Chapter 5 Synthesis of Strategic Issues and Analysis

Learning Objectives
After reading this chapter, you should be able to understand and articulate answers to the
following questions:
1. How is the SWOT framework developed and used for determining strategic issues and
strategies?
2. What is a strategic issue and how is it identified and expressed?
Introduction
In the recent chapters, we focused on evaluating organizational performance, analyzing
the external and internal environments, and understanding competitive dynamics. The SWOT
framework serves as a vital tool to consolidate and summarize the key information obtained from
these assessments. This framework is instrumental in strategic management by helping identify
and define strategic issues that organizations must address. Once a strategic issue is pinpointed, it
paves the way for developing strategies to resolve challenges and advance towards the
organization's vision. In the next chapter, we will explore the development of basic business-
level strategies, and a more detailed discussion on the evolution of the strategic issue will follow
later in this chapter.
1.1. SWOT Framework
SWOT analysis is a strategic planning tool used to identify and evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or business. It provides a
comprehensive overview of the internal and external factors that can impact an organization.
Let's delve into each component:
 Strengths (S):
Internal factors that give the organization an advantage.
Examples include a strong brand, skilled workforce, cutting-edge technology,
efficient processes, or unique resources.
 Identifying strengths helps organizations leverage their competitive advantages.
 Weaknesses (W):
 Internal factors that place the organization at a disadvantage.
 Examples include outdated technology, poor management, inadequate resources, or a
lack of key skills.
 Recognizing weaknesses is crucial for addressing areas that need improvement.
 Opportunities (O):
 External factors that the organization could exploit for its benefit.
 Opportunities can arise from market trends, changes in consumer behavior,
technological advancements, or new partnerships.
 Identifying opportunities allows organizations to align their strategies with emerging
trends.
 Threats (T):
 External factors that could pose challenges or risks to the organization.
 Threats may come from competitive forces, economic downturns, regulatory changes,
or technological disruptions.
 Recognizing threats helps organizations prepare contingency plans and mitigate
potential risks.
The SWOT analysis process involves the following steps:
 Data Collection: Gathering relevant information about the internal and external factors
affecting the organization.
 Identification: Identifying and listing the strengths, weaknesses, opportunities, and
threats.
 Analysis: Evaluating the impact and significance of each identified factor.
  Strategy Development: Developing strategies to capitalize on strengths, address
weaknesses, seize opportunities, and mitigate threats.
 Action Planning: Creating detailed plans and initiatives based on the developed
strategies.
SWOT analysis is versatile and can be applied to various scenarios, such as business
planning, project management, personal development, and more. It provides a structured
framework for decision-making, helping organizations make informed choices and allocate
resources effectively. It's important to note that SWOT analysis is not a one-time process; it
should be revisited periodically to adapt to changing circumstances and ensure ongoing strategic
relevance.
Example: SWOT analysis for Metropolitan Bank and Trust Company (Metrobank):
 Strengths (S):
Established Brand: Metrobank has a strong brand reputation and is well-recognized in the
banking industry.
Diverse Product Portfolio: The bank offers a wide range of financial products and services,
including savings accounts, loans, investments, and insurance.
Robust Financial Performance: Metrobank has demonstrated consistent financial stability and
growth over the years.
Extensive Network: The bank has a broad network of branches and ATMs, providing
convenience to customers across various locations.
 Weaknesses (W):
Limited Digital Presence: Metrobank may lag behind competitors in terms of digital banking
offerings and online customer experience.
Bureaucratic Processes: Internal bureaucracy and lengthy approval processes might hinder the
bank's ability to quickly adapt to market changes.
Dependency on Local Market: Metrobank's operations are heavily focused on the domestic
market, which may limit exposure to international growth opportunities.
Employee Turnover: High turnover rates could lead to a loss of institutional knowledge and
impact customer service quality.
 Opportunities (O):
Digital Innovation: Investing in digital technologies and online banking platforms can enhance
customer experience and attract a tech-savvy audience.
Global Expansion: Exploring international markets could provide new revenue streams and
diversify the bank's portfolio.
Partnerships with Fintechs: Collaborating with fintech companies can enable Metrobank to offer
innovative financial solutions and stay competitive.
Economic Growth in Emerging Markets: Capitalizing on economic growth in emerging markets
can lead to increased demand for banking services.
 Threats (T):
Intense Competition: The banking sector is highly competitive, with both traditional banks and
fintech startups vying for market share.
Regulatory Changes: Changes in financial regulations may impact Metrobank's operations and
require adjustments to compliance procedures.
Cybersecurity Risks: The increasing frequency and sophistication of cyber threats pose a risk to
customer data and the bank's reputation.
Economic Downturn: Economic uncertainties or recessions could result in reduced demand for
loans and financial services.

SWOT Analysis Summary:

Metrobank's strengths lie in its established brand, diverse product offerings, financial
stability, and extensive network. However, it faces challenges in terms of limited digital
presence, internal bureaucracy, and dependence on the local market. To leverage opportunities
and mitigate threats, Metrobank should invest in digital innovation, explore global markets,
foster partnerships with fintechs, and stay vigilant to regulatory changes and cybersecurity risks.
Addressing weaknesses and capitalizing on strengths will be critical for sustained growth and
competitiveness in the dynamic banking industry.
1.2. Strategic Issue Identification
The process of defining strategic issues in strategic management is a crucial step that
follows the completion of external and internal analyses, including the SWOT framework. This
stage involves identifying and articulating specific challenges or opportunities that the
organization needs to address to align with its long-term vision and goals.
Key points about defining strategic issues:
 Nature of a Strategic Issue:
Issue Requiring Resolution: A strategic issue is a matter that needs attention and resolution. It
can be a problem to solve or an opportunity to capitalize on.
Strategic Significance: The issue is strategic because its resolution has a lasting impact on the
organization's direction and success.
 Derivation from Analysis:
Informed Decision-Making: The strategic issue is not predefined at the beginning of the strategic
management process. It emerges based on a thorough analysis of internal and external factors,
synthesized through the SWOT framework.
Data-Driven Definition: Decision-makers don't rely on intuition or guesses; rather, they derive
the strategic issue from information obtained through the analysis process.
 Driving Strategy Development:
Strategic Focus: The defined strategic issue becomes the focal point around which the
organization's strategies are developed. Resolving this issue is critical for achieving the overall
vision.
Guiding Decision-Making: The strategic issue guides decision-makers in determining the most
effective strategies to pursue.
 Conciseness and Clarity:
One Concise Statement: Ideally, the strategic issue is articulated in one clear and concise
sentence. This ensures that it is easily communicated and understood throughout the
organization.
Amplifying Information: Additional information may be provided to explain the context and
rationale behind the choice of the strategic issue.
 Starting with "How":
Action-Oriented: The strategic issue often begins with the word "how," emphasizing the action-
oriented nature of the resolution. For example, "How does the organization address...?"
 Adaptability Over Time:
Dynamic Nature: The strategic issue is not static; it evolves over time as external, competitive,
and internal dynamics change. Organizations need to stay attuned to shifts in their environment.
 Team Collaboration:
Interpretation Variability: Team members may interpret data differently based on their roles and
perspectives. Collaboration is essential to align interpretations and arrive at a consensus on the
strategic issue.
Consensus Building: Organizations often use collaborative processes where team members share
their perspectives, prioritize issues, and work toward a consensus on the wording of the strategic
issue.
In summary, defining a strategic issue is a data-driven, collaborative process that requires
careful analysis, interpretation, and alignment among decision-makers. The chosen strategic
issue becomes the cornerstone for developing effective strategies that propel the organization
toward its long-term vision.
Synthesis
In this chapter, the focus is on synthesizing strategic issues and analysis in strategic
management, introducing the SWOT framework as a key tool for consolidating external and
internal assessments. The dynamic nature of SWOT analysis is emphasized, requiring periodic
revisits for adaptation. The example of Metropolitan Bank and Trust Company (Metrobank)
illustrates the application of SWOT in the Philippine banking industry. The discussion then shifts
to strategic issue identification, emphasizing their critical nature and lasting impact. The process
involves data-driven analysis, guided by SWOT, and collaborative efforts to align interpretations
and reach consensus. Overall, the synthesis of strategic issues and analysis forms the foundation
for developing strategies aligned with long-term organizational vision and goals.