Module 15
External and Internal Analysis
• SWOT!
• Short, simple and sweet. “Doing your SWOT analysis” is
part and parcel of being a marketer and creating great
marketing plans. Let's explore what makes the analysis
of Strengths, Weaknesses, Opportunities and
Threats so significant.
• We will start by continuing our look at the world beyond
our firm. We described what was happening in the
Current Situation of the marketing plan. Now, we will
analyze some aspects of that situation. We are looking
for two key things:
• Opportunities: These are developments in the external
marketing environment which will lead to new market
segments or which will enhance existing ones. A new law
that makes a product required, a change in consumer
attitudes, a group in the population that is entering a new
stage -- any of these could be major opportunities.
• Threats: These are developments which threaten to
disrupt the status quo in some way. A new competitor,
especially an aggressive one, will alter industry
dynamics dramatically, as Wal-Mart did. A decline in
interest for a major product category (e.g. beer) would be
another threat. A rise in interest rates can put a damper
on the housing industry.
The Double-Edged Sword
• Remember that many developments create a doubleedged sword! The new competitor may be a threat to
many staid players, but could create opportunities for
those firms who don't offer its style, or can fill gaps it
leaves in the market. Don't be too hasty to classify things
one way or another.
• Above all, remember that opportunities and threats exist
in the external environment and are completely
independent of whatever firm you are studying. This is
essential to understand, because any of several firms
could pursue the same opportunity! A thorough analysis
would consider likely competitor actions and recognize
that others could get a share of the new segment.
• Once we have identified the key opportunities
and threats, we can determine which
opportunities to exploit and how we can avoid or
overcome threats. All of this happens after we
are clear on what is happening in the
environment. We might pursue a new, growing
segment which has never been won over by a
new competitor who is moving into the area.
Canadian Tire and Zellers reformulated their
strategies to stress areas where Wal-Mart was
weak when that goliath came to Canada.
Inside Ourselves:
Strengths & Weaknesses
A realistic, objective analysis of our subject company yields
two key things. It gives us a sense of what strengths we
can build on and what weaknesses we can overcome or
avoid. According to Lawrence Adelman, managing
director of Morgan Stanley & Co. Inc. in New York,
market-beating companies usually have some or all of
the following strengths:
• Low cost structures, such as Wal-Mart and its efficiency.
• Differentiated products and brands. A powerful brand is a
huge strength! Coca-Cola, Mercedes-Benz and Sony are
examples.
• Strong management. No surprise!
• Access to capital. Usually, strong past profit performance
or sound entrepreneurial plans are keys here.
• Sound distribution. Think Wal-Mart again; it uses
satellites and data management to keep costs low.
• Strong product development. Sony is a leader here!
Check out a Sony store and think how often they were
first with the type of product. Recently, they introduced
the Digital Versatile Disc and are leading the charge into
digital TV with innovative technologies.
• Keep in mind that these are some of the features of
successful firms. Look at what seems to be good about
the firm in question, including the above. In particular,
assess the people and the positive things they bring.
Think of training programs, etc.
•
• Weaknesses are usually just the opposite of
strengths! A horrible brand reputation would be
an example. While it is tempting to be charitable
or full of worship when analyzing a firm, it is
essential to get a realistic sense of where their
problems lie. Consider these possibilities:
• Ridiculously high prices can do you in.
• Poor brands that don't offer anything different.
A&P's Master Choice is an example.
• A bad reputation. Hyundai cars got one back in
the 80s with their Pony and they are still having
trouble living it down.
• Weak distribution. Many entrepreneurial
companies have trouble getting into larger
outlets like Canadian Tire or the department
stores. Also, efficient supply chains underlie
strategies of firms like Wal-Mart and Dell.
• Confused business. Sony owns movies and
music, yet also makes the equipment which can
duplicate them illegally!
• No money, lousy people, etc...