SWOT ANALYSIS The SWOT matrix illustrates how the external threats and opportunities facing a particular corporation can be matched with the company’s internal strengths and weaknesses so that the 4 sets of possible strategic alternative emerge: SO – Strengths – Opportunities Strategies WO – Weakness - Opportunities Strategies ST – Strengths – Threat Strategies WT – Weakness – Threat Strategies The following are the steps to develop SWOT Matrix: In the Threats (T) block, list the external threats faced by the company now and may be in the near future. In the Opportunities (O) block, list the external opportunities available to the company now or may be in the near future. In the Weakness (W) block, list the firm’s weakness that the company has now or in the near future. In the Strengths(S) block, list the firm’s strengths that the company has now or may have in near future. Internal External factors Strength (S) List 5 – 10 internal strengths Weakness (W) List 5- 10 internal weaknesses Opportunities (O) List 5 – 10 external opportunities SO Strategies (use strengths to take advantage of strategies) WO Strategies (Overcome weaknesses by taking advantage of opportunities) Threats (T) List 5 – 10 external threats ST Strategies (use strengths to avoid threats) WT Strategies ( Minimize weaknesses and avoid threats)
The SWOT Matrix is useful for generating a series of alternative strategies. It can be used for the entire firm, or it can be used for a specific business unit within a firm. THE BCG APPROACH TO PORTFOLIO ANALYSIS BCG Matrix was developed by Boston Consulting group, USA. According to this technique, businesses or products are classified as low or high performers depending upon: Industry Growth Rate Firm’s Market Share 1. The stars are market leaders and are usually able to generate enough cash to maintain their high market share. When their market growth rate slows, stars become cash cows. The main features of stars are: High industry growth rate High market share The firm may undertake various activities such as: R & D introduce better features Effective after sales service to enhance customer loyalty 2. The question marks are also called as wild cats. They are new products with the potential for success, but they need a lot of cash for development. The main features of question marks are: High industry growth
Low market share The firm may adopt growth strategy for question marks. Various activities may be undertaken to transform question marks into stars. Penetration pricing strategy Effective sales promotion and other elements of promotion –mix Dealers incentives Enhancing customer relationship 3 . The cash cows bring in far more money than is needed to maintain their market share. In their declining life cycle, the money of cash cows is invested in new question marks. The main features of cash cows are: Low industry growth High market share The company may adopt stability strategy. Various activities may be undertaken such as:
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- Fall '16