators including their
statement in the right side. Internal areas are recorded
in Strategic Advantages Profile (SAP) and external
areas are recorded in Environmental Threat and
Opportunity Profile
• (ETOP). Strength, Weakness, Opportunity, and Threat
(SWOT) profile can be designed combining both of
these two profiles into one.
 Preparing ETOP Amity Business School

• Environmental threat and opportunity profile is

referred as ETOP profile. It identifies the relevant
environmental factors. Such factors might be
general environmental factors and task environment
factors. Thereafter, it is necessary to identify their
nature. Some factors are positive to the organization
whereas others are negative. Therefore, it is
necessary to find out their impact to the
organization. Positive, neutral, and negative sign in
ETOP denotes the relevant impact of environmental
factors.
 Preparing SAP
Amity Business School
/ CAP (Competitive Advantage Profile)

• Strategic advantage profile is known as SAP. It shows

strength and weakness of an organization. Preparation of
SAP is very similar process to the ETOP.
• There are generally five functional areas in most of the
organizations. These areas are Production or Operation,
Finance or Accounting, Marketing or Distribution, Human
Resource & Corporate Planning, and Research &
Development. These functional areas are listed to identify
their relative strength and weakness in SAP. Very similar to
the ETOP, positive, neutral,and negative signs are denoted
and brief description is written in SAP profile.
• Each functional area is very broad having many
components inside.
Amity Business School
 SWOT Analysis Amity Business School

InternalEnvironment

• Strengths
• Weaknesses

External Environment
• Opportunities
• Threats
 Criticisms of SWOT Amity Business School

• Analysis
it generates lengthy lists.
• it uses no weights to reflect priorities.
• it uses ambiguous words and phrases.
• the same factor can be placed in two categories
(e.g., a strength may also be a weakness).
• there is no obligation to verify opinions with data
or analysis.
• it only requires a single level of analysis.
• there is no logical link to strategy implementation.
 Amity Business School
External Factor Analysis Summary
External Factors
(EFAS) Weighted
Weight Rating Score Comments
1 2 3 4 5
Opportunities

Threats

Total Weighted Score 1.00

Notes: 1. List opportunities and threats (5–10 each) in column 1. 2. Weight each factor from 1.0 (Most Important) to 0.0 (Not
Important) in Column 2 based on that factor’s probable impact on the company’s strategic position. The total weights must sum to
1.00. 3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the company’s response to that factor. 4. Multiply
each factor’s weight times its rating to obtain each factor’s weighted score in Column 4. 5. Use Column 5 (comments) for rationale
used for each factor. 6. Add the weighted scores to obtain the total weighted score for the company in Column 4. This tells how
well the company is responding to the strategic factors in its external environment. A weighted score of 3.0 means average
performance.
Source: T. L. Wheelen and J. D. Hunger, “External Strategic Factors Analysis Summary (EFAS).” Copyright © 1991 by Wheelen and
Hunger Associates. Reprinted by permission.
 External Factor Analysis Summary Amity Business School

(EFAS): Maytag as Example

External Factors Weighted
Weight Rating Score Comments
Opportunities 1 2 3 4 5
• Economic integration of .20 4 .80 Acquisition of
European Community Hoover
• Demographics favor quality .10 5 .50 Maytag quality
appliances
• Economic development of Asia .05 1 .05 Low Maytag presence
• Opening of Eastern Europe .05 2 .10 Will take time
• Trend to “Super Stores” .10 2 .20 Maytag weak in this
Threats channel

• Increasing government regulations .10 4 .40 Well positioned

• Strong U.S. competition .10 4 .40 Well positioned
• Whirlpool and Electrolux strong .15 3 .45 Hoover weak globally
globally
• New product advances .05 1 .05 Questionable
• Japanese appliance companies .10 2 .20 Only Asian presence is
Australia

Total Scores 1.00 3.15

 Amity Business School
Internal Factor Analysis Summary
(IFAS) Weighted
Internal Factors Weight Rating Score Comments
1 2 3 4 5
Strengths

Weaknesses

Total Weighted Score 1.00

Notes: 1. List opportunities and threats (5–10 each) in column 1. 2. Weight each factor from 1.0 (Most Important) to 0.0 (Not
Important) in Column 2 based on that factor’s probable impact on the company’s strategic position. The total weights must sum to
1.00. 3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the company’s response to that factor. 4. Multiply
each factor’s weight times its rating to obtain each factor’s weighted score in Column 4. 5. Use Column 5 (comments) for rationale
used for each factor. 6. Add the weighted scores to obtain the total weighted score for the company in Column 4. This tells how
well the company is responding to the strategic factors in its external environment A weighted score of 3.0 means average
performance..

Source: T. L. Wheelen and J. D. Hunger, “External Strategic Factors Analysis Summary (EFAS).” Copyright © 1991 by Wheelen and
Hunger Associates. Reprinted by permission.
 Internal Factor Analysis Summary Amity Business School

(IFAS):
Internal Factors Maytag as Example Weight Rating
Weighted
Score Comments

Strengths 1 2 3 4 5
• Quality Maytag culture .15 5 .75 Quality key to success
• Experienced top management .05 4 .20 Know appliances
• Vertical integration .10 4 .40 Dedicated factories
• Employee relations .05 3 .15 Good, but deteriorating
• Hoover’s international orientation .15 3 .45 Hoover name in cleaners

Weaknesses
• Process-oriented R&D .05 2 .10 Slow on new products
• Distribution channels .05 2 .10 Superstores replacing
small dealers
• Financial position .15 2 .30 High debt load
• Global positioning .20 2 .40 Hoover weak outside the
United Kingdom and
Australia
• Manufacturing facilities .05 4 .20 Investing now

Total Weighted Score 1.00 3.05

 Strategic Factor Analysis Summary Amity Business School

1 2 (SFAS)
3 4 5 Duration 6
Strategic Factors

INTERMEDIATE
(Select the most important
opportunities/threats from EFAS, Table 3.4
Weighted

SHORT
and the most important strengths and

LONG
weaknesses from IFAS, Table 4.2) Weight Rating Score Comments

Total Score

Notes: 1. List each of the factors developed in your IFAS and EFAS tables in Column 1. 2. Weight each factor from 1.0 (Most
Important) to 0.0 (Not Important) in Column 2 based on that factor’s probable impact on the company’s strategic position. The total
weights must sum to 1.00. 3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the company’s response to
that factor. 4. Multiply each factor’s weight times its rating to obtain each factor’s weighted score in Column 4. 5. For duration in
Column 5, check appropriate column (short term—less than 1 year; intermediate—1 to 3 years; long term—over 3 years.) 6. Use
Column 6 (comments) for rationale used for each factor. A weighted score of 3.0 means average performance.
Source: T. L. Wheelen and J. D. Hunger, “Strategic Factors Analysis Summary (SFAS).” Copyright © 1997 by Wheelen and Hunger
Associates. Reprinted by permission.
 Amity Business School
Strategic Factor Analysis Summary (SFAS):
Maytag as Example Duration
Strategic Factors

INTERMEDIATE
(Select the most important
opportunities/threats from EFAS, Table 3.4
Weighted

SHORT
and the most important strengths and

LONG
weaknesses from IFAS, Table 4.2) Weight Rating Score Comments
S1 Quality Maytag culture (S) .10 5 .50 X Quality key to success
S3 Hoover’s international orientation (S) .10 3 .30 X Name recognition
W3 Financial position (W) .10 2 .20 X High debt
W4 Global positioning (W) .15 2 .30 Only in N.A., U.K., and Australia
O1 Economic integration of
European Community (O) .10 4 .40 X Acquisition of Hoover
O2 Demographics favor quality (O) .10 5 .50 X X Maytag quality
O5 Trend to super stores (O + T) .10 2 .20 X Weak in this channel
T3 Whirlpool and Electrolux (T) .15 3 .45 X Dominate industry
T5 Japanese appliance companies (T) .10 2 .20 X Asian presence

1.00 3.05
Total Score

Notes: 1. List each of the factors developed in your IFAS and EFAS tables in Column 1. 2. Weight each factor from 1.0 (Most
Important) to 0.0 (Not Important) in Column 2 based on that factor’s probable impact on the company’s strategic position. The total
weights must sum to 1.00. 3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the company’s response to
that factor. 4. Multiply each factor’s weight times its rating to obtain each factor’s weighted score in Column 4. 5. For duration in
Column 5, check appropriate column (short term—less than 1 year; intermediate—1 to 3 years; long term—over 3 years.) 6. Use
Column 6 (comments) for rationale used for each factor. A weighted score of 3.0 means average performance.
Source: T. L. Wheelen and J. D. Hunger, “Strategic Factors Analysis Summary (SFAS).” Copyright © 1997 by Wheelen and Hunger
Associates. Reprinted by permission.
 Amity Business School
TOWS Matrix
INTERNAL Strengths (S) Weaknesses (W)
FACTORS
(IFAS)
EXTERNAL
FACTORS
(EFAS)

Opportunities (O) SO Strategies WO Strategies

Threats (T) ST Strategies WT Strategies

Source: Adapted from Long-Range Planning, April 1982, H. Weihrich, “The TOWS Matrix—A Tool for
Situational Analysis” p. 60. Copyright 1982, with kind permission from H. Weihrich and Elsevier Science Ltd.
The Boulevard, Langford Lane, Kidlington OX5 1GB, UK.
 TOWS Matrix Amity Business School

INTERNAL Strengths (S) Weaknesses (W)

FACTORS
(IFAS) List 5 – 10 internal List 5 – 10 internal
EXTERNAL strengths here weaknesses here
FACTORS
(EFAS)

Opportunities (O) SO Strategies WO Strategies

List 5 – 10 external Generate strategies here Generate strategies here
opportunities here that use strengths to take that take advantage of
advantage of opportunities opportunities by
overcoming weaknesses

Threats (T) ST Strategies WT Strategies

List 5 – 10 external Generate strategies here Generate strategies here
threats here that use strengths to that minimize weaknesses
avoid threats and avoid threats

Source: Adapted from Long-Range Planning, April 1982, H. Weihrich, “The TOWS Matrix—A Tool for
Situational Analysis” p. 60. Copyright 1982, with kind permission from H. Weihrich and Elsevier Science Ltd.
The Boulevard, Langford Lane, Kidlington OX5 1GB, UK.