SWOT AND BUSINESS STRATEGY IN A NUTSHELL

 Hello Everyone!!

We are all graduates and finally entrepreneurs per say. How will one analyse the external environments? How can we pitch our project to our bank managers or venture capitalists for a start up loan? The simplest answer we all know is SWOT. It is undoubtedly true that this analysis will give the investors a bird's eye view of your company. What info we put into the SWOT is alright, but I can demonstrate to you today the best plausible method to prepare one. It's simple! Take the excerpts from Balanced Scorecard, BCG matrix, Porters Five Forces model, PESTLE, Ansoff's and Eisenhower's matrix and include them in the SWOT.

This is because, the outcome of the SWOT will be more scientific rather than gathering bare facts about Strengths, Weaknesses, Opportunities and Weaknesses from a newspaper. The method which I am going to prescribe to you will make your SWOT content appear more pragmatic and empirical. 

So lets start with important facets which will give your SWOT a holistic picture that will portray many management techniques, pros and cons of every industry.  

1. Think of all the SWOT points that you wish and jot them down

2. PESTEL Analysis

What you will learn from this is the current affairs part of your domicile economy. 

Political means- all news about political reforms, tax reforms, subsidies, tariffs quantitative easing etc. 

Economic means- age, communities, population growth rates etc., can be researched. Like this, finish off noting all important aspects of other factors from the above- Technological, Environmental and Legal aspects. 

Note: Please make sure, that you will record only the important points which will either enhance your corporate culture; which will improve your sales; and that the benefits from the above factors will flow to your organisation. Once you have noted all the points, for example, your country government declared that for the next five years, trade impositions will be lifted to improve FDI- Add this to your SWOT in Opportunities section as 'Foreseeable growth in sales due to lowered import duties'. I hope you all got it by now!! Like this, choose the best news from PESTLE which will add value to your organisation and include those points into relevant sections of SWOT. 

3. Balanced Scorecard

Please understand the above KPI's included in this strategic management tool, and please prepare this scorecard prudently so that the reader can understand the strategic goals and management initiatives to achieve these goals. For example Financial section may contain the managements views about achieving highest ROI. Similarly, through their modern world class manufacturing processes, the company wants to service top quality products. Thus, you can mention this in the Customer perspective  section that Financial, Business Process & Organizational perspectives will increase the value to the customer. By the way, the Organisational perspective will include how well the lean manufacturing techniques increase the productivity driven by highly skilled technical staff. Now, finally, in the SWOT, add a comment like this-'Our company mainly focuses on cost and pollution reduction through modern scientific management techniques in order to deliver quality products and services to our customers.'

Are we all right till now? I am sure you are because anyone who does research will know everything. So I will concise my explanation from below and leave you to find more information regarding these things online and one of the best sources is Corporate Finance Institute. I also use performance management professional resources for in depth analysis and so can you all. 

4. BCG Matrix

This matrix was developed by renown Boston Consulting Group which aids us in understanding kind of markets we are operating in relationship to Market share & Market growth.

Stars- High market share and high growth rate

Cash cows- High market share and low growth rate

Question marks- High growth rate and low market share

Dogs- Low market share and low growth rates

Once you identify your company as one from the four distinctions above, say, if we are Question marks, then include one more point in the SWOT under Opportunity section as- 'Our company is a new entrant and a growing company in this state'. Then include another point in Threats section as- 'Many existing competitors and it is difficult to gain market share'. Did you see how easy it is? I am sure you do!!

5. Porter's Five Forces model

If you observe the above picture, one can understand that this section will deal with major marketing, sales, distribution and other challenges from competitors and our creditors. So simply, make a report on these five forces and include them in your SWOT. Example, include this in SWOT's Opportunity section- 'lower bargaining power of customers and suppliers pose no threat to the sales growth forecasts in the foreseeable future' This wasn't hard to understand as well was it?

6. Eisenhower Matrix

  You can introduce this report into SWOT's Strengths section as -'Our company is arduous in resolving customers inundated complaints within time-scales'. Got it??

7. Ansoff's Matrix

From this report, you can include 'Our sales will boost this year because of acquiring existing competitor and discounts offered' 

Once again, how hard was it? I am sure it is not even as hard as the efforts I put in to type this matter today. Your SWOT is worth all the efforts and another example is product life cycle identification from the below matrix

What can you make out from the above diagram? If your product is in a Decline stage, you will include this in your SWOT's weakness as 'The product has threat from substitute products' and in the opportunity section add 'company taking marketing competitive advantage by penetrating new markets, trying to achieve economies of scales, giving bulk discounts and lowering prices.' 

One can use all sorts of information which can be a potential SWOT. Please go through the below GE's 9-grid BCG matrix to try and identify important issues.

Hence, I finally request you to review all of these reports and include all facts which narrates dangers, value added and goodwill increasing points from above analysis into your SWOT. 

Bye