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a number of companies in the apparel industry, including Gap, Liz Claiborne, Kathie Lee Gifford, Nike, and Wal- Mart have been marketing goods produced in sweatshop conditions.

In the case of Gap, it was revealed in late 2007 that some of the company’s clothes were being produced by young children in India. Although Gap had policies and procedures to prevent the use of sweatshops and children in the production process, the facility concerned was operated by a subcontractor. The company responded to this bad publicity by announcing plans for a ‘‘Sweatshop Free’’ label for its clothing. Gap also pledged to increase its monitoring of subcontractors and overseas factories.

National attention was directed at other companies in the apparel industry, and advocacy groups, particularly vibrant among college students (who refused to buy college or university logo merchandise produced in sweatshops), organized consumer awareness of sweatshop conditions and attempted to pressure companies into ceasing their sweatshop-labor practices. Since the middle of the first decade of the twenty-first century, popular organizing against sweatshop labor has been gaining momentum. As Daniel E. Lee and Elizabeth J. Lee point out in their 2010 book, Human Rights and the Ethics of Globalization, ‘‘Organizations such as Oxfam Interna- tional, the Fair Trade Federation, and United Students Against Sweatshops are working hard to increase con- sumer awareness and encourage consumers to purchase fair trade products that provide a decent return to the farmers and workers who produce them.’’

These and other similar groups try to capitalize on the knowledge that, if the general public were aware of the conditions in which certain consumer items were pro- duced, they would refrain from buying them. Improved global communications, using such tools as satellites and the Internet, make it easy to disseminate information about the business activities of multinational corporations in developing nations. Activists hope that consumer pressure will force companies to become more socially responsible or face devastating negative publicity, like that experienced by Gap and Apple.

S E E A L S O Ethics; Globalization; International Management; Multinational Corporations.

B I B L I O G R A P H Y

Apple Inc. ‘‘Supplier Responsibility: 2010 Report.’’ Cupertino, CA: Apple Inc., 2010. Available from http://images.apple. com/supplierresponsibility/pdf/SR_2010_Progress_ Report.pdf.

‘‘Apple: No Sweatshop IPod Labor.’’ Wired, 18 August 2006. Available from http://www.wired.com/science/discoveries/ news/2006/08/71619.

Bernstein, Aaron. ‘‘A World of Sweatshops.’’ Businessweek, 6 November 2000. Available from http://www.businessweek. com/2000/00_45/b3706008.htm.

Domosh, Mona, and Joni Seager. Putting Women in Place. New York: Guilford Press, 2001.

Esbenshade, Jill. Monitoring Sweatshops: Workers, Consumers, and the Global Apparel Industry. Philadelphia: Temple University Press, 2004.

Evans, Jonny. ‘‘Apple Responds to iPod Factory Claims.’’ Macworld, 14 June 2006. Available from http://www. macworld.co.uk/mac/news/index.cfm?newsid=14935.

Greathead, Scott. ‘‘Making It Right: Sweatshops, Ethics, and Retailer Responsibility.’’ Chain Store Age, May 2002.

Hartman, Laura P., ed. Rising Above Sweatshops: Innovative Approaches to Global Labor Challenges. New York: Praeger, 2003.

‘‘Hypocrisy on Immigration; A Raid in New England Reveals a Broken System.’’ Washington Post, 18 March 2007, B06. Available from http://www.washingtonpost.com/wp-dyn/ content/article/2007/03/16/AR2007031602119.html.

Lee, Daniel E., and Elizabeth J. Lee. Human Rights and the Ethics of Globalization. New York: Cambridge University Press, 2010.

McDougall, Dan. ‘‘Child Sweatshop Shame Threatens Gap’s Ethical Image.’’ Observer, 28 October 2007, 36. Available from http://www.guardian.co.uk/business/2007/oct/28/ ethicalbusiness.india.

———. ‘‘Gap Plans ’Sweatshop-Free’ Labels.’’ Observer, 4 November 2007, 38. Available from http://www.guardian.co. uk/business/2007/nov/04/3.

Manu, Joseph. ‘‘IT Sweatshops Breaking Indians.’’ Wired, 11 July 2003. Available from http://www.wired.com/techbiz/ media/news/2003/07/59477.

Paterson, Kent. ‘‘Dollar Stores: Top Link in the Sweatshop Chain.’’ Corpwatch, 6 October 2010. Available from http:// www.corpwatch.org/article.php?id=15629.

Pratt, Mary K. ‘‘Is Your Outsourcer an IT Sweatshop?’’ Computerworld, 21 April 2008. Available from http://www. computerworld.com/s/article/315482/Is_your_outsourcer_an_ IT_sweatshop_.

‘‘Secrets, Lies, and Sweatshops.’’ Businessweek, 27 November 2006. Available from http://www.businessweek.com/magazine/ content/06_48/b4011001.htm

Sinclair, Upton. The Jungle. 1906. Reprint, New York: Penguin, 2006.

‘‘The Triangle Factory Fire.’’ Ithaca, NY: Cornell University. ILR School. Catherwood Library Kheel Center, 2005. Available from http://www.ilr.cornell.edu/trianglefire/narrative1.html.

SWOT ANALYSIS Organizational strategies are the means through which companies accomplish their missions and goals. Successful strategies address four elements of the setting within which the company operates: (1) the company’s strengths (S), (2) its weaknesses (W), (3) the opportunities in its competitive environment (O), and (4) the threats in its competitive environment (T). This set of four elements—strengths,

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weaknesses, opportunities, and threats—when used by a firm to gain competitive advantage, is often referred to as a SWOT analysis. SWOT was developed by Kenneth Andrews in the early 1970s, and it continues to be used with only minor modification and development into the twenty-first century. In 2008, the Harvard Business School Press published two digital guides to performing SWOT analysis, and investment analysts regularly publish guides that perform a SWOT analysis on a wide variety of corpo- rations and financial institutions.

An assessment of strengths and weaknesses occurs as a part of organizational analysis. It is an audit of the com- pany’s internal workings, which are relatively easier to control than outside factors. Conversely, examining oppor- tunities and threats is a part of environmental analysis—the company must look outside of the organization to deter- mine opportunities and threats, over which it has lesser control.

Andrews’s original conception of the strategy model that preceded the SWOT asked four basic questions about a company and its environment: (1) What can we do? (2) What do we want to do? (3) What might we do? and (4) What do others expect us to do?

The answers to these questions provide the input for an effective strategic management process. While Andrews’ original conception of this analysis has been developed and changed to the more streamlined SWOT analysis that is known today, his work is the foundation of this activity.

STRENGTHS, WEAKNESSES,

OPPORTUNITIES, AND THREATS

Strengths, in the SWOT analysis, are a company’s capabil- ities and resources that allow it to engage in activities to generate economic value and perhaps competitive advant- age. A company’s strengths may be in its ability to create unique products, to provide high-level customer service, or to have a presence in multiple retail markets. Strengths may also be things such as the company’s culture, its staffing and training, or the quality of its managers. Whatever capability a company has can be regarded as a strength.

A company’s weaknesses are a lack of resources or capabilities that can prevent it from generating economic value or gaining a competitive advantage if used to enact the company’s strategy. There are many examples of organ- izational weaknesses. For example, a firm may have a large, bureaucratic structure that limits its ability to compete with smaller, more dynamic companies. Another weakness may occur if a company has higher labor costs than a competitor who can have similar productivity from a lower labor cost. The characteristics of an organization that can be a strength, as listed above, can also be a weakness if the company does not do them well.

Opportunities provide the organization with a chance to improve its performance and its competitive advantage. Some opportunities may be anticipated, others arise unex- pectedly. Opportunities may arise when there are niches for new products or services, or when these products and services can be offered at different times and in different locations. For instance, the increased use of the Internet has provided numerous opportunities for companies to expand their product sales.

Threats can be an individual, group, or organization outside the company that aims to reduce the level of the company’s performance. Every company faces threats in its environment. Often the more successful companies have stronger threats, because there is a desire on the part of other companies to take some of that success for their own. Threats may come from new products or services from other companies that aim to take away a company’s competitive advantage. Threats may also come from gov- ernment regulation or even consumer groups.

A strong company strategy that shows how to gain competitive advantage should address all four elements of the SWOT analysis. It should help the organization deter- mine how to use its strengths to take advantage of oppor- tunities and neutralize threats. Finally, a strong strategy should help an organization avoid or fix its weaknesses. If a company can develop a strategy that makes use of the information from SWOT analysis, it is more likely to have high levels of performance.

Nearly every company can benefit from SWOT anal- ysis. Larger organizations may have strategic-planning pro- cedures in place that incorporate SWOT analysis, but smaller firms (particularly entrepreneurial firms) may have to start the analysis from scratch. Additionally, depending on the size or the degree of diversification of the company, it may be necessary to conduct more than one SWOT analysis. If the company has a wide variety of products and services, particularly if it operates in different markets, one SWOT analysis will not capture all of the relevant strengths, weaknesses, opportunities, and threats that exist across the span of the company’s operations.

LIMITATIONS OF SWOT ANALYSIS

One major problem with the SWOT analysis is that while it emphasizes the importance of the four elements associ- ated with the organizational and environmental analysis, it does not address how the company can identify those elements within itself. Many organizational executives may not be able to determine what these elements are, and the SWOT framework provides no guidance. For example, what if a strength identified by the company is not truly a strength? While a company might believe its customer service is strong, it may be unaware of problems with employees or the capabilities of other companies to

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provide a higher level of customer service. Weaknesses are often easier to determine, but typically after it is too late to create a new strategy to offset them. A company may also have difficulty identifying opportunities. Depending on the organization, what may seem like an opportunity to some may appear to be a threat to others. Opportunities may be easy to overlook or may be identified long after they can be exploited. Similarly, a company may have difficulty antici- pating possible threats in order to effectively deal with them.

While the SWOT framework does not provide man- agers with the guidance to identify strengths, weaknesses, opportunities, and threats, it does tell them what ques- tions to ask during the strategy development process. Managers know they must determine a strategy that will take advantage of a company’s strengths, minimize its weaknesses, exploit opportunities, or neutralize threats.

Some experts argue that making strategic choices for the firm is less important than asking the right questions in choosing the strategy. A company may think it has solved a problem whereas in fact it may only have pro- vided the correct answer to the wrong question.

USING SWOT ANALYSIS TO

DEVELOP ORGANIZATIONAL

STRATEGY

SWOT analysis is just the first step in developing and implementing an effective organizational strategy. After a thorough SWOT analysis, the next step is to rank the strengths, weaknesses, opportunities, and threats and to document the criteria for ranking. The company must then determine its strategic fit given its internal capabil- ities and external environment in a two-by-two grid (see Figure 1). This fit, as determined in the grid, will indi- cate what strategic changes need to be made. The quad- rants in this grid are as follows:

• Quadrant 1—internal strengths matched with external opportunities

• Quadrant 2—internal weaknesses relative to external opportunities

• Quadrant 3—internal strengths matched with external threats

• Quadrant 4—internal weaknesses relative to external threats

Quadrant 1 lists the strategies associated with a match between the company’s strengths and its perceived external opportunities. It represents the best fit between the company’s resources and the options available in the external market. A strategy from this quadrant would be to protect the company’s strengths by shoring up resour- ces and extending competitive advantage. If a strategy in this quadrant can additionally bolster weaknesses in other areas, such as in Quadrant 2, this would be advantageous.

Quadrant 2 lists the strategies associated with a match between the company’s weaknesses with external opportunities. Strategies in this quadrant would address the choice of either improving upon weaknesses to turn them into strengths, or allowing competitors to take advantage of opportunities in the marketplace.

Quadrant 3 matches the company’s strengths and external threats. Strategies in this quadrant may aim to transform external threats into opportunities by changing the company’s competitive position through use of its resources or strengths. Another strategic option in this quadrant is for the company to maintain a defensive strategy to focus on more promising opportunities in other quadrants.

Quadrant 4 matches a company’s weaknesses and the threats in the environment. These are the worst possible scenarios for an organization. However, because of the competitive nature of the marketplace, any company is likely to have information in this quadrant. Strategies in this quadrant may involve using resources in other quad- rants to exploit opportunities to the point that other threats are minimized. Additionally, some issues may be moved out of this quadrant by otherwise neutralizing the threat or by bolstering a perceived weakness.

Once a strategy is decided on in each quadrant for the issues facing the company, these strategies require frequent monitoring and periodic updates. An organization is best

Opportunities

Ex te

rn al

Internal

Strengths Weaknesses

Quadrant 1 Possible strategies

Quadrant 2 Possible strategies

Quadrant 3 Possible strategies

Quadrant 4 Possible strategies

Threats

Figure 1

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served by proactively determining strategies to address issues before they become crises.

An example of how a firm can develop strategies using these quadrants is as follows. Generic Corporation produ- ces high-quality, high-priced specialty kitchen items in a catalog and in stores and is known for its excellent customer service. This strength has been able to offset its major weaknesses, which are having few stores and no current capabilities for Internet sales. Its major opportunities come from the explosion of Internet shopping, and its threats are other more high-profile competitors, operating primarily on the Internet, and the concerns of identity theft in Internet sales that many customers have. Matching Generic’s strengths to its opportunities (Quadrant 1), the firm may choose to enhance its Internet site to allow online purchases, still providing its excellent 24-hour telephone customer service. Ideally, this strategy will offset the weak- ness of not having an Internet presence, which addresses the concerns of Quadrant 2. Additionally, by bolstering the strength of excellent customer service by applying it to the online shopping site, the company may be able to alleviate customer concerns about identity theft (Quadrant 3). A strategy for Quadrant 4, which matches the company’s weaknesses and threats, is that Generic may consider selling its online business to a competitor. Certainly, the Quadrant 4 strategy is the least preferred, but a proactive strategy that plans for managing such a situation is favored over a crisis situation in which the company is forced to sell with no planning.

SWOT ANALYSIS IN OTHER FIELDS

SWOT analysis has such a wide range of applicability that it can be used in virtually any context. As Lawrence Fine noted in his 2009 book, The SWOT Analysis, ‘‘Many people wrongly assume a SWOT analysis is only relevent for businesses, but it can be invaluable for indi- viduals, organizations, and even team building.’’ A quick survey of both popular and scholarly articles from 2010 and beyond with the term ‘‘SWOT Analysis’’ in the title yields such results as ‘‘The SWOT Strategic Planning of Quantitative Analysis for Service Robot Development in Taiwan,’’ ‘‘Strategic SWOT Analysis of Public, Private and Not-for-Profit Festival Organisations,’’ ‘‘An Appli- cation of SWOT-AHP to Develop A Strategic Planning for a Tourist Destination,’’ and ‘‘A SWOT Analysis of the Protecting Pedestrians on the Move Project.’’ As a business tool, SWOT analysis is a first but critical step in developing an organizational strategy. Examining a com- pany’s internal capabilities (its strengths and weaknesses), and external environment (its opportunities and threats), helps to create strategies that can proactively contend with organizational challenges.

S E E A L S O Strategic Planning; Strategy Formulation.

B I B L I O G R A P H Y

Andrews, Kenneth R. The Concept of Corporate Strategy. Homewood, IL: R.D. Irwin, 1971.

Barney, Jay. Gaining and Sustaining Competitive Advantage. 4th ed. Upper Saddle River, NJ: Prentice Hall, 2010.

Bradford, Robert W. Simplified Strategic Planning. Worcester, MA: Chandler Press, 2000.

Chermack, Thomas. Scenario Planning in Organizations. San Francisco: Berret-Kohler Publishers, 2011.

Fine, Lawrence G. The SWOT Analysis: Using Your Strength to Overcome Weaknesses, Using Opportunities to Overcome Threats. KickIt, 2009.

Fleisher, Craig S., and Babette E. Bensoussan. Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition. Upper Saddle River, NJ: Prentice Hall, 2003.

Jackson, Susan E., Randall S. Schuler, and Steve Werner. Managing Human Resources: A Partnership Perspective. 10th ed. Cincinnati, OH: South-Western College Publishing, 2008.

‘‘SWOT Analysis.’’ QuickMBA.com. Available from http://www. quickmba.com/strategy/swot/.

SWOT Analysis I: Looking Outside for Threats and Opportunities. Cambridge, MA: Harvard Business School Press, 2008.

SWOT Analysis II: Looking Inside for Strengths and Weaknesses. Cambridge, MA: Harvard Business School Press, 2008.

SYNERGY Synergy, also known as synergism, refers to the combined effects produced by two or more parts, elements, or indi- viduals. Simply stated, synergy results when the whole is greater than the sum of the parts. For example, two people can move a heavy load more easily than the two working individually can each move their half of the load. Synergy can be a positive or negative outcome of combined efforts.

The term ‘‘synergy’’ is derived from the Greek word sunergos, meaning ‘‘working together.’’ Positive synergy is sometimes called the 2 þ 2 = 5 effect. Operating independ- ently, each subsystem can produce two units of output. However, by combining their efforts and working together effectively, the two subsystems can produce five units of output.

Negative synergy can be called the 2 þ 2 = 3 effect. Again, individuals operating alone can each produce two units of output. However, with negative synergy, the combination of their efforts results in less output than what they would have achieved if they had each worked alone. Negative synergy can result from inefficient com- mittees, business units that lack strategic fit, and from other poorly functioning joint efforts.

HISTORY OF SYNERGY

Synergy has origins as a theological term describing the cooperation of human effort with divine will. In recent years the term has most often been used in association with systems theory. Systems theory, as applied to biology and

Synergy

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