Lecture 4

SWOT Analysis
Setting Objectives & Goals
SWOT Analysis
 Based on ability to identify the significant and relevant
Strengths, Weaknesses, Opportunities and Threats

 One of the most basic yet most widely used planning

concepts

 CRITICAL to identify the causes NOT the symptoms

 E.g. declining sales is just a symptom of an underlying
weakness.
SWOT Analysis - a Strategic Marketing
perspective
 Strengths & Weaknesses internally focussed on:
 The organisation and its existing strategies & capabilities
 Comparison with capabilities of competitors
 Readiness to adapt to macro & micro environment

 Opportunities and Threats are more externally generated:

 Changes & trends in macro-environment (beyond firm’s control) or
micro-environment (within firm’s control)
 Remember: this is all relative to the capabilities of its competitors
Strengths
 Strengths - competitive advantage and other aspects of the
firm’s operations that it does particularly well

 Identified by asking:
“What are the key reasons why the firm has been as
successful as it has been to date?”

 E.g. What are the strengths of McDonalds?

Weaknesses
 Weaknesses - restraints that hinder the firm’s performance
and choice of alternatives compared to competition

 Identified by asking:
“What are the key reasons why the firm has not been more
successful than it has been to date?”

 E.g. What are the weaknesses of McDonalds?

Opportunities
 An opportunity results from dynamic changes in market situation or within
the industry, which give a firm a chance to improve its performance.

 Because of its existing strengths or flexibility, the firm is well-placed to

take advantage of the changes/trends

 Concept of “strategic fit” determines whether change creates an opportunity

or a threat.

 Eg. What have been some opportunities for McDonalds that it has taken
advantage of? Any current opportunities they have yet to take action on?
 NB. Focus must be only on “significant” issues – will this make a significant
difference to the firm?
Threats
 A threat emerges from an existing market situation or changes & trends
within the industry or market, which may result in the firm’s performance
worsening.

 Because of its weaknesses, it is NOT well-placed to deal with the new

market situation or changes/trends

 Concept of “strategic fit” determines whether change creates an opportunity

or a threat.

 E.g. Are there any threats to McDonalds?

 Consider increasing competition from “heat-and-serve” food from supermarkets
as trading hours are extended.
Strengths and Weaknesses
 Seek to leverage and build the strengths – this increases its performance as
well as the opportunities it can take advantage of.
 Eg, Coles offering fuel coupons and buying up Shell Fuel Stations

 Seek to address and minimise the weaknesses - therefore removing

restrictions to the firm’s ongoing success, and reducing the threats to its
performance
 Eg, Qantas launching Jetstar to counter Virgin Blue
 Eg2, Qantas lobbying the aviation authority to restrict International carriers
servicing domestic routes

 Managing SWOT forms the basis of strategies

 Everything is relative, no such thing as an absolute Strength or Weakness
eg. the local Under 12’s versus University’s basketball team versus the WildCats versus the US Dream
Team
Strategic Use of SWOT
 Current & potential changes in the firm’s competitive environment generate
opportunities and threats

 If company’s strengths enable exploitation of an opportunity, a “strategic

window of opportunity” exists

 Often a threat is viewed as such because of a Weakness within the company.

Rectifying this Weakness can transform a Threat into an Opportunity.

 Used for comparison with competitors

 Focuses on future choices and capability of organisation to support them

 Need to anticipate and be proactive

SWOT
 Problems of SWOT analysis
 Can generate long lists: need to focus on key issues
 Danger of over-generalisation: not a substitute for rigorous
strategic analysis
 4.17 Internal Factor Analysis Summary (IFAS): Maytag as Example (Table 4.2) p. 102

Internal Factor Analysis Summary (IFAS):

Maytag as Example
Weighted
Internal Factors Weight Rating Score Comments
Strengths
• Quality Maytag culture .15 5 .75 Quality key to success
• Experienced top management .05 4 .20 Know appliances
• Vertical integration .10 4 .40 Dedicated factories
• Employee relations .05 3 .15 Good, but deteriorating
• Hoover’s international orientation .15 3 .45 Hoover name in cleaners

Weaknesses
• Process-oriented R&D .05 2 .10 Slow on new products
• Distribution channels .05 2 .10 Superstores replacing
small dealers
• Financial position .15 2 .30 Highdebtload
• Global positioning .20 2 .40 Hoover weak outside the
United Kingdom and
Australia
• Manufacturing facilities .05 4 .20 Investing now

Total Weighted Score 1.00 3.05

© 1998 Addison Wesley Longman, Inc.TM-91
 Generating The S.F.A.S
(Strategic Factor Analysis Summary)
1 2 3 4 Duration 5 6
Key Strategic Factors

INTERMEDIATE
Weighted

SHORT

LONG
Weight Rating Score Comments

NEWUnchanged

Total Score
The Basic T.O.W.S Matrix
I.F.A.S. Strengths Weaknesses
List 2 – 3 internal List 2 – 3 internal
strengths here weaknesses here
E.F.A.S

SO WO
Opportunities Strategies
List 2-3 external Strategies
opportunities here

Threats ST WT
List 2-3 external Strategies Strategies
threats here
 The Basic T.O.W.S Matrix - Maytag
STRENGTHS WEAKNESSES
IFAS S1. Quality Maytag culture W1. Global positioning

EFAS S2. Hoover’s international

W2. Financial position
orientation

OPPORTUNITIES

O1. Economic integration of

European Community
SO Strategies
O2. Trend to superstores WO Strategies

O3. Demographics favour

quality appliances

THREATS
T1. Whirlpool and Electrolux
strong globally

T2. Japanese appliance companies ST Strategies WT Strategies

T3. Strong U.S competition

Example of an Assignment TOWS
Matrix
Opportunities
 Little competitor activity on environmental
front.
 Potential to attract Asian clientele.
 No green hotel movement in Perth
 Save money through smart use of
technology and work methods
 Publicity potential is proven and
considerable
Threats
 Government Regulations likely to increase.
 Water scarcity/cost
 Increasing competition in the theme pub
niche.
 High cost of delaying implementation of
green initiatives,
 Next generation of consumers and
professionals will punish severely firms
that are not environmentally sensitive.
Strengths
 Diverse Locations/businesses
 Proven Innovators
 Strong Brand names
 Assumed demographics of patrons suits
environmental responsiveness
 Willing to make change for financial gain
 Make all pubs/hotel look at green issues,
trading off the strong brand names to
make the public, both current and future
patrons aware of all new initiatives
undertaken
 Investigate PATA green leaf and other
Asian programs. If none suit the hotel /pub
industry here, an opportunity exists to start
your own Green Hotels movement.
Perhaps seeking Sullivans as a partner.
Create own Green Leaf accreditation,
perhaps the "Green 4 leafed Clover" to fit
with Irish pub theme.
 Recognise and seek out cost savings
through environmental programs
 Be the first to recognise this niche a gain
support of the environmentally aware in
society
 Create a distinctive competence through
linking brands to environmental
stewardship.
 Focus on PR opportunities to let the public
know what you are doing for the industry.
Weaknesses
 Lack of staff Empowerment on
environmental issues.
 No corporate culture/mission on
environmental issues.
 No strategic focus on the environment
 Over reliance on European themes
 Poor Communication
 Involve staff formally in designing the
Green Hotels association and formalize
communications forums so that all can
contribute
 Seek support from all strategic partners on
green issues, such as lawyers, architect,
marketing consultant etc.
 Use the green theme to transcend national
themes, environmentally concerned come
from all nationalities
 Implement improvements in all Western a
Properties, lead by example
 Strengthen policies on smoking to cover
room use and employees/contractors
 Introduce award/recognition for water
conservation ideas, make known to the
public
 Provide tangible reward for cost saving
environmental ideas, either through
promotion, payment or public recognition
 Investigate use of a web site to advertise
green initiatives to inbound travelers and
locals alike.
Marketing objectives & goals
 A business is like a sports team - you can’t work together
to score goals if you don't know where the goal posts are
Marketing objectives and goals

 Definition of success in business:

“Success is getting to a check-point, on the way to a
never-ending finish”

 Need to establish goals and objectives to ensure that the

firm is actually working towards its overall reason for
existing – i.e. its Corporate or Business Mission
Mission, Objectives and Goals
 Mission: What do we want to become?
 E.g. to become one of the leading automobile manufacturers in the world

 Objectives: Statements of intent, without specifying quantity or time – what

do we need to do?
 Example 1: to develop expertise in low cost automated production
 Example 2: to develop a premium product range targeting the luxury
market

 Goals: Measurable as to quantity and timing – help motivate us as well as

track our progress.
 Example 1: to reduce production costs by 33% by 2012
 Example 2: to begin marketing our premium brand with 1x luxury sedan
and 1x luxury SUV in showrooms by 2012
Attributes of Objectives & Goals
 be explicit – must be clear / easily understood
 provide direction to guide decisions
 be challenging / stimulate change
 be realistic / recognise existing situation
 be measurable AND be measured
 be related to higher and lower level objectives within the
organisation
Levels of Objectives and Goals
 Ensure SBU objectives are consistent with, and contribute to, achieving
Corporate objectives

Focus on core competencies, SBU portfolios,

Corporate capital investments and resource allocations,
corporate culture, corporate structure

Focus on the corporation’s performance in

specific markets, on competition in these
SBU
markets, on product portfolios, on longer
term success in a market, on SBU brands etc.

Focus on marketing mix strategies, making

the marketing plan happen, on day to day
Product marketing issues relating to specific products
and brands
 Integrating Corporate and SBU Mission,
Objectives and Goals

EXAMPLE: SPLASH DIVING

 Corporate mission:
“To become the State’s leading dive specialists for
the tourism & leisure market”
 Provides boundaries to an organisation’s operations

 Corporate objectives:
 Est. dive shops in major holiday locations
 Acquire fleet of dive vessels
 Develop dive sites to attract global dive enthusiasts
Integrating Corporate and SBU Mission,
Objectives and Goals
Corporate goals:
 Set up Retail SBU to launch and manage 5 dive shops in
Perth, Mandurah, Albany, Exmouth and Rottnest over a period
of 3 years
 Set up Marine Operations SBU to acquire 5 vessels over a 3
year period and launch the following tourism activities:
 Wilderness diving expeditions to
Exmouth and Ningaloo Reef / whale sharks
 Dive charters to Rottnest
 Historic wrecks expeditions in Albany