BUSINESS CAPABILITIES AND SWOT ANALYSIS

MAKING THE DATA WORK FOR YOU

Prepared By: Mitchell Banks

IT 486 Critical Issues in Information Technology Central Washington University

March 7, 2012

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TABLE OF CONTENTS

Introduction.Page 3 Swot Analysis..Page 4,5,6,7 Strategy.. Page 8 Conclusion..Page 9,10 Works CitedPage 11

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INTRODUCTION

In todays rapidly changing world of business every successful company must stay up to date on their capabilities. These capabilities include strengths, weaknesses, opportunities, and threats. It is important for a business to know how it interacts with its environment both internally and externally. The purpose of knowing these capabilities will help your business in the short and long term. This paper will explain swot analysis, the parts that make up swot analysis and what to do with the information once you have it. The information received from a swot analysis is very valuable. The company can turn weaknesses into strengths and your strengths can be turned into opportunities (tutor2u). Once the team has all of the information, this information can then be analyzed to help eliminate threats, create opportunities, eliminate weaknesses, and build on the companys strengths. Although this is not a magic cure all by doing a swot analysis the company will have a clear understanding of areas that need improvement, ways to create more revenue, and eliminate some of the obstacles in the external environment that are holding the company back. This in turn will help the company reach its strategic goals for both individual departments and the entire business as a whole (tutor2u).

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SWOT ANALYSIS

The most important thing to remember about swot is that strengths and weaknesses are internal to the business and relate to the current business situation. Opportunities and threats are external to the business and relate to environmental changes that will affect the business. Here are the four key areas that make up a swot analysis. Strengths:

Things a business is good at A characteristic giving a business an important capability Sources of clear advantage over rivals Distinctive competencies and resources that will help the business achieve its objectives High market share Achieving economies of scale High quality Leadership & management skills Financial resources Research and development capabilities Technological leadership Brand reputation Protected IP Distribution network Employee skills High productivity Flexibility of production

When determining a business strategy it is important to look at the strengths of the company, this helps build a competitive advantage. Once a company determines its strengths these can be built upon and protected (tutor2u).

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Weaknesses: A source of competitive disadvantage Things the business lacks or does poorly Factors that place a business at a disadvantage Issues that may hinder or constrain the business in achieving its objectives Low market share Inefficient plant Outdated technology Poor quality Lack of innovation A weak brand name High costs Cash flow problems Undifferentiated products Inadequate distribution Low productivity Skills shortages Non-motivated staff Products at the decline stage of product life cycle (tutor2u)

Managers should always try to eliminate weaknesses because the competition can build on these. Weaknesses should also be looked at to determine areas that need improvement. Some of the areas that weaknesses are likely to occur are customer service, pricing structure that is not in alignment with the direction of the market, and products that do not meet the changing demands (Siciliano).

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Opportunities: Technological innovation New demand Market growth Demographic change Social or lifestyle change Government spending programs Higher economic growth Trade liberalization EU enlargement Diversification opportunity Deregulation of the market (tutor2u)

According to tutor2u opportunity is defined as any feature of the external environment which creates positive potential for the business to achieve its objectives (tutor2u). Some of the ways to capitalize on opportunities is to check for openings in the marketplace that allow someone to take advantage of events and circumstances that are external to the company. Some of these include weaknesses of competitors and identifying a market before the competitors recognizes it (Siciliano).

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Threats: New market entrants Change in customer tastes or needs Demographic change Consolidation among buyers New regulations Economic downturn Rise of low cost production abroad Higher input prices New substitute products Competitive price pressure

Some examples of real life threats facing some real companies in todays business world. Home Depot joins competitors such as Lowes and Menards in taking a second look at expansion plans due to an uncertain economy. Top competitors for Molson Coors include: Ashai, Carlsberg, Heineken, Kirin, and Tsingtao. The most highly priced Indian Premier League teams may not be those that have the early success. McDonald's have been criticized by many parent advocate groups for their marketing practices towards children which are seen as marginally ethical. The supply chain has very few suppliers, leaving IBM very little to negotiate with or switch to. The majority of the Krogers 326,000 employees are covered by collective labor agreements. The customers of Infosys may switch to other offshore service companies in other countries such as China or Korea. Many of Johnson and Johnson's new launch products are vulnerable to the uncertainty of regulatory review The obvious threat is from ITC's competition, both domestic and international. There may be religious, cultural and social restrictions among certain groups that object to utilizing Trojan's birth control methods (Marketingteacher).

Most generally threats will appear in the form of a competitor offering a lower price on a product or some type of regulation that will hinder the company from making a profit from their products.

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STRATEGY
Tutor2us definition of strategy is strategy is the direction and scope of an organization over the long term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations (tutor2u). Different Levels of Strategy within the Business: Corporate strategy this level mainly consists of the overall purpose and scope of the business to satisfy stakeholder expectations. This is an important level because the investors in the business guide strategic decision making. The Mission Statement usually contains the corporate strategy for a business. Business Unit Strategy this level determines how a business competes in a certain market. The strategic decisions involved are choice of products, gaining an upper hand on competitors, new opportunities, and the needs of customers. Operational Strategy this level determines how the business is organized to meet the business unit level strategic direction. The main issues at this level are resources, people, and processes.

Developing a good strategic plan is important for every level of an organization. It not only keeps the stakeholders happy it also keeps management and employees focused on the task of running a successful business.

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Conclusion

Key points to remember about swot analysis:

Some Examples: Weakness Outdated technology Skills gap Overdependence on a single product Poor quality High fixed costs Possible Response Acquire competitor with leading technology Invest in training & more effective recruitment Diversify the product portfolio by entering new markets Invest in quality assurance Examine potential for outsourcing or off shoring

Some key points to remember about strategic analysis:

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Different Levels of Strategy: Where is the business trying to get to in the long-term (direction) Which markets should a business compete in and what kind of activities is involved in such markets? (markets; scope) How can the business perform better than the competition in those markets? (Advantage)? What resources (skills, assets, finance, relationships, technical competence, and facilities) are required in order to be able to compete? (Resources)? What external, environmental factors affect the businesses' ability to compete? (Environment)? What are the values and expectations of those who have power in and around the business? (stakeholders)

Swot analysis is a very useful tool to help managers and stakeholders evaluate the current business capabilities that exist within their companies. This tool not only benefits stakeholders it can also benefit every level of the organization.

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Works Cited
Marketingteacher. Swot Analysis. 2000-2012. 8 March 2012 <http://www.marketingteacher.com/lesson-store/lesson-swot.html#>. Siciliano, Gene. Analyzing Your Companies Strengths and Weaknesses. 5 September 2011. 7 March 2012 <http://www.businessweek.com/smallbiz/tips/archives/2008/09/analyzing_your.html>. tutor2u. Strategy: Swot Analysis- Introduction. 8 March 2012 <http://tutor2u.net/business/strategy/SWOT_analysis.htm>.