Week 10 SWOT & PESTEL

1. SWOT & PESTEL
Week 8 Business IT/Systems

2. Organisations
• ‘John Bryson quotes Sun Tzu, from the Art of War :
•
“So it is said that if you know others and know yourself,
you will not be imperilled in a hundred battles; if you do
not know others but do know yourself, you win one and
lose one; if you do not know others and do not know
yourself, you will be imperilled in every single battle.”

3. Organisation Definition
• At this stage I would like to keep an
organisation definition very broad:
‘constructs formed by social groupings to
achieve a specific goal using designed and
coordinated activities’ *
* adopted but also have a look at Farnham & Horton;

4. Organisation Analysis
• History of Organisations
– Organisations have always been an integral feature
of civilisation
– However, since the start 20th
Century and the onset of
large organisation more research has focused on
organisations
• Organisations as Systems
– Organisations can be viewed as systems and as
such can be categorised with commonalities and
differences

5. Organisation Perspectives
– Accounts
– School
– Retail
– Local Authority
– Airport
– Manufacture
– Hospital
– Hotel
– Leisure Centre
– Pharmaceutical
Company
– Bank
– Expectations Setting
– Industry
(Nationalised/Private)
The range of organisation types is large:

6. Differences & Common Factors
• Differences factors:
– Cultural
– Social
• Common factors:
– People
– Objectives
– Structure
• The fourth factor?:
– Management: the organisations activities and its
members efforts are directed and controlled towards
the objectives
Interaction of people in order to
achieve objectives which forms the
basis of an organisation. Some form
of structure is needed by which
people’s interaction and efforts are
channelled and coordinated.

8. Group Example

9. Organisation Classification
• The classification of organisation is an interesting and
well documented subject area (see for example Blau
and Scott) the detail of which we do not need to focus on
at this time.
• However, a good starting point for us to take is
considering organisations as ‘open systems’:
– ‘Organisations which take inputs from the
environment (outputs from other systems) and via
activities transform these inputs into outputs (inputs
to other systems) to achieve some objective.

10. Organisation as an Open
System

11. Environmental Interactions
• Organisations are strongly influenced by a range of
volatile, external and environmental factors.
• Open Systems are open to and continually interact with
the external environmental’ of which it is part
• In order to be:
– Effective, Survive and Grow
• It must respond to the:
– Opportunities, Challenges, Risks and Limitations;
presented by the external environment.

12. External Environment

13. Common Techniques –
Decision Matrix

14. Support Technique - PESTEL:
• One popular technique for analysing the general
environment is the PESTEL analysis:
– Political
– Economic
– Socio-Cultural
– Technological
– Environmental and
– Legal influences
This can be viewed as a ‘organisational
macro’ perspective.

15. Ref: Lynch, R. Corporate Strategy, fourth edition, Financial Times Prentice Hall (2006), p. 84

16. Further Support Technique - SWOT
• A more ‘organisational micro’ perspective of analysing
the organisation
• Tied in with the concept of Synergy (Ansoff) :
– Synergy results when the whole is greater than the
sum of the component parts
• Seen as positive in common field mergers e.g.
Product expansion
• Seen as negative in different field mergers e.g.
Different operating methods or markets

17. SWOT
• A SWOT analysis starts with defining an objective. A
SWOT analysis usually incorporated into strategic
planning.
– Many feel it is bets to first segment the organisation
area first.
• Strengths: characteristics of the business or team that
give it an advantage over others in the industry.
• Weaknesses: are characteristics that place the firm at a
disadvantage relative to others.
• Opportunities: external chances to make greater sales
or profits in the environment.
• Threats: external elements in the environment that could
cause trouble for the business.

18. SWOT (or ‘WOTS up’!)

19. SWOT
SupportCapitalise
Invest Identify
http://www.youtube.com/watch?
v=mH1EljfXp-0&feature=related
http://www.youtube.com/watch?
v=mH1EljfXp-0&feature=related

20. SWOT analysis
• STRENGTHS – inward looking
• WEAKNESSES – inward looking
• OPPORTUNITIES – outward looking
• THREATS – outward looking
20

21. SWOT analysis
INTERNAL
STRENGTHS
Assets
Expertise
WEAKNESSES
Resources
Manpower
EXTERNAL
OPPORTUNITIES
Market niche
Trend
THREATS
Competition
“Red Tape”

22. Limitations of SWOT
• The volume of S, W, O, Ts can become
unmanageable
• Can lead to disagreements
• Leads to the question, “so what do we
do now?”

23. SWOT Analysis - Method
SO
(exploitation of strength to gain
an advantage)
WT
(minimise/avoid a weakness or
threat)

24. SWOT Analysis - method
1. LIST Internal STRENGTHS &
WEAKNESSES
2. LIST External OPPORTUNITIES &
THREATS
3. PRIORITISE THE LISTS and
GIVE RANK
4. PRODUCE A SWOT MATRIX = 4
sets of possible strategies:-

25. SWOT MATRIX
Strengths
(S)
Make a
LIST
Weaknesses
(W)
Make a LIST
Opportunities
(O)
Make a LIST
SO
Strategies
WO
Strategies
Threats (T)
Make a LIST
ST
Strategies
WT
Strategies
Internal
External

26. SWOT Example
Using the steps from previous slides
provide a SWOT analysis and
matrix for an SME researching :
e.g. “Consumer E-commerce”

27. Strengths
S1. Strong Government support
S2. Tradition of retail innovation
S3. Potential customer confidence
S4. Development of search engines
S5. Capability of focused marketing
S6 Good benchmarks with trusted brands

28. Weaknesses
W1 Lack of culture awareness in SMEs
W2 Possible outsourcing costs of design
W3 Inexperience of internet marketing
W4 Limited payment systems
W5 Limited knowledge of possible market
W6 Lack of employee skills

29. Opportunities
O1 Possible increase in market share
O2 Potential for cheaper goods (volume)
O3 Potential for growth via “virtual
means”
O4 Set up costs reducing
O5 Continuous development of technology

30. Threats
T1 Consumer Reluctance
T2 Problems with delivery and
after sales support
T3 Fears over data security
T4 High profile of bad experiences
T5 Viruses and fraud
T6 In-store ‘fight backs’

31. SWOT MATRIX eg:
SO Strategies
S5. Capability for focused marketing
O1. Possible increase in market share
WO Strategies
ST Strategies WT Strategies
Action point = INTERNAL PRODUCT/SERVICE ANALYSIS
TO DECIDE ON AREA TO FOCUS MARKETING
CAMPAIGN