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3-1 © 2006 by Nelson, a division of Thomson Canada Limited 9/12/2015 Slides developed by: Peter Yannopoulos Chapter 3 Situational Analysis and Strategic.

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Presentation on theme: "3-1 © 2006 by Nelson, a division of Thomson Canada Limited 9/12/2015 Slides developed by: Peter Yannopoulos Chapter 3 Situational Analysis and Strategic."— Presentation transcript:

1 3-1 © 2006 by Nelson, a division of Thomson Canada Limited 9/12/2015 Slides developed by: Peter Yannopoulos Chapter 3 Situational Analysis and Strategic Approaches

2 3-2 © 2006 by Nelson, a division of Thomson Canada Limited Situational Analysis, SWOT Matrices, and Marketing Objectives Marketing Objectives Final SWOT Matrix Situational Analysis Preliminary SWOT Matrix

3 3-3 © 2006 by Nelson, a division of Thomson Canada Limited Components of Internal Analysis Marketing Management Finance Production R&D Marketing Management Finance Production R&D Competitor Resources and Capabilities Firm Resources and Capabilities Strengths and Weaknesses

4 3-4 © 2006 by Nelson, a division of Thomson Canada Limited Examples of Resources and Capabilities Marketing Market sensing Customer relating Brand equity Breadth of product line Market share Market development skills Access to channels of distribution Advertising spending and skills Effectiveness of sales force Management Experience in the business Quality of company culture Ability of managers Effectiveness of strategic planning Ability to implement plans Employee training Employee skills Use of work teams Shared organizational goals and objectives Effectiveness of systems and control Production Access to raw materials Capacity Age and location of facilities Inventory control procedures Quality control procedures Manufacturing cost Order handling Finance Cash reserves Financing from parent company Ability to borrow or raise capital Debt levels Research and development Technological research capabilities Product design and innovation skills New product development time Communication between research and development and other functions Patents

5 3-5 © 2006 by Nelson, a division of Thomson Canada Limited Components of External Analysis Demographic Factors Political/Legal Factors Economic Factors Social/Cultural Factors Technological Factors Market Demand Unmet Market Segment Needs Competition Task Environment General Environment Opportunities and Threats

6 3-6 © 2006 by Nelson, a division of Thomson Canada Limited Strengths Strengths are areas in which the firm performs exceptionally well relative to its competitors

7 3-7 © 2006 by Nelson, a division of Thomson Canada Limited Weaknesses Weaknesses are deficiencies or limitations that place a firm at a disadvantage relative to its competition Weaknesses inhibit the firm’s ability to implement its marketing strategy and fulfill its objectives

8 3-8 © 2006 by Nelson, a division of Thomson Canada Limited Opportunities Opportunities are favourable trends, forces, or changes in the external environment Opportunities have the potential to help the firm improve its competitive position if appropriate action is taken

9 3-9 © 2006 by Nelson, a division of Thomson Canada Limited Threats Threats are unfavourable trends, changes, or forces that can threaten the firm’s competitive position Threats cause problems if no appropriate action is taken

10 3-10 © 2006 by Nelson, a division of Thomson Canada Limited Potential Strengths, Weaknesses, Opportunities, and Threats Potential Threats Raw materials shortages Slow industry growth Increased competitive entry New substitute products Increasing bargaining power of buyers Increasing bargaining power of suppliers Adverse social trends Potential Opportunities Weak competitors Attractive new market segments High growth prospects High profit potential High barriers to entry New complements Low rivalry New technological developments Potential Weaknesses Weak product development skills Weak distribution Poor management skills Lack of product development skills Narrow product focus Inadequate financial resources Poor quality control procedures Lack of product awareness Weak research & development skills Potential Strengths Financial resources High brand awareness Superior service High market share Low manufacturing cost Proprietary technology Access to distribution Brand reputation Strong marketing skills

11 3-11 © 2006 by Nelson, a division of Thomson Canada Limited Developing the SWOT Matrix Step 1 – Identify the organization’s strengths, weaknesses, opportunities, threats Step 2 – Assess strategic fit between the internal capabilities and environmental trends and developments Step 3 – Propose list of strategies to exploit the strengths and opportunities and convert or minimize weaknesses and threats

12 3-12 © 2006 by Nelson, a division of Thomson Canada Limited I Strengths 1. Well-known brand name 2. Strong marketing skills 3. Superior product quality 4. Large financial resources II Weaknesses 1. High cost of operations 2. Narrow product line 3. Concentration in higher-end brands 4. Limited distribution in specialty stores III Opportunities 1. Increased emphasis on family values 2. Growing demand for healthy food 3. Aging population 4. Demand for a low-priced version of the product 5. Growing foreign markets IV Threats 1. Declining demand for core product 2. Growing demand for away-from- home eating 3. Growing demand for ready- made food An Example of an Intermediate Matrix

13 3-13 © 2006 by Nelson, a division of Thomson Canada Limited An Example of a Final SWOT Matrix Internal Factors External Factors Strengths 1. Well-known brand name 2. Strong marketing skills 3. Superior product quality 4. Large financial resources Weaknesses 1. High cost of operations 2. Narrow product line 3. Concentration in higher- end brands 4. Limited distribution in specialty stores Opportunities 1. Increased emphasis on family values 2. Growing demand for healthy food 3. Aging population 4. Demand for a low-priced version of the product 5. Growing foreign markets I Possible strategies 1. Appeal to older groups with healthier products 2. Establish or acquire family restaurants 3. Establish or acquire restaurants specializing in healthy eating 4. Expand into foreign markets II Possible strategies 1. Diversify into health- conscious segments using specialty stores 2. Develop low-priced version of the product Threats 1. Declining demand for core product 2. Growing demand for away- from-home eating 3. Growing demand for ready- made food III Possible strategies 1. Introduce convenience foods 2. Target older age market segments IV Possible strategies 1. Emphasize cost reduction 2. Sell the company

14 3-14 © 2006 by Nelson, a division of Thomson Canada Limited Pitfalls of SWOT Analysis It provides only general recommendations It is based on subjective interpretation of the information It demands a tight fit between the organization’s resources and marketing strategies It can result in a long list of strengths and weaknesses Resources and capabilities are defined too broadly to be actionable It may be difficult to replicate current success SWOT analysis must be performed at the appropriate level

15 3-15 © 2006 by Nelson, a division of Thomson Canada Limited Effective Objectives Are… Consistent Acceptable to management Measurable & timely Feasible Understan- dable EffectiveObjectives

16 3-16 © 2006 by Nelson, a division of Thomson Canada Limited Competitor Analysis CompetitorAnalysis Competitor Strengths and Weaknesses Competitor Objectives and Strategies

17 3-17 © 2006 by Nelson, a division of Thomson Canada Limited Competitive Intelligence Competitive intelligence is the process by which organizations gather actionable information on competition and the business environment and apply it to their decision-making and planning processes

18 3-18 © 2006 by Nelson, a division of Thomson Canada Limited Sources of Competitive Intelligence  Competitor speeches  Competitor financial reports  Competitor product circulars  Competitor flyers  Competitor publicity releases  Government documents  Analysts’ reports  Books  Magazine articles  Newspapers  On-line sources  Trade journals  Competitor ads  Competitor brochures  Customers  Employees  Industry experts  Trade associations  On-line databases  Suppliers  Competitor mailing lists  Visiting competitor stores  Using competitor product

19 3-19 © 2006 by Nelson, a division of Thomson Canada Limited Competitive Intelligence Core Tasks Data Analysis Implementation Planning Data Collection CompetitiveIntelligenceCoreTasks


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