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SWOT: The Analysis of Strengths,

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Presentation on theme: "SWOT: The Analysis of Strengths,"— Presentation transcript:

1 SWOT: The Analysis of Strengths,
Marketing Strategy Chapter 4 SWOT: The Analysis of Strengths, Weaknesses, Opportunities, and Threats

2 Benefits of SWOT Analysis
SWOT analysis is simple in that it requires no extensive training or technical skills to be used successfully, only an understanding of the nature of the company and the industry in which it operates. SWOT analysis is flexible in that it can enhance the quality of an organization's strategic planning even in the absence of extensive marketing information systems. SWOT analysis allows the marketing manager to integrate and synthesize diverse information, both of a quantitative and qualitative nature. SWOT analysis can foster collaboration between managers of different functional areas.

3 Directives for a Productive SWOT Analysis I
Stay Focused Don’t complete one generic analysis for the entire organization. In most firms, there should be a series of analyses, each focusing on a specific product/market combination. Such a focus enables the manager to examine the specific mix of product, price, promotion, and distribution presently being used in a given market and to analyze the specific environmental issues that are relevant to the particular product/market. Separate product/market analyses can be combined to examine the issues that are relevant for the entire strategic business unit, and business unit analyses can be combined to create a complete SWOT for the entire organization. The only time a single SWOT would be appropriate is when an organization has only one product/market combination.

4 Directives for a Productive SWOT Analysis II
Search Extensively for Competitors The key is not to overlook any competitor, whether it be a current rival or one on the horizon. The firm should remain watchful for any current or potential direct substitutes for its products. The firm must look for Brand competitors Product competitors Generic competitors Total budget competitors.

5 Directives for a Productive SWOT Analysis III
Collaborate with Other Functional Areas The SWOT process should stimulate communication outside normal channels. The final outcome of a properly conducted SWOT analysis should be an amalgam of information from many areas. Managers in sales, advertising, production, research and development, finance, customer service, inventory control, quality control, and others areas should learn what other managers see as the firm's strengths, weaknesses, opportunities, and threats.

6 Directives for a Productive SWOT Analysis IV
Examine Issues from the Customers' Perspective Marketing planners must gauge the perceptions of each customer segment that the firm is attempting to target Examining every issue from the customers’ perspective includes the firm’s internal customers: its employees The following questions can assist in the analysis: What do our customers (and noncustomers) believe about us as a company? What do our customers (and noncustomers) think of our product quality, customer service, price and overall value, convenience, and promotional messages in comparison to our competitors? What is the relative importance of these issues, not as we see them, but as our customers see them?

7 Directives for a Productive SWOT Analysis V
Separate Internal Issues from External Issues Internal issues are the firm's strengths and weaknesses, while external issues refer to opportunities and threats that are present in the firm's external environments. 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.

8 Strengths and Weaknesses Analysis
Strengths and weaknesses exist inside the firm, or in key relationships between the firm and its customers or other organizations (i.e.,channel members, suppliers, alliance partners, etc.). A strength is meaningful only when it is useful to satisfy a customer need. When this is the case, that strength becomes a capability. A customer-focused SWOT analysis can also uncover a firm's potential weaknesses. While some weaknesses may be harmless, those that relate to specific customer needs should be minimized if possible. The role of the internal portion of SWOT is to determine where resources are available or lacking so that strengths and weaknesses can be spotted. The manager can then develop marketing strategies that match these strengths with opportunities and thereby create new capabilities, which will then be part of subsequent SWOT analyses. The manager can also develop strategies to strengthen the firm's weaknesses, or find ways to minimize the negative effects of these weaknesses.

9 Opportunities and Threats Analysis
Ignoring the external environment is a mistake that can result in an efficient organization that is no longer effective when changes in the external environment impede the firm's ability to deliver value to its targeted customer segments. Such changes can occur in the rate of overall market growth and in the competitive, economic, political/legal, technological, or sociocultural environments. Changes in the internal organizational structure can create internal weaknesses that must be considered.

10 SWOT-Driven Strategic Planning Should Recognize
The assessment of the firm's strengths and weaknesses involves looking beyond the firm's current products. The successful achievement of the firm's goals and objectives depends on its ability to transform key strengths into capabilities by matching them with opportunities in the marketing environment. Firms can convert weaknesses into strengths, and even capabilities, by investing strategically in key areas (i.e., customer support, R&D, promotion, employee training) and by linking key areas more effectively (such as linking human resources to marketing). Threats can often be converted into opportunities if the right resources are available.

11 SWOT Matrix A method to appraise each strength, weakness, opportunity, and threat to determine its total impact on the firm's marketing efforts. It’s a four-cell array that managers can use to categorize information at the conclusion of the SWOT analysis. The manager should begin by assessing the magnitude (+3 = most favorable & -3 = most unfavorable) and importance (3 = highest importance & 1 lowest importance) of each element in the SWOT matrix. These ratings should ideally be based on customers' perceptions rather than those of the manager. Those elements with the highest absolute numerical rankings should receive the greatest attention Find competitive advantages by matching strengths to opportunities.

12 Real vs. Perceived Capabilities and Advantages
The problem lies in developing and maintaining capabilities and competitive advantages that customers can easily understand, and that solve specific customer needs. Capabilities or competitive advantages that do not translate into specific benefits for customers are of little use to a firm. Many successful firms have developed capabilities and competitive advantages based on one of three strategies: Firms employing a strategy of operational excellence tend to focus on efficiency of operations and processes. Firms that focus on product leadership typically excel at technology and product development. Organizations that practice customer-intimacy work very hard to know their customers and understand their needs better than the competition.

13 Converting Weaknesses and Threats Converting Threats into Opportunities
In some cases, conversion strategies depend on the investment of additional resources, typically financial resources. Finding new markets for a firm's products is a viable conversion strategy. Identify major liabilities that occur when a weakness remains paired with a threat. Develop strategies that minimize those weaknesses or threats that cannot be converted. One strategy is to become a niche marketer. Another strategy is to reposition the product. Despite a company's best efforts, some weaknesses and threats simply cannot be minimized or avoided. When this situation occurs, the firm is said to have a limitation. One way to deal with limitations is to diversify, thus reducing the risk of operating solely within a single business unit or market.

14 Keys to SWOT-Driven Strategic Planning
Look beyond the organization’s products to assess its business processes Offer customers “solutions” rather than specific products Match key strengths with opportunities to create capabilities that can be developed into competitive advantages Invest strategically in key areas to convert weaknesses into strengths and threats into opportunities Minimize the impact of limitations (unconverted weaknesses) and liabilities (weaknesses paired with threats), especially those that are obvious to customers or that put the organization at a major competitive disadvantage

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