PGDM

Strategic Management
 PGDM Strategic Management
 This session
 SWOT and TOWS Analysis
 PGDM Strategic Management
SWOT - TOWS

Corporate Strategy

Intuitive
Analysis
Process

Business environment Business environment

Evaluation & control VMO

Implementation Finance
Strategy
Strategy
Culture & Mgmt style Value Chain

Strategic Analysing
Culture & The value chain choice strategic alternatives
management style competencies
 PGDM Strategic Management
SWOT - TOWS

Corporate Strategy

Intuitive
Re-iteration

Re-iteration
Analysis
Process

Business environment Business environment

Evaluation & control VMO

Implementation Finance
Strategy
Strategy
Culture & Mgmt style Value Chain

Strategic Analysing
Culture & The value chain choice strategic alternatives
management style competencies
 PGDM Strategic Management
SWOT - TOWS

Corporate Strategy

Intuitive
Re-iteration

Re-iteration
ic
Analysis

is t Process

o l
Business environment H Business environment

Evaluation & control VMO

Implementation Finance
Strategy
Strategy
Culture & Mgmt style Value Chain

Strategic Analysing
Culture & The value chain choice strategic alternatives
management style competencies
 PGDM Strategic Management
SWOT - TOWS

Perform (Opportunities Threats)

External Audit

Implement
Develop Generate, Implement Strategies: Measure
Establish
Mission Evaluate Strategies - Marketing and
Long-term
& Vision & select Management Finance Evaluate
Objectives
Statement strategies Issues Accounting performance
R&D, MIS

Perform
(Strengths Weaknesses)
Internal Audit

Source: David, F. 2009

Strategy Formulation Strategy Implementation Strategy Evaluation

 PGDM Strategic Management
SWOT - TOWS

• SWOT – Strengths Weaknesses Opportunities Threats

• SWOT is the first stage:
1. List the firm’s key external opportunities
2. List the firm’s key external threats
3. List the firm’s key internal strengths
4. List the firm’s key internal weaknesses
 Strengths Weaknesses
S 1. Inventory turn up 5.8.to 6.7 1. Software instore rev down 12%
a U 2. Average customer purchase up $97 to 2. Store location hurt by new highway 34
of r $128 3. Carpet, paint in disrepair
O T u te 3. Employee morale excellent 4. Bathroom needs refurb
SW mp 4. In-store promos 20% sale increase 5. Total store rev down 8%
co ore 5. Newspapers ad costs -10% 6. Store has no website
st 6. In store repair/service revenue up 16% 7. Supplier JIT delivery takes 2.4 days
7. Techies instore have MIS degrees 8. Checkout process too slow
8. Store debt to total assets ration down 9. Rev per employee up 19%
34%
Opportunities
1. Population of city growing 10%
2. Rival store opening 1 mile away
3. Vendors average 6 new products/yr
4. Vehicle passing traffic up 12%
5. Seniors use of PC’s up 8%
6. SME growth in area up 10%
7. Desire for realtors websites up 10%
8. Desire for websites up 12% by SME

Threats
1. Best buy opening new store in
one year nearby
2. Local Uni offers computer repair
3. New Hway 34 bypass will divert
traffic
4. New mall being built nearby
5. Gas prices up 14%
6. Vendors raising prices 8%
 PGDM Strategic Management
SWOT - TOWS
• SWOT – Strengths Weaknesses Opportunities Threats
• SWOT is the first stage:
1. List the firm’s key external opportunities
2. List the firm’s key external threats
3. List the firm’s key internal strengths
4. List the firm’s key internal weaknesses
• TOWS is the second stage:
5. Match internal strengths with external ops and record the
resultant SO strategies
6. Match internal weaknesses with external ops and record the
resultant WO strategies
7. Match internal strengths with external threats and record the
resultant ST strategies
8. Match internal weaknesses with external threats and record the
resultant WT strategies

d 2. Store location hurt by new highway 34
an a U S
OT of
SW WS uter
TO mp
co re
sto
Opportunities
1. Population of city growing 10%
2. Rival store opening 1 mile away
3. Vendors average 6 new products/yr
4. Vehicle passing traffic up 12%
5. Seniors use of PC’s up 8%
6. SME growth in area up 10%
7. Desire for realtors websites up 10%
8. Desire for websites up 12% by SME
Threats
1. Best buy opening new store in
one year nearby
2. Local Uni offers computer repair
3. New Highway 34 bypass will
divert traffic
4. New mall being built nearby
5. Gas prices up 14%
6. Vendors raising prices 8%
Strengths
1. Inventory turn up 5.8.to 6.7
2. Average customer purchase up $97 to
$128
3. Employee morale excellent
4. In-store promos 20% sale increase
5. Newspapers ad costs -10%
6. In store repair/service revenue up 16%
7. Techies in-store have MIS degrees
8. Store debt to total assets ration down
34%
SO Strategies
1. Add 4 new in-store promotions
monthly (S4,O3)
2. Add 2 new repair/service people
(S6,O5)
3. Send flyer to all seniors over age 55
(S5,O5)
ST Strategies
1. Hire 2 more repair persons and
market these new services
(S6,S7,T1)
2. Purchase land to build new store
(S8,T3)
3. Raise out of store service calls from
$60 to $80 (S6, T5)
Weaknesses
1. Software in-store rev down 12%
3. Carpet, paint in disrepair
4. Bathroom needs refurbishing
5. Total store rev down 8%
6. Store has no website
7. Supplier JIT delivery takes 2.4 days
8. Checkout process too slow
9. Rev per employee up 19%
WO Strategies
1. Purchase land to build new store
2. Install new carpet/paint/bath
(W3,W4,O1)
3. Up web site services by 50%
(W6,O7, O8)
4. Launch mail-out to all realtors in city
(W5,O7)
WT Strategies
1. Hire 2 new cashiers (W8,T1,T4)
2. Install new carpet/paint/bath
(W3,W4,T1)
 p l e od
A p -iP
e
of r pr
OT u t e
SW mp
Co Strengths Weaknesses
1. Sizable miniature storage 1. (Poor) Economies of scale versus
expertise computer rivals
2. User friendly engineering skill 2. Maturing computer markets
3. Reputation and image with 3. Limited financial resources
youthful customers
4. Limited music industry expertise
4. Brand name
5. Web-savy organisation and people
6. Job’s Pixar experience

Opportunities Threats
1. Confused online music 1. Growing global computer
situation companies
2. Emerging file-sharing 2. Major computer competitors
restrictions
3. Few core computer related
opportunities
4. Digitisation of music and
movies
 PGDM Strategic Management
SWOT - TOWS

• SWOT Analysis Diagram

Numerous Environmental (External) Opportunities

Cell 3: Cell 1:
Supports a Supports an
turnaround-oriented aggressive strategy
strategy
Critical Internal Substantial Internal
Weaknesses Strengths
Cell 4: Cell 3:
Supports a defensive Supports a
strategy diversification strategy

Source: Pearce J, Robinson

R, Mital A 2008

Major Environmental (External) Threats

 PGDM Strategic Management
SWOT - TOWS

• SWOT and TOWS are well known, simple and liked

by managers
• But they do have disadvantages:
• Can downplay external factors and
overemphasise internal strengths. A firm may do
something well now but how will that be affected by
external factors over time? Apple had to consider
the external environment of file-sharing and how to
develop iTunes as well as its internal strengths
 PGDM Strategic Management
SWOT - TOWS

• SWOT and TOWS are well known, simple and liked

by managers
• …more:
• SWOT is a static model. A snapshot in time. It
ignores changing circumstances. US airline
deregulation changed the whole basis of
established airlines’ strategies built around their
strengths
 PGDM Strategic Management
SWOT - TOWS

• SWOT and TOWS are well known, simple and liked

by managers
• …more:
• SWOT can overplay a single strength. The HP
and Compaq merger gave the new company a
strength of huge EoS. However flexibility through
direct global sales channel has proven more
valuable to the smaller Dell
 PGDM Strategic Management
SWOT - TOWS

• SWOT and TOWS are well known, simple and liked

by managers
• …more:
• A strength is not necessarily a source of
competitive advantage. Cisco, an ICT
manufacturer with great strength in the corporate
market failed to succeed in the home-networking
market and subsequently acquired Link-Sys to gain
that market share
PGDM Strategic Management

Q &A