SWOT Analysis
| Internal Organization Analysis | External Ecosystem Analysis | |||
| Strengths | Weaknesses | Opportunities | Threats | |
| Strategy | Owners are nimble and can make quick decisions
Attention to detail [internal strengths can be shifted to new external market] Had a monopoly Market – focused on gov Barrier to entry [knowledge and talent to do the quality work] |
Current Mission statement is outdated
Lack of customer diversification Angus did not restructure quickly based on the new article forecasting downsizing of regiment Had a monopoly Market – only focused gov |
Provide same quality shoes to the general public
Can expand in local area [cobblers are in other regions/villages]
|
Downsize of Black Watch Regiment |
| Finance | On site accounting. Judith Fraser does all books and is aware of inflow and outflow of the business | Declining Sales
Depleting cash flow/bank account Low accounts receivable Asset base is weak [out of cash little food; profit margin is razor thin] Inventory is up sales are down Negative ROE ROA All ratios ROE etc are weak |
Now: they have 3X as much inventory compared to previous years]
|
Cannot pay their bills i.e. the butcher
Table 2.8 54% to neg. 25% so the swing on return ratio
Table 2.7 times covered is 13.2 thereby they are not able to meet their external bills
|
| Human Resources | Quick decisions [if they chose to be active rather than reactive] i.e. not a lot of bureaucracy | No succession planning | Elves are potential strategic ally | Loss of trade secrets |
| Operational | Proven quality; Internal talent [knowledge]; Quality control; Mobile industry : with local show now; Customer service; Pride in work; Established in the business for a long time; Attention to details; Reputation of Shop [Angus] | Too small [too dependant on one person i.e. Angus if he is ill or injured the work stops]
No economy of scale
Transportation of goods take |
Outsourcing to elves
If the elves are invited in then they will increase the economy of scale
Have existing inventory to move forward if they can acquire clients |
Potential loss of intellectual knowledge to elves |
| Marketing | Brand image is ‘mom and pop’ quality
Strong reputation |
Only one product
Niche marketing
|
Elves [if invited in] can potentially provide additional distribution channels in their local areas
|
One Client decreasing in size
Competition from elves Change in brand image if they accept elves Lack of advertising to general public Increased competition from other cobblers |
| Technical | Have Trade secrets | Outsourcing is an internal threat as trade secrets could be lost | Economies of scale with elves could lead to capturing [stealing] market shares of other cobblers | Loss of intellectual knowledge to elves
IF they invite the elves into the operations |
An effective business tool to assess both the internal (micro-) and external (macro-) environments of a company is a SWOT analysis. Using this tool, the organization can assess and analyse its current situation. The SWOT includes performing a candid internal assessment of the company’s strengths and weaknesses and its external opportunities and threats. It is important that a company closely examines the competitive advantages and addresses any deficiencies in the business planning process. This is also a very effective instrument to evaluate potential international business partners and alliances by assessing their overall strengths and weaknesses. You are looking for a “fit” -Synergy!
Based on the data collected, and by responding to the various questions, the strategist must analyze the data and consider the firm’s current situation and available resources. Managers must determine whether the current strategy is working and, if it isn’t, what other viable options are within the firm’s capability and competencies.
KEY THOUGHT- The test to determine the best strategic option is to ask a series of questions.
- Is the proposed option a good fit with the vision and mission statements, and the firm’s available resources?
- Will it contribute to building a sustainable competitive advantage for the firm?
- Will it create value for shareholders, and strengthen the firm’s survivability?
If the answers are yes TO ALL 3, then there is merit in adopting the strategy. Strategists must undertake hard critical thinking, analyze the data they have collected for the models, and draw all of the “so what’s” from the data when crafting their strategies.
SWOT is complementary to the TOWS.
I encourage you to adopt both tools when drafting your alternative strategies.
KEY TERM: So what? When analysing data, look beyond the surface-level of a fact by asking a series of “so what” questions. For example: Our competitor is opening a factory in China. So what? Well, labour in China is less expensive than our labour. So what? Well, our competitor’s cost base will go down. So what? They will be able to make their product for less than we can. Ah-ha! This is one technique that will help you “peel the onion” to reveal deeper meaning from the facts”. Practice-Practice Practice.
