swot analysis

1. The Purpose of Swot Analysis
The SWOT analysis enables companies to identify the positive and negative
influencing factors inside and outside of a company or organization.
Besides businesses, other organizations, in areas such as community health and
development and education have found much use in its guiding principles. The
key role of SWOT is to help develop a full awareness of all factors that may affect
strategic planning and decision making, a goal that can be applied to most any
aspect of industry
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
In some cases, a weakness may be the flip side of a strength. Take the case in
which a firm has a large amount of manufacturing capacity. While this capacity
may be considered a strength that competitors do not share, it also may be a
considered a weakness if the large investment in manufacturing capacity
prevents the firm from reacting quickly to changes in the strategic environment.

2. 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
STRATEGIC WINDOW
Period of time that is temporary between competitive abilities in an
organization and the markets existing needs.
EXAMPLE
This past year when Toyota had all of those recalls on their vehicles because of
the brake failures and other flaws in the design, the other big car company's such
as Ford and GM had a strategic window to take a major share of the market by
stealing Toyota's customers. However, even though these companies did
prosper well, I don't believe that they took the strategic window as much as they
could. I believe if they wanted to, they could have put Toyota under for good.
Strategic Business Unit
An autonomous division or organizational unit, small enough to be flexible and
large enough to exercise control over most of the factors affecting its long-term
performance.
Strategic business units are absolutely essential for multi product organizations.
These business units are basically known as profit centres. They are focused
towards a set of products and are responsible for each and every decision /

3. strategy to be taken for that particular set of products. Strategic business units
can be best explained with an example.
Example of Strategic business units – The best example of strategic business
unit would be to take organizations like P&G or LG in focus. These organizations
are characterized by multiple categories and multiple product lines. For example,
HUL may have a line of products in the shampoo category, Similarly LG might
have a line of products in the television category. Thus to track the investments
against return, they may classify the category as a different SBU itself.
if the company have multi-sector business then it is suitable to use some
strategic business units.
let,s take example of Nestle , SA
They have business in coffee (Nescafé), bottled water, other beverages
(including Aero (chocolate) & Skinny Cow), chocolate, ice cream, infant foods,
performance and healthcare nutrition, seasonings, frozen and refrigerated foods,
confectionery and pet food.
of course each business must be treated as a strategic business unit so each
SBU can concentrate in each market by their own executives , instead of led by 1
centralized CEO
each SBU manager/CEO will be given autonomy to some extent of degree to
lead their own SBU
and usually each SBU shares functional programs and facilities with other SBUs,
and Head Company will give strategic direction in the development of the SBU.
But if a multinational company has only 1 business , like ben & jerry with ice
cream or starbuck with the coffee, they dont need some strategic business units,
their ice cream is already a strategic business unit, so dont mix a strategic
business unit as a strategy that chan be chosen to apply or not. (LOOK at the
definition of a strategic business unit below)
DEFINITION of 'BCG Growth Share Matrix'
A planning tool that uses graphical representations of a company’s products and
services in an effort to help the company decide what it should keep, sell or
invest more in.

4. INVESTOPEDIA EXPLAINS 'BCG Growth Share Matrix'
The BCG growth share matrix breaks down products into four categories: dogs,
cows, stars and “unknown”. If a company’s product has low market share and is
in a low rate of growth market, it is considered a “dog” and should be sold off.
Products that are in low growth areas but which the company has a large market
share are considered “cows”, meaning that the company should “milk” the “cash
cow” for as long as it can. Products that are both in high growth markets and
make up a sizeable portion of that market are considered “stars”, and should be
invested in more. Questionable opportunities are those in high growth rate
markets, but in which the company doesn’t maintain a large market share.
Products in this quadrant are to be analyzed more.
Dogs - Dogs have low market share and a low growth rate and thus neither
generate nor consume a large amount of cash. However, dogs are cash traps
because of the money tied up in a business that has little potential. Such busin-
esses are candidates for divestiture.
Stars - Stars generate large amounts of cash because of their strong relative
market share, but also consume large amounts of cash because of their high
growth rate; therefore the cash in each direction approximately nets out. If a star
can maintain its large market share, it will become a cash cow when the market
growth rate declines. The portfolio of a diversified company always should have
stars that will become the next cash cows and ensure future cash generation.
Cash cows - As leaders in a mature market, cash cows exhibit a return on
assets that is greater than the market growth rate, and thus generate more cash
than they consume. Such business units should be "milked", extracting the profits
and investing as little cash as possible. Cash cows provide the cash required to
turn question marks into market leaders, to cover the administrative costs of the
company, to fund research and development, to service the corporate debt, and
to pay dividends to shareholders. Because the cash cow generates a relatively
stable cash flow, its value can be determined with reasonable accuracy by
calculating the present value of its cash stream using a discounted cash flow
analysis.
Question marks - Question marks are growing rapidly and thus consume large
amounts of cash, but because they have low market shares they do not generate
much cash. The result is a large net cash comsumption. A question mark (also
known as a "problem child") has the potential to gain market share and become a
star, and eventually a cash cow when the market growth slows. If the question
mark does not succeed in becoming the market leader, then after perhaps years
of cash consumption it will degenerate into a dog when the market growth
declines. Question marks must be analyzed carefully in order to determine
whether they are worth the investment required to grow market share.