Chapter 3

SWOT: The Analysis of Strengths, Weaknesses, Opportunities, & Threats

Benefits of the SWOT Analysis

Simple process which lowers costs No extensive training required Flexible-enhances strategic planning Integration-synthesizes qualitative & quantitative information Collaboration-encourages interdepartmental coordination
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Directives for a Productive SWOT Analysis

Stay focused Search extensively for competitors Collaborate with other functional areas Examine issues from the customers perspectives Separate internal issues from external issues

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Keys to Staying Focused

Focus on specific products & markets Adapt the marketing mix to address environmental issues Examine overall strategic business units Make certain you have 1 SWOT analysis for each product/market combination
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Search Extensively for Competitors

Do not overlook any competitor (current or future) Consider:
Product competitors Generic competitors Total budget competitors

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Collaborate with Other Functional Areas

Stimulates communication outside normal channels Result is varied information from diverse sources Provides an outsiders perspective in the SWOT
Sales Production Advertising Finance Customer service -Inventory control -Quality control -Research & development

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Examine Issues from the Customers Perspectives in the SWOT

What do our customers believe about us as a company? What are their perceptions of:
Product quality Customer service Price/value Convenience Promotional
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Customer Segment Evaluations Should be Benchmarked

Consider internal customers (employees) Consider all relevant stakeholders:
Investors & stockholders Suppliers Customers Governmental Societal
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Concerns Beyond External Issues

Internal issues (strengths & weaknesses) Biggest problem with SWOTS
failure to understand the difference between internal & external issues

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The Elements of the SWOT Analysis

Strengths & Weaknesses: A strength is meaningful only when it addresses customer needs A customer-focused SWOT can uncover potential weaknesses Weaknesses associated with customer needs should be minimized Determine where resources are available & lacking Match strengths with market opportunities Strengthen weaknesses or minimize their negatives
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The Elements of the SWOT Analysis

Opportunities & Threats:
Changes in the external environment can impede the ability to deliver value to customers Changes can occur in:
market growth competition overall economy political/legal environment technology sociocultural issues
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SWOT-Driven Strategic Planning

Utilizing a SWOT for strategic planning requires:
Looking beyond the firms current products Matching strengths with opportunities (translate strengths into capabilities) Investing in key areas: customer support, R&D, promotion, employee training) Converting weaknesses into strengths Understanding that weaknesses that cannot be converted into strengths become limitations
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One Way to Conduct a SWOT Analysis-SWOT Matrix

4 cells categorizing the SWOT:strengths, weaknesses, opportunities & threats Assess magnitude and importance of each
Based on customer perceptions, not managers

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Developing Sustainable Competitive Advantages

Capabilities allow the firm to better serve customer needs (competitive advantage) Sources of competitive advantage:
customer loyalty -brand equity -distribution patents & trademarks -salesforce -culture

Capabilities that do not solve customer needs are of little value

Must have a core competency
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How to Achieve a Competitive Advantage

Operational excellence-efficiency Product leadership-research & development, technology, products Customer intimacy-relationship marketing

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Matching Strengths to Opportunities (Johnson & Murphy)

2 key strengths: reputation for quality & personal service 2 key opportunities: demand for high quality products & good service J & M uses a product leadership strategy & customer intimacy strategy J & M stresses convenience of locations & catalog services (overnight delivery options)
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Considerations in Developing Marketing Goals

Attainability Consistency Comprehensiveness Intangibility

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Considerations in Developing Marketing Objectives

Attainability Continuity Timeframe Assignment of responsibility

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Strategies Converting Strengths or Threats into Opportunities

Find new markets for a firms products (conversion strategy)
May require significant financial resources Must identify major liabilities that continue to occur

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Minimize or Avoid Weaknesses or Threats Which Cannot Be Converted

Become a niche marketer Reposition the product Realize your limitations
Diversify to minimize risks of operating in a single market

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How would you react to the idea that a SWOT analysis is unnecessary?

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How could each of the following be a strength or weakness?

Highest quality product in the industry Significant excess production capacity Excellent relationship with a single supplier Sizable amount of cash on hand Offering a product that is designed to suit everyones needs
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Identify some opportunities & threats in the following industries

Commercial aviation Health care Television Pet supplies Education Transportation
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