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SWOT and PEST analysis - Strategic Management

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Business Analysis
Models
Strategic Management
Social Media
PEST Analysis
Political factors
economical factors
Social factors
Technology factors

Business Analysis
SWOT analyiss
Strengths
Weaknesses
Opportunities
threats

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SWOT and PEST analysis - Strategic Management

  1. 1. Copyright © 2002 by Harcourt, Inc. All rights reserved. Topic 6 :Topic 6 : Business Analysis ModelsBusiness Analysis Models Lecturer: Zhu WenzhongLecturer: Zhu Wenzhong
  2. 2. Copyright © 2002 by Harcourt, Inc. All rights reserved.  Key learning goals: This topic will introduce two well-known business analysis models, SWOT and PEST, which are commonly used as tools to analyze and develop business strategies. 1. State the 4 areas of SWOT analysis and tell which are internal and which are external by giving some examples. 2. State the 4 areas of PEST analysis and give at least some examples for each. 3. Do a case study. LEARNING GOALSLEARNING GOALS
  3. 3. Copyright © 2002 by Harcourt, Inc. All rights reserved. What is SWOT analysis?What is SWOT analysis? • SWOT analysis involves looking at the internalSWOT analysis involves looking at the internal strengths and weaknesses of a business and externalstrengths and weaknesses of a business and external opportunities and threats.opportunities and threats. • In other word, it is used to analyze the possible internalIn other word, it is used to analyze the possible internal advantages and problems that a business has, and toadvantages and problems that a business has, and to determines the external factors of the business whichdetermines the external factors of the business which may affect its strategy.may affect its strategy. • The purpose of a SWOT analysis is to conduct aThe purpose of a SWOT analysis is to conduct a general and quick examination of a business’s currentgeneral and quick examination of a business’s current position so that it can help the business to develop orposition so that it can help the business to develop or plan a direction of development or a proper strategy inplan a direction of development or a proper strategy in future.future. Business Analysis ModelsBusiness Analysis Models -SWOT Analysis-SWOT Analysis
  4. 4. Copyright © 2002 by Harcourt, Inc. All rights reserved. Figure 6-1 Elements of SWOT Analysis
  5. 5. Copyright © 2002 by Harcourt, Inc. All rights reserved. Uses of SWOT analysis:  SWOT analysis is an effective way of gathering and classifying information, illustrating particular matters, and generating strategic planning ideas for a business. The result of the analysis may provide a basis on which a more detailed analysis can be conducted. SWOT analysis is, therefore, often used as a method by which a business or its marketing department can plan its marketing strategy. Some examples of SWOT analysis are given in the following table: Business Analysis ModelsBusiness Analysis Models -SWOT Analysis-SWOT Analysis
  6. 6. Copyright © 2002 by Harcourt, Inc. All rights reserved. • Good brand image • Well-known name • Good reputation • Cost advantage in production • High market share • Confidence in the market • Customer loyalty or repeat business • More advanced technology and R & D • … Strengths © PhotoDisc Business Analysis ModelsBusiness Analysis Models -Examples or Illustrations for SWOT-Examples or Illustrations for SWOT Analysis ModelsAnalysis Models
  7. 7. Copyright © 2002 by Harcourt, Inc. All rights reserved. • Ineffective in production • Falling profit • Falling sales of the product • Declining age of the life cycle of a product • Poor reputation • Lack of innovation and change • Lack of adequate capital or having some financial problems • Customers’ losing confidence or increasing complaints on the business • Poor management or inefficient organizational structure • …. Strengths Weaknesses © PhotoDisc Business Analysis ModelsBusiness Analysis Models -Examples or Illustrations for SWOT-Examples or Illustrations for SWOT Analysis ModelsAnalysis Models
  8. 8. Copyright © 2002 by Harcourt, Inc. All rights reserved. • Possible development of new products • Expansion into new markets • Development of a global brand • Joint –development with other companies • Possible growing demand for a product in the market • Possible government policies encouraging the growth of the business and its certain products • New sources of profit or income • …. Strengths Weaknesses © PhotoDisc Business Analysis ModelsBusiness Analysis Models -Examples or Illustrations for SWOT-Examples or Illustrations for SWOT Analysis ModelsAnalysis Models Opportunities
  9. 9. Copyright © 2002 by Harcourt, Inc. All rights reserved. • Changes in law or regulation which may prohibit or affect the production of a business • Growing competition from local companies • Increasing competition from foreign competitors • New products developed by other companies which may replace the product of the business • Marketing activities or strategies which will be implemented by competitors • ….. Strengths Weaknesses Opportunities Threats © PhotoDisc Business Analysis ModelsBusiness Analysis Models -Examples or Illustrations for SWOT-Examples or Illustrations for SWOT Analysis ModelsAnalysis Models
  10. 10. Copyright © 2002 by Harcourt, Inc. All rights reserved. Question for your critical thinking: Please briefly make a SWOT analysis on yourself based on the analysis model we have discussed in the class within 10 minutes. Business Analysis ModelsBusiness Analysis Models -SWOT Analysis-SWOT Analysis
  11. 11. Copyright © 2002 by Harcourt, Inc. All rights reserved. What is PEST analysis? • PEST analysis is an analysis model examining the external environment and the global factors that may affect a business. • It can provide a quick understanding of the external pressures facing a business and their possible constraints on its strategy. • It is usually divided into four external influences on a business – political, economic, social and technological. Business Analysis ModelsBusiness Analysis Models -PEST Analysis-PEST Analysis
  12. 12. Copyright © 2002 by Harcourt, Inc. All rights reserved.  Purposes: To find how political development, locally, nationally, internationally affect the strategy of a business.  Areas to be considered: 1. Consumer laws and regulation 2. Political pressures, 3. Government views of certain business activities, including local, national or international government political issues affecting a business 4. … Political © PhotoDisc Business Analysis ModelsBusiness Analysis Models -Illustrations for PEST Analysis Models-Illustrations for PEST Analysis Models
  13. 13. Copyright © 2002 by Harcourt, Inc. All rights reserved.  Purposes: To find how economic factors may affect on the business.  Areas to be considered: 1. Consumer activities, such as spending patterns 2. Economic conditions, such as inflation, unemployment, growth, etc. 3. Government policies, such as fiscal, monetary, exchange rates, etc. 4. The changes in production and labor market … Political Economic © PhotoDisc Business Analysis ModelsBusiness Analysis Models -Illustrations for PEST Analysis Models-Illustrations for PEST Analysis Models
  14. 14. Copyright © 2002 by Harcourt, Inc. All rights reserved.  Purposes: To find what competitive advantage a business may gain by social changes.  Areas to be considered: 1. Aging population trend, which may increase services for old people 2. Birth rate increase, which may affect baby product markets 3. Security condition, e.g. increase in crime may cause a business to increase insurance costs 4. Pressure groups, such as environmental groups, local community groups, etc. which may prevent a business from polluting a river… Political Economic © PhotoDisc Business Analysis ModelsBusiness Analysis Models -Illustrations for PEST Analysis Models-Illustrations for PEST Analysis Models Social
  15. 15. Copyright © 2002 by Harcourt, Inc. All rights reserved.  Purposes: To find how new technologies might affect the business activities.  Areas to be considered: 1. The rate of technological change 2. The development of IT 3. The wide use of Internet 4. The creation of new materials for production …  Impacts: All these technological changes will lead to some effects on the business, such as the product of the business may be replaced by new products or its production methods may have become out of date. Political Economic Social Technological © PhotoDisc Business Analysis ModelsBusiness Analysis Models -Illustrations for PEST Analysis Models-Illustrations for PEST Analysis Models
  16. 16. Copyright © 2002 by Harcourt, Inc. All rights reserved. Question for your critical thinking: Please try to tell what the key difference is between SWOT and PEST models. Business Analysis ModelsBusiness Analysis Models -SWOT and PEST-SWOT and PEST

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