The document discusses strategy formulation tools including SWOT analysis, TOWS matrix, and identifying a propitious niche. It provides details on conducting a SWOT analysis, such as listing strengths, weaknesses, opportunities, and threats. It then describes how the TOWS matrix can be used to develop four types of strategies by matching internal factors with external factors. Finally, it discusses finding a propitious niche that is well-suited to an organization's capabilities so that it is difficult for competitors to challenge.
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The document discusses strategy formulation tools including SWOT analysis, TOWS matrix, and identifying a propitious niche. It provides details on conducting a SWOT analysis, such as listing strengths, weaknesses, opportunities, and threats. It then describes how the TOWS matrix can be used to develop four types of strategies by matching internal factors with external factors. Finally, it discusses finding a propitious niche that is well-suited to an organization's capabilities so that it is difficult for competitors to challenge.
The document discusses strategy formulation tools including SWOT analysis, TOWS matrix, and identifying a propitious niche. It provides details on conducting a SWOT analysis, such as listing strengths, weaknesses, opportunities, and threats. It then describes how the TOWS matrix can be used to develop four types of strategies by matching internal factors with external factors. Finally, it discusses finding a propitious niche that is well-suited to an organization's capabilities so that it is difficult for competitors to challenge.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online from Scribd
The document discusses strategy formulation tools including SWOT analysis, TOWS matrix, and identifying a propitious niche. It provides details on conducting a SWOT analysis, such as listing strengths, weaknesses, opportunities, and threats. It then describes how the TOWS matrix can be used to develop four types of strategies by matching internal factors with external factors. Finally, it discusses finding a propitious niche that is well-suited to an organization's capabilities so that it is difficult for competitors to challenge.
Copyright:
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Strategy Formulation
SWOT analysis TOWS Matrix
Prof. Rushen Chahal
Comprehensive Strategy-Formulation Framework
Stage 1: The Input Stage
Stage 2: The Matching Stage
Stage 3: The Decision Stage
Strategy-Formulation Analytical Framework
Internal Factor Evaluation Matrix (IFSA)
Stage 1: The Input Stage
External Factor Evaluation Matrix (EFSA)
Strategic Factor Analysis Summary (SFAS) Matrix
The SWOT analysis
y
SWOT analysis should not only result in identification of corporations distinctive competencies but also in the identification of opportunities that the firm is not currently able to take advantage of due to a lack of appropriate resources.
WEAKNESSES Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength? Reputation, presence and reach? Financials? Own known vulnerabilities? Timescales, deadlines and pressures? Cashflow, start-up cash-drain? Continuity, supply chain robustness? Effects on core activities, distraction? Reliability of data, plan predictability? Morale, commitment, leadership? Accreditations, etc? Processes and systems, etc? Management cover, succession?
The SWOT analysis
OPPORTUNITIES Market developments? Competitors' vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences? New markets, vertical, horizontal? Niche target markets? Geographical, export, import? New USP's? Tactics - surprise, major contracts, etc? Business and product development? Information and research? Partnerships, agencies, distribution? Volumes, production, economies? Seasonal, weather, fashion influences?
THREATS Political effects? Legislative effects? Environmental effects? IT developments? Competitor intentions - various? Market demand? New technologies, services, ideas? Vital contracts and partners? Sustaining internal capabilities? Obstacles faced? Insurmountable weaknesses? Loss of key staff? Sustainable financial backing? Economy - home, abroad? Seasonality, weather effects?
The SWOT analysis
The essence of strategy is opportunity divided by capacity y
An opportunity by itself has no real value unless a company has the capacity (resources) to take advantage of that opportunity Weaknesses in other resource areas can prevent a strategy from being successful.
SA=O/(S-W)
Criticism of the SWOT analysis
y y y y y y y
It generates lengthy lists It uses no weights to reflect priorities It uses ambiguous words and phrases The same factor can be placed in 2 categories There is no obligation to verify opinions with data or analysis It requires only a single level of analyses There is no logical link to strategy implementation
SFAS matrix y
Strategic Factor Analysis Summary (SFAS) matrix includes only the most important factors gathered from environmental scanning thus provides info essential for strategy formulation. The use of EFAS and IFAS tables together with SFAS matrix deal with many of the criticism of SWOT analysis.
Propitious niche y
The goal is to find a propitious niche that is so well suited to the firms internal and external environment that other corporations are not likely to challenge or dislodge it. Look for a strategic window a unique market opportunity that is available only for a particular time. Occupy a propitious niche and discourage competition. Identify a market opportunity in which the firm can obtain and keep dominant market share. Niche can change faster than a firm can adapt to that change thus the firm need to invest heavily in their capabilities to keep strong in a changing niche.
1. 2. 3. 4.
Propitious niche can disappear because of:
y 1. 2.
The environment/industry changes
The market gets smaller because of factors beyond the control of the company/SBU. The company/SBU, through its own efforts, not only fills a demand but actually causes the market to expand.
y 1. 2.
The company/SBU changes
Due to demands for resources elsewhere in the corporation, the company/SBU may be forced to cut back its activities. Its own success in the niche may cause the company/SBU to move into nearby niches.
The TOWS matrix
y
SWOT can be also used to generate a number of possible alternative strategies. The TOWS Matrix illustrates how the external opportunities and threats facing a corporation can be matched with the companys internal strengths and weaknesses to result in four sets of possible strategic alternatives.
SO Strategies Strengths Weaknesses Opportunities Threats SWOT
SO Strategies
Use a firms internal strengths to take advantage of external opportunities
WO Strategies Strengths Weaknesses Opportunities Threats SWOT
WO Strategies
Improving internal weaknesses by taking advantage of external opportunities
ST Strategies Strengths Weaknesses Opportunities Threats SWOT Use a firms strengths to avoid or reduce the impact of external threats
SO Strategies Use strengths to take advantage of opportunities
WO Strategies Overcoming weaknesses by taking advantage of opportunities
Threats T List 5-10 Threats
ST Strategies Use strengths to avoid threats
WT Strategies Minimize weaknesses and avoid threats
Strengths S TOWS Matrix for Maytag Corporation Quality Maytag Culture Experienced Top Manag-t Vertical Integration Employee Relation Hoovers international orientation
Weaknesses W Process-oriented R&D Distribution channels Financial position Global positioning Manufacturing facilities
Opportunities O Economic integration of European Community Demographic favor quality Economic devel-t of Asia Opening of Eastern Europe Trend toward super stores
SO Strategies Use worldwide Hoover distribution channels to sell both Hoover & Maytag major products. Find joint venture partners in Eastern Europe and Asia
WO Strategies Expand Hoovers presence in ci
Treats T Increasing government regulation Strong U.S. competition Whirlpool & Electrolux positioned for global economy New products advances Japanese appliance companies
ST Strategies Use strengths to avoid threats
WT Strategies Minimize weaknesses and avoid threats
