SWOT ANALYSIS

A scan of the internal and external environment is an important part of the

strategic planning process. Environmental factors internal to the firm usually can be
classified as strengths (S) or weaknesses (W), and those external to the firm can be
classified as opportunities (O) or threats (T). Such an analysis of the strategic
environment is referred to as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching the firm's
resources and capabilities to the competitive environment in which it operates. As such,
it is instrumental in strategy formulation and selection. The following diagram shows
how a SWOT analysis fits into an environmental scan:

SWOT Analysis Framework

Environmental Scan
/
Internal Analysis
/\
Strengths Weaknesses
|
SWOT Matrix

\
External Analysis
/\
Opportunities Threats

Strengths
A firm's strengths are its resources and capabilities that can be used as a basis for
developing a competitive advantage. Examples of such strengths include:

patents
strong brand names

good reputation among customers

cost advantages from proprietary know-how

exclusive access to high grade natural resources

favorable access to distribution networks

Weaknesses
The absence of certain strengths may be viewed as a weakness. For example, each of
the following may be considered weaknesses:

lack of patent protection

a weak brand name

poor reputation among customers

high cost structure

lack of access to the best natural resources

lack of access to key distribution channels

Opportunities
The external environmental analysis may reveal certain new opportunities for profit and
growth. Some examples of such opportunities include:

an unfulfilled customer need

arrival of new technologies

loosening of regulations

removal of international trade barriers

Threats
Changes in the external environmental also may present threats to the firm. Some
examples of such threats include:

shifts in consumer tastes away from the firm's products

emergence of substitute products

new regulations

increased trade barriers

The SWOT Matrix

A firm should not necessarily pursue the more lucrative opportunities. Rather, it may
have a better chance at developing a competitive advantage by identifying a fit between
the firm's strengths and upcoming opportunities. In some cases, the firm can overcome
a weakness in order to prepare itself to pursue a compelling opportunity.
To develop strategies that take into account the SWOT profile, a matrix of these factors
can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below:
SWOT / TOWS Matrix
Strengths

Weaknesses

Opportunities S-O strategies W-O strategies

Threats

S-T strategies W-T strategies

S-O strategies pursue opportunities that are a good fit to the company's
strengths.
W-O strategies overcome weaknesses to pursue opportunities.

S-T strategies identify ways that the firm can use its strengths to reduce its
vulnerability to external threats.

W-T strategies establish a defensive plan to prevent the firm's weaknesses from
making it highly susceptible to external threats.

EA GAMES SWOT ANALYSIS:

STRENGTHS
* Electronic Arts (EA) Games, is a global corporation which develops, markets,
publishes and distributes video game software, online interactive games, and
mobile games. They design games for a number of platforms including Sony
PlayStation 3, Microsoft Xbox 360 and Nintendo Wii; handheld game systems,
including PlayStation Portable (PSP), Nintendo DS and Apple iPod; personal
computers (PCs); and mobile phones. The company distributes games in over 35
countries worldwide.

* EA Games has four segments under their label: EA Games, EA Sports, The Sims
and EA Casual Entertainment.
* The EA Games label has the largest percentage of research and development
staff, and produces action-adventure, role playing, racing and combat games and
the extraordinarily popular online role-playing games.
* The EA Sports label produces sports-based video games, including the Madden
NFL, (which in 2007 grossed $100 million in sales in their first week on the market),
FIFA Soccer and Tiger Woods PGA Tour franchises. The sports division brings in 43%
of EA's revenue.
* The EA Casual Entertainment label develops games that are intended to be
quick to learn and play online, making them easily accessible for a wide audience.
Pogo has 1.6 million subscribers.
* EA Games has a social responsibility platform that includes a grant program,
software donation program, volunteer opportunities, and supporting non-profit
organizations and schools by giving to organizations that provide services to
underprivileged youth in the areas of math, computer science, music and art.

WEAKNESSES

* In December 2008, Electronic Arts cut its worldwide workforce by approximately

10% and closed at least nine of its studios and publishing locations. They also laid
off 6% of their staff, and let go of Kathy Vrabek, head of EA's Casual Entertainment
division, just 18 months after she took the job.
* Their software is dependent upon the platforms that are created by other
companies, leading to limitations in design capabilities, graphics and game
performance.
* Game release times have to be tied into specific times of year, Christmas sales,
sports seasons and major sporting events, any miscalculation of production and
distribution further hurts sales, and makes their assets less profitable.
* In 2008, EA, in a licensing deal with Hasbro, created a digital Scrabble game,
which was a failure due in part to software problems.
* EA's crown jewel Madden NFL franchise was the company's only title among the
industry's top 10 best-selling games in 2007.

OPPORTUNITIES

* In 2008, EA acquired ThreeSF, Inc., a gaming-based social network; and they

acquired J2MSoft Inc., a Korean-based developer of PC online games.
* The computer gaming industry has begun to recognize that the U.S. Army
needs simulation training and EA Games can provide the instruments to achieve
their goals. Games are also being adopted for defense, medicine, architecture,
education, city planning and government applications.
* A line of interactive training tools featuring voice commands and instructional
coaching.
* Complete game-in-a-box containing all the equipment necessary for kids to
practice and play a sport.
* A line of sports toys that will utilize electronics to reward young athletes with
cheers when they use proper techniques.
* A basic line of high density-foam balls to help kids develop skills at an early age.

THREATS

* Since 2004 sales have been steadily increasing, however, profits have been
steadily decreasing until 2008, when they actually had a negative profit margin.
They earned $3.8 billion in sales, but had a $454 million loss.
* Sales and profits are dependent on the success and prolonged purchasing
power of gaming consoles. If sales for a gaming console wane (such as a Playstation
or Wii) software/game sales will slump.
* Software piracy has become a serious problem, especially in countries, like
South Korea where laws are not enforced; software is pirated and distributed
without much fear of consequences, cutting into EA Games' profits.
* In May 2009, EA Games was sued claiming they illegally used the names and
likenesses of thousands of college football and basketball players in their software
since the 1990's.

* Due to their executive staff layoffs, restructuring, and lack of stability there has
been speculation that they are a prime candidate for a takeover by other global
entertainment companies.