Professional Documents
Culture Documents
Chapter 4
Chapter 4
Strategy
What is SWOT analysis
• SWOT can help your company face its greatest challenges and find its
most promising new markets.
• The SWOT Analysis framework is a very important and useful tool to use
in marketing Management and other business applications A clear
understanding of SWOT is required for business majors.
EXTERNAL ENVIRONMENT (OPPORTUNITY AND
THREAT) ANALYSIS
• The first is to offer something that is in short supply. This requires little
marketing talent, as the need is fairly obvious.
• A company may benefit from converging industry trends and introduce hybrid products
or services that are new to the market. Major cell manufacturers have released phones with
digital photo and video capabilities, and Global Positioning Systems (GPS).
• • A company may make a buying process more convenient or efficient. Consumers can use
the Internet to find more books than ever and search for the lowest price with a few clicks.
• • A company can meet the need for more information and advice. Angie’s List connects
individuals with local home improvement contractors and doctors that have been reviewed by
others.
like:
• 2. Can we locate the target market(s) and reach them with cost-effective media and trade
channels?
• 3. Does our company possess or have access to the critical capabilities and resources we need to
• 4. Can we deliver the benefits better than any actual or potential competitors?
• 5. Will the financial rate of return meet or exceed our required threshold for investment?
• In the opportunity matrix in Figure 2.4 (a), the best marketing opportunities facing the TV-lighting-
equipment company appear in the upper-left cell (#1). The opportunities in the lower-right cell (#4)
are too minor to consider. The opportunities in the upper-right cell (#2) and the lower-left cell (#3)
are worth monitoring in the event that any improve in attractiveness and potential.
• An environmental threat is a challenge posed by an unfavorable trend or
development that, in the absence of defensive marketing action, would lead to
lower sales or profit. Figure 2.4 (b) illustrates the threat matrix facing the TV-
lighting-equipment company. The threats in the upper-left cell are major,
because they have a high probability of occurrence and can seriously hurt the
company.
• To deal with them, the company needs contingency plans. The threats in the
lower-right cell are minor and can be ignored. The firm will want to carefully
monitor threats in the upper-right and lower-left cells in the event they grow
more serious.
INTERNAL ENVIRONMENT (STRENGTHS AND
WEAKNESSES) ANALYSIS
• Clearly, the business doesn’t have to correct all its weaknesses, nor
should it gloat about all its strengths.
• Examples - Abundant financial resources, Well-known brand name, Lower costs [raw
materials or processes], Superior management talent, Better marketing skills, Good
distribution skills, Committed employees.
Weaknesses (internal, negative factors)
• Detract the organization from its ability to attain the core goal and influence its
growth.
• Weaknesses are the factors which do not meet the standards we feel they should
meet.
• Are external attractive factors that represent reasons your business is likely to prosper.
• Chances to make greater profits in the environment - External attractive factors that
represent the reason for an organization to exist & develop.
• Arise when an organization can take benefit of conditions in its environment to plan and
execute strategies that enable it to become more profitable.
• Organization should be careful and recognize the opportunities and grasp them whenever they
arise.
• Examples - Rapid market growth, Rival firms are complacent, Changing customer
needs/tastes, New uses for product discovered, Economic boom, Government deregulation,
Sales decline for a substitute product .
Threats (external, negative factors)
• It helps in knowing past, present and future so that by using past and current data, future
plans can be chalked out.
Limitations of SWOT Analysis
• SWOT Analysis is not free from its limitations. It may cause organizations
to view circumstances as very simple because of which the organizations
might overlook certain key strategic contact which may occur. Moreover,
categorizing aspects as strengths, weaknesses, opportunities and threats
might be very subjective as there is great degree of uncertainty in
market. SWOT Analysis does stress upon the significance of these four
aspects, but it does not tell how an organization can identify these
aspects for itself.
There are certain limitations of SWOT Analysis which are not in control of management. These
include-
• Price increase;
• Inputs/raw materials;
• Government legislation;
• Economic environment;
• Searching a new market for the product which is not having overseas market due to import
restrictions; etc.
Internal limitations may include-Insufficient research and
development facilities;
• Faulty products due to poor quality control;
• Poor industrial relations;
• Lack of skilled and efficient labour; etc