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is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities and threats involved in running a business.

Strengths: characteristics of the business that give it an advantage over others Weaknesses: are characteristics that place the business at a disadvantage relative to others Opportunities: external chances to improve performance of the company. Threats: external elements in the environment that could cause trouble for the business.

Internal factors The strengths and weaknesses internal to the organization.

External factors The opportunities and threats presented by the external environment to the organization.

For SWOT Analysis you will inject values into:


Factor scale/size Relevance/importance Strategic Impact

Strengths. For each of the strengths identified Enter the scale or size of the strength on a scale of 1 to 9. (1 being a very minor strength and 9 being a very significant strength). Enter the relative importance or relevance of each of the strengths on a scale of 1 to 9. (1 being strength of very little relevance and 9 being a very important or highly relevant strength). Enter the strategic impact of each of the strengths if it was to be fully exploited on a scale of 1 to 9. (1 being Strength of very little impact and 9 being strength with a very significant strategic impact).

Weaknesses For each of the weaknesses identified Enter the scale or size of the weakness on a scale of 1 to 9. (1 being a very minor weakness and 9 being a very significant weakness) Enter the relative importance or relevance of each of the weaknesses on a scale of 1 to 9. (1 being a weakness of very little relevance and 9 being a very important or highly relevant weakness) Enter the strategic impact of each of the weaknesses if the organisation was to be fully exposed to the weakness on a scale of 1 to 9. (1 being a weakness of very little impact and 9 being a weakness with a very significant strategic impact)

Opportunities

For each of the opportunities identified Enter the scale or size of the opportunity on a scale of 1 to 9. (1 being a very minor opportunity and 9 being a very significant opportunity). Enter the relative probability of each of the future opportunities actually arising on a scale of 1 to 9. (1 being an opportunity with very little probability of actually arising and 9 being an opportunity with a very high probability of actually arising). Enter the strategic impact of each of opportunity if it was to be fully exploited on a scale of 1 to 9. (1 being an opportunity of very little impact and 9 being a opportunity with a very significant strategic impact).

Threats For each of the threats identified Enter the scale or size of the threat on a scale of 1 to 9. (1 being a very minor threat and 9 being a very significant threat) Enter the relative probability of each of the future threats actually arising on a scale of 1 to 9. (1 being a threat with very little probability of actually arising and 9 being a threat with a very high probability of actually arising) Enter the strategic impact of each of the threats if the organisation was to be fully exposed to the threats on a scale of 1 to 9. (1 being a threat of very little impact and 9 being a threat with a very significant strategic impact)

Items plotted close to the (0,0) are the least significant, either because they are not rated as important or the relevance or probability is very low. Those that are at the extremes of the chart are the largest and are rated as highly relevant or a high probability of occurring. The size of the bubble indicates the strategic impact of the SWOT factor, the larger the bubble the greater the strategic impact.

BCG Matrix is the simplest way to portray a corporation s portfolio of investments. Each of the corporation s product lines or business units is plotted on the matrix according to both the growth rate of the industry in which it competes and its relative market share.

The BCG Growth-Share Matrix is a four-cell (2 by 2) matrix used to perform business portfolio analysis as a step in the strategic planning process.

SBUs/Product Lines with a relative high market share in a high growth market are designated as Stars. SBUs/Product Lines with a relative high market share in a low growth market are designed as Cash Cows SBUs/Product Lines with a relative low market share in a high growth market are designated as Question Marks or Problem Children. SBUs/Product Lines with a relative low market share in a low growth market are designated as Dogs.

A different strategic and investment approach is taken for each of the four different categories. Cash Cows typically have large market shares in mature, slow growing markets. Cash cows require little investment and generate cash that can be used to invest in other SBUs/product lines. Stars are SBUs/product lines that have a large market share in a fast growing market. Because the market is growing rapidly, stars frequently require on-going investment to maintain their market leadership. As marginal competitors withdraw and the market matures and slows down, successful stars become cash cows and generate significant cash.

Question Marks operate in high growth markets, but suffer from low market share. The strategic options involve investing resources to grow market share or withdrawing. Investing to grow market does not guarantee these SBUs or product lines will become stars and hence the term Question Mark. Dogs. A dog suffers from having low market share in a market that is mature and slow growing. Investment will usually have little benefit and therefore, liquidation and withdrawal is usually the best strategy for those SBUs/product lines classified as Dogs (Also used for divestment of businesses).

1. Enter the Business Unit Names. Up to 25 Business Units may be entered. 2. Enter the Relative Market Share compared to the most important competitor for each Business Unit. 3. Enter the Market Growth Rate for each Business Unit. 4. Enter the Market Size

The data for Relative Market Share, Market Growth Rate and Market Size should be based on a scale of 1 to 9 where 1 Extremely Low 5 Industry Average 9 Extremely High Data may be entered using a single decimal point, e.g. a market Growth Rate of 3.5 can be used.

The industry attractiveness and business strength scores are used to portray the strategic positions of each business in diversified company. Long term industry attractiveness is plotted on the vertical axis and competitive strength of business units on the horizontal axis. A nine cell grid emerges from dividing the vertical axis into three regions (high, medium and low) an horizontal axis into three regions (low, medium and high).

The aim of the GE/McKinsey Matrix Portfolio Analysis is to: Analyse the current business portfolio and decide which businesses should receive more or less investment Develop growth strategies for adding new products and businesses to the portfolio
Decide

which businesses or products should no longer be retained.

grow

Hold

Harvest

GE Mackinsey Matrix Strategies strong business units in attractive industries average business units in attractive industries strong units in average industries average business units in average industries strong business units in weak industries weak business units in attractive industries weak units in unattractive industries average business units in unattractive industries weak business units in average industries

SFAS = IFAS + EFAS IFAS EFAS Internal factor analysis summary External Factor analysis summary

The IFAS and EFAS tables plus SFAS Matrix have been developed to deal with the criticisms of SWOT Analysis. When used together, they are powerful analytical tools for strategic analysis. SFAS matrix summarizes an organization s strategic factors by combining the Internal factors from IFAS table with internal factors from EFAS table.

There are too many factors in EFAS and IFAS for strategists to use. The SFAS Matrix requires a strategic decision maker to condense these strengths, weakness, opportunities and threats into fewer than 10 strategic factors. The 10 factors identification is done by reviewing and revising the weight given to each factor. The revised weights reflect the priority of each factor as a determinant of the company s future success. The highest weighted EFAS and IFAS factors should appear in SFAS.

Internal Factors Analysis Summary Strenghts Weight S1 High Quality Products 0.2 Rating 3 Weighted Score 0.6 Comments the company provides high quality products for which it has been awarded and recognized. the company has trained staff to make quality products for the customers

S2

Highly skilled labor and management Company is highly capable of paying short term debts including accounts payable which are generated from buying raw material like cocoa (current is excellent) Weakness low debt ratio (debt ratio should high considering less volatility of cash flows) No focus on economies of scale through optimal production of products No national and international level marketing campaigns.

0.15

0.45

S3

0.1

2.5

0.25

current ratio reflects that the company can its short term debt very easily. This means that accounts payable generated from by raw materials could be cleared easily by the respective company.

W1

0.15

0.45

W2

0.2

2.5

0.5

W3

0.2

3.5

0.7

the debt ratio is 23.60% and it should be increased as the cash flows are predictable enough. the company is more focussed on offering absolutely fresh stuff to customer and so manufactures products on need basis. Cost cutting can be done by achieveing economies of scale in production process marketing is done only on regional basis and there is no focus on making RMCF a national level brand

Total Score

1.00

3.0

External Factors Analysis Summary Opportunites Weight O1 Increase the sales through entering into international markets Increase the variety of products offered by RMCF in national as well as international markets. 0.35 Rating 3 Weighted Score 1.05 Comments RMCF should focus on increasing global reach The customer base is increasing for high end products as well as healthy products.

O2

0.15

2.8

0.42

Threats Entry barriers into the industry have reduced due to newly available machinery and equipment. Global large companies are moving into the same area to target the audience that prefers products with no chemicals and preservatives. with the introduction of new kind of machinery and equipment a new player can enter the market with relatively very small investment The large global level companies have also realized the customer base from this no chemical and no preservative market and are entering this market on large scale

T1

0.3

3.5

1.05

T2

0.2

2.5

0.5

Total Score

1.00

3.0

Strategic Factors Analysis Summary Weights Rating Weighted Score S1 S2 High Quality Products Highly skilled labor and management No focus on economies of scale through optimal production of products No national and international level marketing campaigns. 0.15 0.1 2 2 0.30 0.20

W1

0.15

0.45

W2

0.1

3.5

0.35

Comments The company has reputation for offering high quality products labor is highly trained to make quality products both at corporate and franchises level No focus on cost of production cuts through producing products using economies of scale only regional marketing campaigns and no focus on national and international level campaigns Increase global reach and generate cash flows by going international Different types of products are in demand and the customer base is very large for such products with the introduction of new kind of machinery and equipment a new player can enter the market with relatively very small investment The large global level companies have also realized the customer base from this no chemical and no preservative market and are entering this market on large scale

O1

O2

T1

Increase the sales through entering into international markets Increase the variety of products offered by RMCF in national as well as international markets. Entry barriers into the industry have reduced due to newly available machinery and equipment. Global large companies are moving into the same area to target the audience that prefers products with no chemicals and preservatives.

0.1

3.67

0.37

0.1

2.8

0.28

0.1

3.2

0.32

T2

0.2

3.5

0.70

Total Score

1.00

3.0

Typical value chain for a Manufactured Product

Value chain analysis allow an organization to ascertain the costs and value that emanate from each of its value activities.

Profit path for value chain analysis of any given Organization.

Simple structure Functional structure Divisional structure Strategic business units (SBUs) Conglomerate structure

FINANCIAL PERSPECTIVE
Target Perform Actual Perform

Objective Financial Perspective

Measures Operating income From Productivity Gain

Initiatives

Manage Cost And Unused Capacity

Rs 20 Cr

Rs 20.12Cr

Increase Shareholder value

Operating Income From Growth

Build Strong Customer Relationship

Rs 30 Cr

Rs 34.20 Cr

Revenue Growth

6%

6.48%

Customer Perspective
Target Actual Perform Perform

Objective Customer Perspective

Measures Market Share

Initiatives

Number of New Customers Customer Satisfaction Rating

Identify future Needs of Customers Identify new Target Customer Seg. Increase Cuts Focus of Sales

6%

7%

1% 65% give Top two Ratings

2% 60%Gave top two Rating

Increase Customer Satisfaction

INTERNAL BUSINESS PROCESS PERSPECTIVE Objective Reduce Delivery Time Meet Specified Delivery dates Measures Initiatives Target Perform 30 days Actual Perform 30 days

Reduce Setup time Re-engineer order Delivery process on time delivery

Re-engineer order Delivery process Improve Customer Service process

92%

90%

Improve post Sales Services

Service Response Time

Within 4 hrs

Within 3 hrs

Improve Processes

Number of Impv. In Business Processes % of processes With Advanced Controls

Organize teams from Sales & Manuf

5 75%

5 75%

Improve Manufacturing Capability

Organize R&D/Mfg Teams to implement Adv. control

Learning and Growth Perspective Objective Measures Initiatives Target Actual Perform Perform 80% Employees Give top Two Ratings 88%

Align Employee Employee SatisfacAnd tion Rating Organizational Goals

Employee Participation to Build Team Work

Develop Process Skill

% Employees Trained in Process & Quality Mgt

Employees Training Programme

90%

92%

Empower Work Force

% Workers Empowered to Manage Processes

Supervisors as Coaches rather Decision Makers

80%

80%