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Analysing Environment

Environmental Analysis

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25 views14 pages

Analysing Environment

Environmental Analysis

Uploaded by

mussaiyib
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Analysing Environment

SWOT analysis Frame work


STRENGTHS WEAKNESS
• Adequate financial • No clear strategy direction
resources • High overall unit cost
• Technology leader • relative to competitors
• Better manufacturing • Obsolete facilities
facilities
• Narrow product line
• Product innovation
• Wide distribution network

OPPORTUNITIES THREATS
• Enter new markets or • Entry of low-cost foreign
segments competitors
• Diversify into related areas • Changing buyer needs and
• Decline in trade barriers tastes
• Complacency among rival • Slower market growth rate
firms • Adverse shifts in foreign
• Increase in customer base exchange and trade polices
of foreign governments
SWOT analysis is a good method of analysing the
current status of business, but it cannot offer any
suggestion as to what the organisation should do to
be successful.
To identify the correct
direction in which an
organisation should
move we need to
convert SWOT into
TOWS

W S
S W
O O-W O-S

T O T
T-W T-S
TOWS Matrix
Strengths Weaknesses
Opportuni S-O Strategies W-O Strategies
ties PROSPECTOR
REACTOR

Threats S-T Strategies W-T Strategies

ANALYSER DEFENDER
SWOT / TOWS Matrix
• S-O strategies pursue opportunities that fit
well the company's strengths.
• W-O strategies overcome weaknesses to
pursue opportunities.
• S-T strategies identify ways that the firm can
use its strengths to reduce its vulnerability to
external threats.
• W-T strategies make a defensive plan to
prevent the firm's weaknesses from making it
susceptible to external threats.
SWOT Interactions
SWOT Analysis is improved for action by SWOT Analysis
TOWS Analysis
Strengths Opportunities

Used to Generate
Weaknesses Threats

External factor analysis


But swot analysis has a problem,
summery ( EFAS) that is not all weaknesses are truly
Internal factor analysis weakness for a particular business,
Similarly not all strengths are stren-
summery ( IFAS ) -gths for a particular business.

To overcome this problem we use a tool


for Improving SWOT , it is called RELEVENT FOR THE
PARTICULAR
SAP- Strategic Advantage Profile & BUSINESS
ETOP-Environmental threat and Opportunity
Profile
SAP- Strategic Advantage Profile &

ETOP-Environmental threat and Opportunity Profile

Symbol Meaning
In SWOT we divide the factors into 2 groups,
Favorable External Factors (O, T) and Internal Factors (S, W).

Unfavorable Now based upon the relevance or Degree of


Importance under current situation we mark
Inactive Symbols against each attribute.

For NIRMA Case


SAP
Strengths were Weaknesses were
1. Promoter was Chemist, and had 1. Mini funds for investment
good knowledge of chemistry. 2. No experience of business
2. Product was good and gave similar 3. Small scale setup
benefit as surf. 4. Manual production system
3. Had minimum overheads. 5. Were unable to use
4. Was marketed directly to user hence traditional distribution
Nirma knew consumer likes. system.
5. Salary and lobour cost Minimum
ETOP

For Nirma Case


Opportunities were Threats were
1. Market Growing annually 1. Surf brand Loyalty
2. Knowledge of Local Preferences 2. Brand extension by Surf
3. Low Competition with a Little Variants in
4. Income of middle class rising and Product Offering
urbanisation of cities. 3. Traditional substitutes
5. Lack of chemical knowledge 4. Big well developed distrib-
6. Surf was high priced. ution network of surf.
5. Financial power of HLL.
For NIRMA Case
Strengths were
1. Promoter was Chemist, and had which of these
good knowledge of chemistry. is more Important?
2. Product was good and gave similar
benefit as surf.
3. Had minimum overheads.
4. Was marketed directly to user hence
Nirma knew consumer likes.
5. Salary and lobour cost Minimum
But one serious limitation of the ETOP & SAP is the Subjective
Evaluation of the Strengths, weaknesses, Opportunities and Threats
Say for example

Therefore it is better to use numbers for comparison but these are only
Rating or scores and have no universal standard hence no Individual
meaning
For NIRMA Case IMPORTANCE
out of 10
Strengths were
1. Promoter was Chemist, and had 9
good knowledge of chemistry.
2. Product was good and gave similar To differentiate
benefit as surf. 7
from SAP &
3. Had minimum overheads. 5
4. Was marketed directly to user hence
ETOP the name
Nirma knew consumer likes. 3 is changed to
5. Salary and lobour cost Minimum 1

Internal factor analysis summery ( IFAS )


External factor analysis summery ( EFAS)

And these factors are known as KRA’s or Key result Areas


Another role of EFAS & IFAS is to analyze
competitors on same scale
According to degree of Importance

Industry Analysis, with A as our company


Internal
Key Success Company A Company A Company B Company B
Factors Weight Rating 100 Weighted Score Rating Weighted Score

Product Develo- 70 35 60 30
pment Cost
0.5
Minimum
Independent 0.3 60 18 70 21
Local suppliers
Existing
Distribution
12 80
0.2 60 16
Network

Total 1.00
65 67

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