Strategic positioning 1

Once the internal and external analyses are

complete, the next task is to develop strategies.
SWOT analysis is a way of identifying the extent
to which an organisation has managed to obtain a
fit with the environment.

Prepared by: Muhammad akhtar

 Corporate Appraisal (Swot analysis)
Corporate appraisal (SWOT): a critical assessment
of the strengths and weaknesses opportunities
and threats in relation to the internal and
environmental factors affecting the entity in
order to establish its condition prior to the
preparation of a long term plan.

Prepared by: Muhammad akhtar

 SWOT Analysis
Strengths and Weaknesses:
A strengths and weaknesses analysis establishes
strengths that should be exploited and
weaknesses which should be improved. It
therefore covers the results of the position audit.

Prepared by: Muhammad akhtar

 SWOT Analysis
Opportunities and threats:
. What opportunities exist in the business environment ?
. What is their inherent profit making potential?
. What is the organization’s ability to exploit the
worthwhile opportunities?
. What threats might arise?
. How will competitors be affected?
. How will company be affected?
The opportunities and threats might arise from PESTEL
and competitive factors.

Prepared by: Muhammad akhtar

 SWOT Analysis
The SWOT analysis combines the results of the
environmental analysis and the internal
assessment into one framework for assessing the
firm’s current and future strategic fit, or lack of it,
with the environment.
So we can say it is an analysis
of the organisation’s strengths and weaknesses,
and the opportunities and threats offered by the
environment.

Prepared by: Muhammad akhtar

 SWOT EXAMPLE
STRENGTHS : 10 Million dollars of capital available.
Weakness: Heavy reliance on a small number of
customer.

Strengths: Production expertise and appropriate

marketing skills.
Weakness: Only limited product range, with no new
products and expected market decline, small
marketing organisation.

Prepared by: Muhammad akhtar

 SWOT EXAMPLE
Threats: A major competitor has already entered the
new market.

Opportunities: Government tax incentives for new

investment.

Growing demand in a new market,

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 SWOT EXAMPLE
This company is in that stage where he losing its
existing markets and must diversify its products and
markets.
The new market opportunity exists to be exploited,
and since the number of customers is current small,
the relatively small size of the existing marketing
force would not be an immediate obstruction.

Prepared by: Muhammad akhtar

 SWOT EXAMPLE
A strategic plan could be developed to buy new
equipment and use existing production and
marketing to enter the new market, with a view to
rapid expansion. Careful planning of manpower,
equipment, facilities, research and development
would be required and there would be an objective
to meet the threat of competition so as to obtain a
substantial share of a growing market.

Prepared by: Muhammad akhtar

 Gap analysis
Forecasting: is the identification of relevant factors
and quantification of their effect on an entity as a
basis for planning.
Gap analysis is the comparison of an entity’s ultimate
objective with the sum of projection and already
planned projects.

Gap analysis compares an organisation’s final

objective with the sum of the forecast for current
activities and planned projects.

Prepared by: Muhammad akhtar

 Gap analysis
What it does:
Gap analysis compares two things.
a. The organization’s targets for achievement over
the planning period.
b. What the organization would be expected to
achieve if it carried on in the current way with the
same products and selling to the same markets,
with no major changes to operations.

Prepared by: Muhammad akhtar

 Gap analysis
This difference is the gap. New strategies will have to
be developed which will close this gap, so that the
organization can expect to achieve its targets over
the planning period.

Prepared by: Muhammad akhtar

 Gap analysis
Errors in the forecast:
Forecasts can never be completely accurate- they
might be misleading in cases of environmental
confusion. But in stable environments they are valid,
if adjusted for error. Errors can be accounted for in
two ways.
a. Estimating likely variations: for example, in 2004
the forecast profit is $5 million with possible
variations of plus or minus $2 million.

Prepared by: Muhammad akhtar

 Gap analysis
Errors in the forecast:
b. Providing a probability distribution for profits: for example, in
2004 there is a 20% chance that profits will exceed 7$ million, a
50% chance that they will exceed 5$ million and an 80% chance
that they will exceed 2$ million.
Minimum profits in 2004 will be $2 million.
The gap could be filled be new product market growth strategies,
Remaining gap to be filled by diversification strategies
Gap filled by product development strategies.
Gap filled by market development strategies.
Gap filled by market penetration strategies.

Prepared by: Muhammad akhtar

 Gap analysis
So gap could be filled by new product market growth
strategies

Prepared by: Muhammad akhtar

 Monitoring Competitors
The purpose of analysing competitors is to try and
assess what they will do. This will enable the
organisation to respond accordingly.
So we have to monitor competitors activities such as:
Future goals of competitors.
Assumptions.
Strategy
Capabilities

Prepared by: Muhammad akhtar

 Competitive Strategies (how to compete)
Competitive strategy is anything which gives one
organisation an edge over its rivals.
Porter (1996) argues
that a firm should adopt a competitive strategy
which is intended to achieve some form of
competitive advantage for the firm.

Prepared by: Muhammad akhtar

 Competitive Strategies (how to compete)
Definition:
Competitive strategy means taking
unpleasant or defensive actions to create a
dependable position in any industry, to cope with
competitive forces and thereby yield a superior
return on investment for the firm. Firms have
discovered many different approaches to this end,
and the best strategy for a given firm is ultimately a
unique construction reflecting its particular
circumstances. (porter, 1996)

Prepared by: Muhammad akhtar

 The choice of competitive strategy
Porter believes there are three generic strategies for
competitive advantage.

a. Cost leadership: means being the lowest cost

producer in the industry as a whole.
b. Differentiation: is the utilization of a product or
service which the industry as a whole believes to
be unique.

Prepared by: Muhammad akhtar

 The choice of competitive strategy
c. Focus : involves a restriction of activities to only
part of the market ( A segment) through:

i . Providing goods and or services at lower cost to

that segment ( cost focus)
ii. Providing a differentiated product or services

Prepared by: Muhammad akhtar

 The choice of competitive strategy
So cost leadership and differentiation are industry
wide strategies. Focus involves segmentation but
involves pursuing, within the segment only, a
strategy of cost leadership or differentiation.

Prepared by: Muhammad akhtar

 Scenario Planning
A scenario is an internally consistent view of what
the future might turn out to be.

So in scenario planning u have to keep eye on the

following these two scenario.
a. Macro scenarios
b. Industry scenarios

Prepared by: Muhammad akhtar

 Scenario Planning
a. Macro scenarios use macro-economic or political
factors, creating alternative views of the future
environment ( eg global economic growth,
political changes, interest rates).

b. Industry scenarios: can be used to analyse the

industry environment.

Prepared by: Muhammad akhtar