Strategic Management:

Strategy Formulation

SWOT Analysis

A Balanced Perspective: Strengths Weaknesses Opportunities Threats

By: Vadim Kotelnikov

Founder, Ten3 Business e-Coach Inspiration and Innovation Unlimited!

"The important thing is not to stop questioning." ~ Albert Einstein

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 Jack Welch's 5 Strategic Questions

"So in war, the way is to avoid what is strong and to strike at what is weak. Water shapes its course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing." Sun Tzu, 'The Art of War'

Strategy Formulation Strategy Formulation The Power of Balance Searching for Opportunities Pursuing Opportunities Resource-based Business Development SWOT Analysis

A Balanced Perspective

You must be aware of:

  1. Your Internal Strengths: your core competencies, corporate capabilities and resources that provide the basis for your strategy

  2. Your Internal Weaknesses: what critical parts of your business you must strengthen or hide from your competitors

  3. External Opportunities: the benefits that are likely to accrue from pursuing your vision and external opportunities

  4. External Threats: the pitfalls and the dangers, the variations and exceptions possible.

 

  

Special Tools for Strategy Formulation

Contributing Factors

  1. Strengths: ability, resources, weakness of the competition, or the opposing sources.

  2. Weaknesses: failures, defeats, loses, and inability to match up with the dynamic situation of growth and the change.

  3. Opportunities: possibilities of what can be done and where effectiveness is possible.

  4. Threats: changes in business environment, PEST forces political, economic, social, technological.

 

 

Strategy Formulation

SWOT Analysis: Questions To Answer

Learning SWOT Questions

Start-Up Firms

SWOT Analysis for Start-Up Firms

Business Portfolio Analysis

BCG Growth-Share Matrix

GE Multifactor Business Portfolio Matrix

What is SWOT Analysis?

Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis is a strategy development tool that matches internal organizational strengths and weaknesses with external opportunities and threats.

A Balanced Perspective

 

SWOT analysis helps you balance idealism and pragmatism, and obtain a balanced perspective of your internal strengths and weaknesses and external opportunities and threats to develop an effective strategy.

Why SWOT Analysis?

SWOT Analysis is the Key Component of Strategic Development. It can prompt actions and responses.

Successful businesses build on their strengths, correct their weaknesses and protect against internal vulnerabilities and external threats. They also keep an eye on their overall business environment and spot and exploit new opportunities faster than competitors. SWOT analysis is a tool that helps many businesses in this process.

 Competitive Strategies: 2 Types

SWOT analysis is based on the assumption that if managers can carefully review such strengths, weaknesses, opportunities, and threats, a useful strategy for ensuring organizational success will become evident to them.

Strengths

Two factors contribute to your strengths: ability and resources available.

Ability is evaluated on 3 counts:

  1. Versatility: your ability to adapt to an ever changing environment.

  2. Growth: your ability to maintain a continuing growth.

  3. Markets: your ability to penetrate or create new markets.

The strength of resources has three dimensions:

  1. Availability: your ability to obtain the resources needed.

  2. Quality: the quality and up-to-dateness of the resources employed.

  3. Allocation: your ability to distribute resources both effectively and efficiently.

Weaknesses

Your weaknesses are determined through failures, defeats, losses and inability to match up with the dynamic situation and rapid change. The weaknesses may be rooted in  lack of managerial skills, insufficient quality, technological backwardness, inadequate systems or processes, slow deliveries, or shortage of resources. There are three possible outcomes to the analysis of your weaknesses.1

  1. Correction of an identified defect.

  2. Protection through cover-up and prevention strategies to reduce the exposure of your weaknesses.

  3. Aggression to divert the attention from your weaknesses.

Opportunities

 3Ss of Winning in Business

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Opportunities are abundant. You must develop a formula which will help you define what comes within the ambit of an opportunity to focus on those areas and pursue those opportunities where effectiveness is possible. The formula must define product/service, target market, capabilities required and resources to be employed, returns expected and the level of risk allowed.

Weaknesses of your competitions are also opportunities for you. You can exploit them in two following ways:

  1. Marketing warfare: attacking the weak leader's position and focusing all your efforts at that point, or making a surprise move into an uncontested area.

  2. Collaboration: you can use your complementary strengths to establish a strategic alliance with your competitor.

Threats

External threats arise from political, economic, social, technological (PEST) forces. Technological developments may make your offerings obsolete. Market changes may result from the changes in the customer needs, competitors' moves, or demographic shifts. The political situation determines government policy and taxation structure.

 

Strategic Management

Venturepreneur

Smart Business Architect

 

 

References:

  1. "Getting Things Done," Francis Lobo