4 pages assignment
Strategy and the General Environment: SWOT & TOWS
SWOT The initial stage of analysis
The Strategic Management field developed a number of foundational tools. The best known of these is SWOT analysis.
Strengths
Weaknesses
Opportunities
Threats
The first glance at analysis Internal and External
SWOT analysis is a great tool to launch the analytic process. It allows you to break analysis into two parts: internal and external
Core Competencies
RBV
Generic Strategies
Corporate level/BCG
PEST analysis
5 Forces model
Competitive Dynamics
Game Theory
A good SWOT analysis retains both elements
The goal is to fit what the firm can do to its environment
The more detail you provide in each quadrant, the more you can begin to search for appropriate strategies.
The Goals of SWOT:
Identify the potential key strategic issues
Develop questions to test relative to #1
Brainstorm solutions that solve the key strategic issue
But SWOT is the beginning, not the end of analysis!
A good SWOT analysis should point you towards in the direction of additional analysis that you need to take.
Other fields (e.g. marketing, finance) build off SWOT to focus on functional areas as well.
Caveats to using SWOT
Easily generates lengthy lists
Doesn’t weight or prioritize those lists
The same factor can appear in multiple quadrants
Accepts opinions and guesses as much as facts and analysis
Single level analysis only.
How to Optimize SWOT
Brainstorm ideas for each quadrant
Identify questions to confirm/disconfirm each idea
Identify how other tools add additional insight to confirm/disconfirm each idea
Summarize findings into “what is the strategic issue?”.
Start with SWOT, use other tools, end with SWOT
TOWS-creating recomendations from SWOT
Combines SWOT into four quadrants
a) Is the firm on offense or defense?
TOWS
| Strengths | Weaknesses | |
| Opportunities | S-O Strategies build on firm strengths to grow | W-O Strategies overcome weaknesses to grow |
| Threats | S-T Strategies blunt advantages of others | W-T Strategies avoid being vulnerable to others |
Strength-Opportunity
Strength-Threat
Weakness-Opportunity
Weakness- Threat
Build on strengths
Blunt the other’s strength
Shore up liabilities
Avoid being vulnerable
Leveraging strategies
Cooperate to set industry standards
M & A to acquire new skills
Retrenchment
Enter new markets, develop new products
M & A to acquire rivals
Outsource to others
Outsource to others
Be a source of outsourcing to others
Alliances to counter strong rivals
Alliances to build learning
Diversify to reduce exposure to an area
Forward integration to acquire new customers, backward to lower production costs
Multi-point competition (e.g. if someone enters your core market, you enter their core market)
Enter new markets/develop new products where there is less competition
Forward integration to lock-in customers, backward to lock-in suppliers
Apply this to Capsim
You can run, but not hide, so Weakness Threat not much of an option.
Improve your weaknesses (Weakness Opportunity) or blunt your opponent (Strength Threat). My advice is the former more than the latter.
Some Advice from Bill Matthews
Drill Down! Many strengths are often results of other strengths—get to the root ones
Ditto for weaknesses
Brainstorm at first, and then narrow it down
A strength should lead to a competitive advantage, otherwise it is not
Benchmark your strengths
Some more Advice from Bill Matthews
No more than 3 of anything (focus)
A threat often turns a strength to a weakness—monitor the environment for this, and set up markers for alerts.
Develop contingency plans for threats
Some TOWS Advice
There is a life cycle approach inherent to this.
Rapid growth often has S-O, followed by ST or W-O as the market declines, followed by W-T
Spend a lot of time determining what quadrant you are in—it leads to better recommendations.