MCom I Semester Business Environment Strengths Weaknesses Opportunities Threats Analysis Study Material Notes

MCom I Semester Business Environment Strengths Weaknesses Opportunities Threats Analysis Study Material Notes: Table Swot analysis Potential Weaknesses Potential External Threats Potential opportunities  Exercise Questions long Answer Questions Short Answer Question Objective Questions :

CTET Paper Level 2 Questions Answer Language II English Model paper

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis

Organisational analysis requires data and information about the internal environment. SWOT analysis refines this information by applying a general framework for understanding and managing the environment under which a company operates. The acronym SWOT stands for strengths, weaknesses, opportunities and threats. SWOT analysis consists of evaluating a company’s internal strength’s and weaknesses and its external opportunities and threats. SWOT analysis underscores the basic point that strategy must produce a good fit between firm’s internal capability (its strengths and weaknesses) and its external situation (its opportunities and threats). Internal environmental for e-casting, is a critical step in SWOT analysis. It is the process of identifying strategic issues that will affect an organisation’s environment.

Strategic advantage analysis the process by which the strategists examine the firm’s resources and capabilities in the key functional areas to determine where the firm has significant strength (and weaknesses) so that it can exploit opportunities and meet the threats in the environment.

Dunkan and others opined that SWOT analysis is not only an activity, but it is an important process which identifies strategic issues that will affect an organisation’s environment and answers the following questions:

1 Whether there is a gap in resources which should be filled immediately?

2. Which weaknesses and threats of the company should be improved?

3. Whether new competitive capabilities should be developed to stay in the market?

4. Does the firm have a sizeable market share?

5. Are long-term funds available or can be procured consistently with industry needs and relative to competitors?

Matching strengths and weaknesses with opportunities and threats requires that an organisation should direct its strengths towards exploiting opportunities and blocking threats while minimising exposure of its weaknesses at the same time.

Potential Strengths : In this context following points should be considered :

1 strong financial condition, ample financial resources for growth of the business.

2. Ability to take advantage of economies of scale.

3. Product innovation skills.

4. Superior technological skills.

5. A reputation for good customer service.

6. Superior intelletual capital in relation to key rivals.

7. A powerful strategy supported by competitively valuable skills and experience in key areas.

8. Proven skills in improving product process.

9. Superior skills in supply chain management.

10. Alliances/Joint ventures with other firms that provide access to valuable technology, competencies and/or attractive geographic markets.

Potential Weaknesses : In this context following points should be considered :

1 Sub par profitability means no cost control measures.

2. A weak balance sheet, burdened with too much debt.

3. Higher overall units costs relative to key competitors.

4. Too narrow a product line relative to rivals.

5. Lots of underutilised plant capacity.

6. Obsolete facilities.

7. No clear strategic direction.

8. Falling behind rivals in putting e-commerce capabilities and strategies in place.

9. Behind on product quality and technical know-how.

10. Not attracting new customers as rapidly as rivals.

Potential opportunities : Following points are included in it:

1 Acquisition of rival firms or companies with attractive technological expertise.

2. Market openings to extend the company’s brand name or reputation to new geographic areas.

3. Using the internet and e-commerce technologies to dramatically cut costs and to pursue sales growth opportunities.

4. Opening to exploit emerging new technologies.

5. Opening to take market shares away from rivals.

6. Alliances or joint ventures that expand the firm’s market coverage or boost its competitive capability.

7. Falling trade barriers in attractive foreign markets.

8. Utilising existing company skills or technological know-how to enter new product lines or new business.

Potential external threats : In this context following points are important :

1 Slow downs in market growth.

2. Growing bargaining power of customers and suppliers.

3. Mounting competition for new internet startup companies pursuing e-commerce strategies.

4. Loss of sales to substitute products.

5. Increasing intensity of competition among industry rivals may cause squeeze on profit margins.

6. Adverse shifts in foreign exchange rates and trade policies of foreign government.

7. Costly new regulatory requirements.

8. Adverse demographic changes that threaten to curtail demand for the firm’s product.

An organization can craft a model that will allow a company to gain a competitive advantage in industry by giving weight age to the aforesaid points which is shown in the following table :

Table

SWOT Analysis

It is clear from the above table that SWOT analysis presents the information about both external and internal environment in a structured from where it is possible to compare external opportunities and threats with internal strengths and weaknesses. This helps in matching external and internal environment so that a strategist can come out with suitable strategy by developing certain pattern of relationship. It is the process of identifying issues that will affect an organisation’s environment at some future time.

Currently, SWOT analysis is applied in private sector to improve the Last time, SWOT analysis was applied in government schools of Indore. It is planned that this system should be applied in at least 2000 schools experiment basis and if successful, it may be applied in whole state.

EXERCISE QUESTIONS

Long Answer Questions

1 What are the factors that may be used in strategic profit analysis? Discuss.

2. Define ‘Strategic Choice.’ Discuss the most important factors of the choice of an appropriate strategy.

3. Discuss the SWOT analysis.

4.What are the most important determinants of the choice of an appropriate strategy from various alternatives?

Short Answer Questions

1 What is SWOT analysis?

2. What thoughts should be possible for the idea of power?

3. What is important idea related to weakness?

4. What is important idea related to opportunities?

5. Write the important ideas related to threats. Objective Questions

(I) Select the Correct Alternative:

1 Strategy formulation of an organization starts from the external and internal environments :

(a) strengths

(b) weaknesses

(c) evaluation and environment

(d) none of these

2. Favorable condition of an organization is :

(a) threats

(b) opportunities

(c) weaknesses

(d) strengths

3. Adverse condition of an organization is :

(a) opportunities

(b) strengths

(c) weaknesses

(d) threats

4. Inherent obstacles of an organization are:

(a) weaknesses

(b) strengths

(c) opportunities

(d) threats

5. Inherent capabilities of an organization is:

(a) threats

(b) opportunities

(c) strengths

(d) weaknesses

[Ans: 1. (c), 2. (b), 3. (d), 4. (a), 5. (c)

(II) Write True or False :

1 A strong financial condition, ample financial resources to grow business is a threat.

2. A reputation for good customer service is a weakness.

3. Superior intellectual capital relative to key rivals is a strength.

4. Product innovation skill is an opportunity.

(Ans: 1. False, 2. False, 3. True, 4. False)

(III) Fill in the Blanks :

1 Strength is an inherent capability of the organization which it can use to gain ……………….. over its competitors.

2. Lots of underutilised plant capacity is the ………..

3. Opening to exploit emerging new technologies is the ……. …….

4. Adverse shifts in foreign exchange rates and trade policies of foreign government is the…

(Ans: 1. strategic advantages, 2. weaknesses, 3. possible opportunities, 4. possible threats.]