Power of SWOT

Introduction

¡ SWOT Analysis is a strategic planning tool used to evaluate the: ¡ Strengths, ¡ Weaknesses, ¡ Opportunities, ¡ Threats

¡ early 1950s

¡ Developed at Stanford

¡ Funded by Fortune 500 companies

¡ Took 9 years to develop

¡ Involved 5000 interviews

History of SWOT Analysis

SWOT Analysis

SWOT analysis is the first stage of planning and helps marketers to focus on key issues.

S

W

O

T

internal SWOT factors

external SWOT factors Turn weaknesses into strengths, threats into opportunities. Then finally, SWOT will give managers options to match internal strengths with external opportunities.

SWOT Analysis

The main purpose of SWOT analysis has to be to add value to our products and services so that we can recruit new customers, retain loyal customers, and extend products and services to customer segments over the long-term.

Simple rules for successful SWOT analysis. •  Be realistic about the strengths and weaknesses of your

organization when conducting SWOT analysis.

•  SWOT analysis should distinguish between where your organization is today, and where it could be in the future.

•  SWOT should always be specific. Avoid grey areas.

•  Always apply SWOT in relation to your competition i.e. better than or worse than your competition.

•  Keep your SWOT short and simple. Avoid complexity and over analysis

SWOT Analysis

Creative Use of SWOTs

¡  How can we Use each Strength?

¡  How can we Stop each Weakness?

¡  How can we use each Opportunity?

¡  How can we Defend against each Threat?

Otherwise known as: S-O or Maxi-Maxi strategy Using a strength to maximise an opportunity

Matching strengths to opportunities

Otherwise  known  as:  W-­‐O  or  Mini-­‐Maxi  strategy    Improving  capability  to  maximise  an  opportunity  

Matching weakness to opportunities

Otherwise  known  as:  S-­‐T  or  Maxi-­‐Mini  strategy    Minimising  a  threat  with  a  strength  

Matching strengths to threats

Otherwise  known  as:  W-­‐T  or  Mini-­‐Mini  strategy    Minimising  weaknesses  and  threats  at  same  @me    (oBen  last  choice)  

Matching weakness to threats

POWER your SWOT

E = Emphasize detail. Detail, reasoning and justification are often omitted from the SWOT analysis. What one tends to find is that the analysis contains lists of single words.

W = Weighting. Too often elements of a SWOT analysis are not weighted. Naturally some points will be more controversial than others. So weight the factors. One way would be to use percentages e.g. Threat A = 10%, Threat B = 70%, and Threat C = 20% (they total 100%). .entry-content

POWER your SWOT

R = Rank and prioritize. Once detail has been added, and factors have been reviewed for weighting, you can then progress to give the SWOT analysis some strategic meaning i.e. you can begin to select those factors that will most greatly influence your marketing strategy albeit a mix of strengths, weaknesses, opportunities and threats.

POWER your SWOT

POWER your SWOT

P = Personal experience. How do you the marketing manger fit in relation with the SWOT analysis? You bring your experiences, skills, knowledge, attitudes and beliefs to the audit. Your perception or simple gut feeling will impact the SWOT.

POWER your SWOT

O = Order – strengths or weaknesses, opportunities or threats. Often marketing managers will inadvertently reverse opportunities and strengths, and threats and weaknesses. This is because the line between internal strengths and weaknesses, and external opportunities and threats is sometimes difficult to spot. For example, in relation to global warming and climate change, one could mistake environmentalism as a threat rather than a potential opportunity.

Strategic Model

Mission

Values

Vision

Strategy

Everything Balanced

Strategic Initiatives

Personal Objectives

Strategic Outcomes

Why we exist

What we believe in

What we want to be

our game plan

Implementation & Focus

What we need to do

What I need to do

How do we develop our Strategy!

A strength can be a competitive advantage like…

u Believe  in  yourself      u Posi@ve  AHtude  u Focus    u Intelligence  u Ability  to  learn  u Time  Management  u Sense  of  Responsibility  u Specific  Goals  u Passion  &  Determina@on  u Cri@cal  Thinking  Ability  u Suppor@ng  Environment  u Etc  

u  Procras@na@on  u  Poor  Time  Management  u  Non-­‐suppor@ve  Environment  u  Irresponsible  u  Unrecognized  Ins@tu@on  u  Complex  Goals    u  Etc  

A weakness can be a disadvantage as…

v Good  Ins@tu@on  v Scholarships  v Good  Mentor  v  Internships  v Jobs    v Backups  v Etc  

An opportunity can be…

v Hurdles  v Health  Problems  v No  Jobs  v Discouragement  v Bad  Environment  v May  be  friends  v etc  

A threat can be…

Analysis -Example-

Analysis PepsiCo

Analysis PepsiCo

Analysis PepsiCo

Strengths Branding – One of PepsiCo’s top brands is of course Pepsi, one of the most recognized brands of the world, Ranking - ranked according to Interbrand. As of 2008 it ranked 26th amongst top 100 global brands. Profit - Pepsi generates more than $15,000 million of annual sales. Others - Pepsi is joined in broad recognition by such PepsiCo brands as Diet Pepsi, Gatorade Mountain Dew, Thirst Quencher, Lay’s Potato Chips, Lipton Teas (PepsiCo/Unilever Partnership), Tropicana Beverages, Fritos Corn, Tostitos Tortilla Chips, Doritos Tortilla Chips, Aquafina Bottled Water, Cheetos Cheese Flavored Snacks, Quaker Foods and Snacks, Ruffles Potato Chips, Mirinda, Tostitos Tortilla Chips, and Sierra Mist.

Analysis PepsiCo

Weaknesses Overdependence on Wal-Mart – Sales to Wal-Mart represent approximately 12% of PepsiCo’s total net revenue. Wal-Mart is PepsiCo’s largest customer. As a result PepsiCo’s fortunes are influenced by the business strategy of Wal-Mart specifically its emphasis on private-label sales which produce a higher profit margin than national brands. Wal-Mart’s low price themes put pressure on PepsiCo to hold down prices. Overdependence on US Markets – Despite its international presence, 52% of its revenues originate in the US. This concentration does leave PepsiCo somewhat vulnerable to the impact of changing economic conditions, and labor strikes. Large US customers could exploit PepsiCo’s lack of bargaining power and negatively impact its revenues. Low Productivity – In 2008 PepsiCo had approximately 198,000 employees. Its revenue per employee was $219,439, which was lower that its competitors. This may indicate comparatively low productivity on the part of PepsiCo employees. Image Damage Due to Product Recall – Recently (2008) salmonella contamination forced PepsiCo to pull Aunt Jemima pancake and waffle mix from retail shelves. This followed incidents of exploding Diet Pepsi cans in 2007. Such occurrences damage company image and reduce consumer confidence in PepsiCo products.

Analysis PepsiCo

Opportunities Broadening of Product Base – PepsiCo is seeking to address one of its potential weaknesses; dependency on US markets by acquiring Russia’s leading Juice Company, Lebedyansky, and V Wwater in the United Kingdom. It continues to broaden its product base by introducing TrueNorth Nut Snacks and increasing its Lipton Tea venture with Unilever. These recent initiatives will enable PepsiCo to adjust to the changing lifestyles of its consumers. International Expansion – PepsiCo is in the midst of making a $1, 000 million investment in China, and a $500 million investment in India. Both initiatives are part of its expansion into international markets and a lessening of its dependence on US sales. In addition the company plans on major capital initiatives in Brazil and Mexico. Growing Savory Snack and Bottled Water market in US – PepsiCo is positioned well to capitalize on the growing bottle water market which is projected to be worth over $24 million by 2012. Products such as Aquafina, and Propel are well established products and in a position to ride the upward crest.PepsiCo products such as, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips, Fritos corn chips, Ruffles potato chips, Sun Chips multigrain snacks, Rold Gold pretzels, Santitas are also benefiting from a growing savory snack market which is projected to grow as much as 27% by 2013, representing an increase of $28 million.

Analysis PepsiCo

Threats Decline in Carbonated Drink Sales – Soft drink sales are projected to decline by as much as 2.7% by 2012, down $ 63,459 million in value. PepsiCo is in the process of diversification, but is likely to feel the impact of the projected decline. Potential Negative Impact of Government Regulations – It is anticipated that government initiatives related to environmental, health and safety may have the potential to negatively impact PepsiCo. For example, manufacturing, marketing, and distribution of food products may be altered as a result of state, federal or local dictates. Preliminary studies on acrylamide seem to suggest that it may cause cancer in laboratory animals when consumed in significant amounts. If the company has to comply with a related regulation and add warning labels or place warnings in certain locations where its products are sold, a negative impact may result for PepsiCo. Intense Competition – The Coca-Cola Company is PepsiCo’s primary competitors. But others include Nestlé, Groupe Danone and Kraft Foods. Intense competition may influence pricing, advertising, sales promotion initiatives undertaken by PepsiCo. Resently Coca-Cola passed PepsiCo in Juice sales.

Analysis PepsiCo

Threats Potential Disruption Due to Labor Unrest – Based upon recent history, PepsiCo may be vulnerable to strikes and other labor disputes. In 2008 a strike in India shut down production for nearly an entire month. This disrupted both manufacturing and distribution. PepsiCo is a world leader in convenient snacks, foods and beverages with revenues of more than $43 billion and over 198,000 employees. Take a journey through our past and see the key milestones that define PepsiCo. Diversification – PepsiCo’s diversification is obvious in that the fact that each of its top 18 brands generates annual sales of over $1,000 million. PepsiCo’s arsenal also includes ready-to-drink teas, juice drinks, bottled water, as well as breakfast cereals, cakes and cake mixes.This broad product base plus a multi-channel distribution system serve to help insulate PepsiCo from shifting business climates. Distribution – The company delivers its products directly from manufacturing plants and warehouses to customer warehouses and retail stores. This is part of a three pronged approach which also includes employees making direct store deliveries of snacks and beverages and the use of third party distribution services