this is a lecture from open tuition to benefit from the lecture you should download the free lecture notes from opentuition.com we finished the methods of looking at strategic position by considering the SWOT analysis or Taos Matrix as it's sometimes called almost certainly you've come across SWAT analysis before it stands for strengths and weaknesses those are internal and opportunities and threats which are external so examples of strengths and weaknesses it could be I might be very strong at marketing but I may have a very bad or weak I.T system I might be strong in r d but I might be weak at marketing opportunities and threats the external the threat could be a change of government a rise in interest rate a change in exchange rate an opportunity might be a competitor in dire Financial streets who's maybe open to an offer for a takeover at a nice cheap price the great thing about SWOT analysis is if you're asked to appraise the position of a company it will always work and sometimes examiner just says using a tool or tools of your choice analyzing company's strategic position so what will always work so it is a fallback and not to be I haven't even shunned but I would say that the examiner does complain sometimes of being sorted to death because the only thing anyone ever does and certainly if the question says using a tool or tools of your choice I would take the hint and try and use more than one so if you're doing a pastel analysis this is the external macro environment and of course pastel would would actually feed into feed some ideas into the opportunities and threats if you're looking uh perhaps at the m words that we had for our resources the money the men and women the Machinery the management the marketing the Mis the the make the brand and so on then they would tend to feed into strengths and weaknesses we've got a very strong brand uh but perhaps the manager of the company is a little weak to make use of that the great thing about setting it out in this this particular Matrix strength and weakness across the top opportunities and threats down the side is it is it should be provoking us to action there is no point in doing a SWOT analysis or indeed any other type of analysis if all you do is say well it's very interesting kind of shrug your shoulders and ignore it uh what it should be doing is taking information from this and kind of saying and so what what should I be doing how should I protect myself how should I make use of an opportunity but but that's what we need to be doing that's the purpose the analyzes so if we look at this one here we have a strength and opportunity matching so maybe our strength is lots of money in the bank maybe the opportunity is a competitor who is in Hard Times maybe right for a takeover that's a marriage made in heaven really we can use our money to take over that competitor another example maybe there's an opportunity to open in a developing country and our strength is we've got very good International marketing a lot of experience and working abroad again that's probably going to work we have the internal strength which is just right to make use of the opportunity to go to the next one here a weakness match to an opportunity this could be like seeing a competitor in uh bad financial State we'd like to take a move but we have no money and if we have no money we can't do it so what we have to do is either and not do that strategy at all not make use of that opportunity or what we have to do is to make good a weakness find the money perhaps of a rights issue or try to borrow from the bank to allow us to take that company over another example we're saying if you have an opportunity to open abroad but you've got no International management experience and managers are all from the family who who've been going to operate in a a small way if they try with their lack of the experience opening abroad they'll probably fall flat on their faces what we need is a way rounded a way to repair the weakness Maybe by recruiting a skilled marketing manager or maybe by entering into some sort of distribution or franchise agreement with a company which is already operating in the foreign country so they can help us sometimes we'll face a threat and maybe we have a strength with which we can fight it it could be a threat of somebody coming into a market and you enter into our Market if we have lots of money in the bank we could afford to reduce our prices uh really put them under pressure so they don't make very good profits and maybe we'll scare them away sometimes what people do again a threat maybe the new entrant coming into the market they appeal to their brand they appeal almost to a nationalist type of feeling they say our product is a long lived product made in this country employing local people and so on buy from the Home Country buy from a home company rather than buying this this foreign stuff which is only helping foreign employees not not your own it might be it might be a very Noble sentiment but but using brand strength and so on is is frequently used you can rely on a brand maybe it would make certain uh pledges that people believe in this is a tricky one there's a threat and it's aimed exactly where you're weak this is what really calls the British car industry to die British cars in the 1960s were not great they were Innovative in some ways they had very good air conditioning because after six months you could poke your finger through the metal work and it rusted so much they had very low fuel consumption because they would never start they were Dreadful too many small companies making cars none with enough resources to develop new models and certainly none of the expertise to develop quality and what they were faced with was threat basically from Japanese car manufacturers who came with the most superb quality and there was simply no way that the British car industry could survive there they tried to learn tricks from Honda and so on but it was too little too late and essentially it drove them out of the market lots of cars are made in the UK now but they're all Japanese cars the only cars from a British Heritage that might still be made are very specialist sport cars no mass produced own model cars made any more in Britain because it was a threat directed where they were weak and they couldn't survive the syllabus makes several references to corporate objectives or organizational objectives but doesn't quite uh ask or or mention what what is meant by organizational objectives so I think it's worthwhile just making a little quick detour into what objectives are on we know we're dealing with strategic business leadership We have dealt with so far basically gathering information we looked at pastel five forces will go to the resources we basically know the position of the company and knowing the position of the company knowing what the stakeholders want and and so on then we can begin to think where do we want the company to go and essentially where we want the company to go is to do with objectives we want the company to be successful we want it to be profitable we wanted to be a good organization and so on but all of those are are rather kind of amorphous terms what's meant by success in the context of an organization and what objectives do are rather more definite areas where we want a company to end up and the objectives to my mind to form the link between having gathered information perhaps knowing the competition knowing the resources Etc knowing what might be possible and developing a strategy the strategy has to be one which is aimed at ending up somewhere it has to be aimed at the corporate objectives and the corporate objectives being successful for example is a very high level um Airy fairy type objective we can break that down into a number of much more concrete objectives if you're successful as an organization you will need certain sales you'll need certain costs and that will give you certain profit and that may be what you regard as being a successful overall destination for the organization subjectives are are much more definite and in particular people talk about smart objectives and this can be put into all sorts of places it can be brought into managing people give them smart objectives it can be brought into uh evaluating a takeover it has it been successful or not well think of the smart objectives first of all it must be specific we can't just say something has to be good or something has to be successful it is what you mean by good what do you mean by successful if you mean by successful profit then say profit if you invise successful number of countries in which you're making sales then say that it has to be specific because if it's not specific it can be measured and they can't be measured then the chances are it is going to be ignored and you cannot make a judgment later whether you have achieved the objective or not it has to be agreed or achievable it has to be agreed amongst the people that you're giving this objective to that it can be something which is achieved if they do not think something is achievable and you can't persuade them to think something is achievable they're probably going to ignore it they'll give up why would they try to achieve something that you think is impossible so it must offer them something which they think if I try maybe a little bit harder and I can stretch I can get that it's achievable if they think it's impossible why even try it has to be relevant to what the company thinks is it's corporate objectives it has to be relevant to what a a subsidiary regards as being relevant to it I mean simply there's no point in setting sales objectives to the manufacturing Department of a company when it has got nothing to do with sales there is no point in in setting quality objectives to the sales department the sales department has got no they've say you were the new ability to change the quality of of products which are being produced so it has to be relevant to the company it has to be relevant to the people to whom you're giving the objectives so they can feel their kind of an influence on it and finally it has to be time Limited you want to make a certain profit by a certain date if you just want to say I I want to make a profit well how much profit does it have to increase by when no good you have to pin it down something which is specific measurable agreed achievable it has to be relevant to the company's overall success or organizations overall success to its Mission if you like and has to be time Limited you just need to be a little bit cautious about some of these need to be consistent throughout the organization if you want a profit of 5 million and you've got two subsidiaries it'll work if you said you make two you make three the organization will make five it has to be um horizontally consistent so for example if you say to sales you're to sell 10 million items there's maybe not much point in saying to production you have to make only six million items so it has to be consistent it has to be consistent through time as well no point in telling people your profits are to go one million 10 million three million six million your gross profit is to be 17 12 3 20 it makes no sense there has to be a kind of logical pattern maybe to how you set the objectives over time his comprehensive objectives you know they'll say what you measure you change if your objectives are not comprehensive it means people will concentrate on what you said as objectives and miss the rest if you've set an objective over sales volume then maybe the sales price and the quality will not be looked at properly you need to be performing properly on usually a whole raft or performance measures and finally need the long-term short-term balance looked at any fool this is a bit of an overstatement any fool could make a profit increase next year because you simply reduce maintenance reduce research and development don't recruit anyone who's left you can squeeze the costs for the year but then five years down the road when you've known new products no good staff and so on you've got to be in difficulty and always always always to some extent because Financial results are reported annually the short term results muscle in and they will if you're not very careful they will knock out the longer term potentially more important objectives which you should be keeping an eye on