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DevelopingCompetitiveAdvantageandStrategicFocus 5 CHAPTER 5 2 SWOTAnalysis Strengths Weaknesses Opportunities Threats Awidelyusedframeworkfororganizingandutilizingthepiecesofdataandinformationgainedfromthesituationanalysis EncompassesbothinternalandexternalenvironmentsOneofthemosteffectivetoolsintheanalysisofenvironmentaldataandinformation 5 3 EffectivenessofAnalysisTools Exhibit5 1 5 4 MajorBenefitsofSWOTAnalysis SimplicityLowerCostsFlexibilityIntegrationandSynthesisCollaboration FromExhibit5 2 5 5 CommonCriticismsofSWOTAnalysis AllowsfirmstocreatelistswithoutseriousconsiderationoftheissuesOftenbecomesasterileacademicexerciseofclassifyingdataandinformation 5 6 MakingSWOTAnalysisProductive StayFocusedSearchExtensivelyforCompetitorsCollaboratewithotherFunctionalAreasExamineIssuesfromtheCustomers PerspectiveLookforCauses NotCharacteristicsSeparateInternalIssuesfromExternalIssues FromExhibit5 3 5 7 StayFocused ItisamistaketocompleteonegenericSWOTanalysisfortheentireorganizationorbusinessunit WhenwesaySWOTanalysis wemeanSWOTanalyses 5 8 SearchExtensivelyforCompetitors InformationoncompetitorsisanimportantaspectofaSWOTanalysis Lookforallfourtypesofcompetition BrandcompetitorsProductcompetitorsGenericcompetitorsTotalbudgetcompetitors 5 9 CollaboratewithOtherFunctionalAreas InformationgeneratedfromtheSWOTanalysiscanbesharedacrossfunctionalareas SWOTanalysiscangeneratecommunicationbetweenmanagersthatordinarilywouldnotcommunicate Createsandenvironmentforcreativityandinnovation 5 10 ExamineIssuesfromtheCustomers Perspective Todothis theanalystshouldask Whatdocustomers andnoncustomers believeaboutusasacompany Whatdocustomers andnoncustomers thinkofourproductquality customerservice price overallvalue convenience andpromotionalmessagesincomparisontoourcompetitors Whatistherelativeimportanceoftheseissuesascustomersseethem Takingthecustomers perspectiveisthecornerstoneofawelldoneSWOTanalysis 5 11 BreakingDownManagerialClich sintoCustomer OrientedStrengthsandWeaknesses Exhibit5 4 5 12 LookforCauses NotCharacteristics CausesforeachissueinaSWOTanalysiscanoftenbefoundinthefirm sandcompetitors resources Majortypesofresources 5 13 SeparateInternalfromExternalIssues FailuretounderstandthedifferencebetweeninternalandexternalissuesisoneofthemajorreasonsforapoorlyconductedSWOTanalysis SocraticAdvice Knowthyself Knowthycustomer Knowthycompetitors Knowthyenvironment 5 14 TheElementsofaSWOTAnalysis StrengthsandWeaknessesScaleandCostEconomiesSizeandFinancialResourcesIntellectual LegalandReputationalResourcesOpportunitiesandThreatsTrendsintheCompetitiveEnvironmentTrendsintheTechnologicalEnvironmentTrendsintheSocioculturalEnvironment 5 15 SWOT DrivenStrategicPlanning Fourissuesthemarketingmanagermustrecognize Theassessmentofstrengthsandweaknessshouldlookbeyondproductsandresourcestoexamineprocessesthatmeetcustomerneeds Offersolutionstocustomerproblemsinsteadofspecificproducts Achievinggoalsandobjectivesdependsontransformingstrengthsintocapabilitiesbymatchingthemwithopportunities Weaknessescanbeconvertedintostrengthswithstrategicinvestment Threatscanbeconvertedintoopportunitieswiththerightresources Weaknessesthatcannotbeconvertedbecomelimitationswhichmustbeminimizedifobviousormeaningfultocustomers 5 16 SWOTMatrixAfour cellarrayusedtocategorizeinformationattheconclusionofaSWOTanalysis Shouldbebasedoncustomerperceptions nottheperceptionsoftheanalyst Elementswiththehighesttotalratingsshouldhavethegreatestinfluenceinmarketingstrategy Focusoncompetitiveadvantagesbymatchingstrengthswithopportunities AnalysisoftheSWOTMatrix 5 17 TheSWOTMatrix Exhibit5 6 5 18 QuantitativeAssessmentofElementsWithintheSWOTMatrix Exhibit5 7 5 19 Strengths weaknesses opportunities andthreats Whichisthemostimportant Why HowmightyourresponsechangeifyouweretheCEOofacorporation Whatifyouwereacustomerofthefirm Anemployee Asupplier DiscussionQuestion 5 20 Competitiveadvantagescanarisefrommanyexternalorinternalsources Competitiveadvantagesrefertorealdifferencesbetweencompetingfirms Threebasicstrategiesforcompetitiveadvantage OperationalExcellenceProductLeadershipCustomerIntimacy DevelopingandLeveragingCompetitiveAdvantages 5 21 OperationalExcellenceFocusonefficiencyofoperationsandprocessesLowercostoperationsleadstolowerpricesforcustomersProductLeadershipExcellenceintechnologyandproductdevelopmentMostadvanced highestqualityproductofferinginindustryCustomerIntimacyUnderstandingcustomersbetterthanthecompetitionDeveloplong termcustomerrelationships CompetitiveAdvantageStrategies 5 22 CommonSourcesofCompetitiveAdvantage FromExhibit5 8 5 23 Supportorcontradictthisstatement Giventherealitiesoftoday seconomyandtherapidchangesoccurringinbusinesstechnology allcompetitiveadvantagesareshortlived Thereisnosuchthingasasustainablecompetitiveadvantagethatlastsoverthelongterm Defendyourposition DiscussionQuestion 5 24 Fourmajordirectionsforstrategicefforts Aggressive manyinternalstrengths manyexternalopportunities Diversification manyinternalstrengths manyexternalthreats Turnaround manyinternalweaknesses manyexternalopportunities Defensive manyinternalweaknesses manyexternalthreats Thesearethemostcommon butothercombinationsofstrengthsandweaknessesarepossible EstablishingaStrategicFocus 5 25 StrategyCanvas Identifiesfactorsthattheindustrycurrentlycompetesonandwhatcustomersreceivefromexistingproductofferings capturedbythehorizontalaxis Identifiestheofferinglevelreceivedbybuyersforeachfactor capturedbytheverticalaxis Highlevelsmeanthatacompanyinvestsmoreandoffersbuyersmoreofthatfactor Identifiesacompany srelativeperformanceacrossitsindustry sfactorsofcompetition capturedbythevaluecurve 5 26 StrategyCanvasforSouthwestAirlines Exhibit5 10 5 27 TheFourActionsFramework Whichfactorsthattheindustrytakesforgrantedshouldbeeliminated ThesefactorsmaynolongerhavevalueforbuyersWhichfactorsshouldbereducedwellbelowtheindustry sstandard Haveproductsbeenoverdesignedinaracetobeatcompetition Whichfactorsshouldberaisedwellabovetheindustry sstandard Hastheindustryforcedcustomerstomakecompromises Whichfactorsshouldbecreatedthattheindustryhasneveroffered Whatarethepotentialnewsourcesofvalueforbuyers 5 28 WhatMakesGoodStrategy Ultimately goodstrategyisintheeyeofthebeholder Inmarketing therearenorulestofollowandnoonetoholdyourhand Thereisonlythecoldhardtruthofcustomersandcompetition Goodstrategyisaboutmatchingthefirm sstrengthstotheavailableopportunities BlueOceanStrategydefinesgoodstrategyashavingthesethreecharacteristics Focus Goodstrategydoesnotdiffusethecompany seffortsacrossallkeyfactorsofcompetition thevaluecur
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