Why strategic plans fail by pptfiles


									SWOT analysis is a framework for generating strategic alternatives from a situation analysis.
SWOT (sometimes referred to as TOWS) stands for Strengths, Weaknesses, Opportunities, and Threats. The SWOT framework was
described in the late 1960's by Edmund P. Learned, C. Roland Christiansen, Kenneth Andrews, and William D. Guth in Business Policy, Text
and Cases (Homewood, IL: Irwin, 1969).

Benefits of SWOT Analysis
    Concentrates on the issues that potentially have the most impact.
    Useful when a very limited amount of time is available to address a complex strategic situation.
    Simple, in that it requires no extensive training
    Flexible, it can enhance strategic planning in the absence of extensive marketing information systems.
    Helps integrate and synthesize diverse information, both of a quantitative and qualitative nature.
    Can foster collaboration between managers of different functional areas.

C.R. Marshall - University of Wisconsin Stevens Point
Gary Mullins - University of Wisconsin Stevens Point
Robert E. Allen - Robert Morris College

The steps are as follows:
        I - List Strengths, Weaknesses, Opportunities, and Threats.
1. Basic internal on axis analysis
2. Basic external on axis analysis
3. Cross axis analysis
          II - Use the list to Determine Your Competitive Position.
4. Quadrant identification
          III- Based on competitive position, select an appropriate strategy
5. Current strategy analysis
6. New strategy candidate list development
7. Analysis and selection of candidate strategy

List Strengths, Weaknesses, Opportunities, and Threats.
1. Internal on axis analysis
Internal analysis deals with company strengths and weaknesses. For the purpose of list making, the two basic questions are:
               What are the organization’s Strengths?
               What are the organization’s Weaknesses?

Note weights:
         -NOT JUST - Do the strengths outweigh the weaknesses
         -Not all strengths and weaknesses are equal. - assign weights to the factors
Note Interaction and substitution effects:
         -Interaction between factors
         For example, an organizational strength, such as having a marketing department with the ability to correctly identify changing
         customer needs, could be completely undermined by the inability to shift production to the newly desired services, products or
         product features. On a personal rather than an organizational level, an individual’s skill with computers may be a reasonable
         substitute for a weakness in mathematics. A computer whiz with moderate but less than stellar math skills may still be successful.

2. External on axis analysis
In list-making for external analysis the questions are:
What Opportunities does the organization have?
What Threats burden the organization?
Common mistakes in steps 1 and 2
-Not Separating internal versus external nature of SWOT analysis.
-Counting list items or to weigh the factors without considering interaction and substitution effects.
The goal at this point is still the determination of overall company position, Strength versus Weakness and Opportunity versus Threat.
Strengths                                                              Weaknesses

    1.   your specialist marketing expertise.                              1.    lack of marketing expertise
    2.   a new, innovative product or service                              2.    undifferentiated products and service (i.e. in relation to your
    3.   location of your business                                               competitors)
    4.   quality processes and procedures                                 3.     location of your business
    5.   state-of-the-art equipment                                       4.     poor quality goods or services
    6.   any other aspect of your business that adds value to your        5.     damaged reputation
         product or service                                               6.     problems managing inventories
                                                                          7.     poorly motivated or untrained staff
                                                                          8.     inefficient or obsolete production methods
Opportunities                                                          Threats

    1.   a developing market such as the Internet.                         1.    a new competitor in your home market
    2.   mergers, joint ventures or strategic alliances                    2.    price wars with competitors
    3.   moving into new market segments that offer improved               3.    a competitor has a new, innovative product or service
         profits                                                           4.    competitors have superior access to channels of distribution
    4.   a new international market                                        5.    taxation is introduced on your product or service
    5.   a market vacated by an ineffective competitor

Questions to help you determine SWOTs

Strengths                                                                          Weaknesses
What is golden about your company?                                                 What looks a bit rusty inside your company?
What do you do well (in sales, marketing, operations, management)?                 What do you need (customer service, marketing,
What are your assets?                                                              accounting, planning)?
What are your core competencies? (I.e., what are essential business operations     Where do you lack resources?
you do very well?_                                                                 What can you do better?
What are the most profitable products/services?                                    Where are you losing money?
What experience do you have?

Opportunities                                                                      Threats
Where is the blue sky in your environment?                                         Where are the red alerts in your environment?
What new needs of customers could you meet?                                        What are the negative economic trends?
What are the economic trends that benefit you?                                     What are the negative political and social trends?
What are the emerging political and social opportunities?                          Where are competitors about to bite you?
What are the technological breakthroughs?                                          Where are you vulnerable?
Where niches have your competitors missed?

Simple rules for successful SWOT analysis
Search Extensively for Competitors
-The key is not to overlook any competitor, whether it be a current rival or one on the horizon.
    • Brand competitors
    • Product competitors
    • Generic competitors
    • Total budget competitors.
-Examine Issues from the Customers' Perspective
-Separate Internal Issues from External Issues
              • The key test to differentiate a strength or weakness from an opportunity or threat is to ask, "Would this issue exist if the
                   firm did not exist?" If the answer is yes, the issue should be classified as external.
              • Failure to understand the difference between internal and external issues is one of the major reasons for a poorly conducted
                   SWOT analysis.
3. Cross axis analysis
Cross axis analysis is comparing internal and external factors and reevaluating your position on each axis.
                                    This relationship is shown in figure 1.


                                                     Turnaround            Aggressive
                                   Weaknesses                                                 Strengths

                                                     Defensive             Diversificatio


                                 Threats Figure 2. SWOT Graphic (adapted from Pierce and Robinson 2004)

Placing a firm both vertically and horizontally on figure 1;
Look at whether or not weaknesses undermined strengths and threats undermined opportunities.
Looking at our organization as it relates to our environment.

Determining Competitive Position
4. Quadrant identification
Strengths and weaknesses can be compared to determine where the company stands internally. Opportunities and threats can be
compared to summarize the external environment.
In the previous step we refined our assessment of the competitive position of the firm. With this revised assessment we can properly place
the firm in one of the four quadrants in figure 2, which adds the competitive position information..

                 Table 1 : Linking SWOT Elements of Competitive Position (adapted from Pierce and Robinson 2004)

SWOT Elements Present                                  Competitive Position
Strengths and Opportunities
Strengths and Threats                                  Diversification
Weaknesses and Opportunities                           Turnaround
Weaknesses and Threats                                 Liquidation
                                                                                              Aggressive - Can aggressively use your
                                                                                              to take advantage of those opportunities.

                                                                                              Diversification - Enter into an
                                                                                              environment that provides you with
                                                                                              opportunities to use your strengths.

                                                                                              Turnaround - Eliminate the weaknesses
                                                                                              and replace them with strengths.

                                                                                              Liquidation - With no hope and no
                                                                                              chance, you are unlikely to succeed.

                                    Table 2. Generic Strategies (adapted from Pierce and Robinson 2004)

Selecting the Appropriate Strategy
5. Current strategy analysis
Analyze Current strategy; placing your current strategy on the list of possible candidates.

6. New strategy candidate list development
Based on your firm’s position in figure 2, candidate strategies can be identified from table 3.

Competitive                    Rationale            Candidate Generic Strategies
     Aggressive          Take advantage of          Concentrated Growth
                         Strengths and              Market Development
                                                    Product Development

Diversification          Take advantage of          Concentric Diversification
                         Strengths, acquire         Conglomerate Diversification
                         Opportunities, move
                                                    Corporate Combinations
                         away from Threats

Turnaround        Eliminate Weaknesses              Horizontal Integration
                  and acquire the                   Vertical Integration
                  Strengths necessary to
                  take advantage of existing
                  Opportunities                     Corporate Combinations

  Defensive        Exit or protect yourself until   Divesture
                                you can recover     Liquidation

                                              Table 3. Generic Strategies by Competitive Position
Generic Strategy               Description

Concentrated Growth             Producing more of your current product for distribution in your current markets
Market Development              Offering current products in new markets or through new channels
Product Development             Substantial modification of existing product or new related product offered to current customers
Innovation                      Ongoing introduction of new products
Horizontal Integration          Growth through acquisition of similar firms operating at the same stage of the production / marketing stage
Vertical Integration            Acquisition of firms that supply inputs or purchase output.
Concentric Diversification      Acquisition or internal generation of separate businesses with synergistic possibilities
Conglomerate Diversification Acquisition of unrelated businesses that represent promising investment opportunities
Turnaround                      Retrenchment through cost and/or asset reduction
Divesture                       Sale of major components of a firm
Liquidation                     Firm is sold off in whole or in parts (includes liquidation bankruptcy)
Bankruptcy                      In reorganization, the firm seeks protection from creditors and reorganizes in hopes of survival
Corporate Combinations          Joint ventures, strategic alliances and consortia

7. Analysis and selection of candidate strategy
Being in the aggressive quadrant suggests an aggressive strategy. Four aggressive strategies are listed. Which choice is best? That depends
on the situation of the particular firm. In a fashion similar to the example in step six, each potential candidate must be evaluated relative to
the particular strengths, weaknesses, opportunities and threats present in the firm and their environment.

Where to Find Information for SWOT Analysis
Company’s business reports , Annual reviews, Published performance data on financial resources, marketing and operations, Current
suppliers, Key stakeholders groups, Journals on marketing, strategy, human

To top