SKI Ltd runs an assembly plant for laptop computers. Managers of the company hold a meeting after six months to review current position of the business and the long term plans. Extracts from the most recent meeting are as follow:
Marketing manager said that sales of our latest OLED screen models have exceeded expectations and the shift toward laptop with OLED display from TFT screen models is expected to continue. The company also has a chance to expand his business by entering into African market, as the trade barriers has been removed by African countries and its market has high growth potential for the company.
Operations manager revealed; the automation of the screen assembly section is in progress. Last month, we turned down a big order due to little factory capacity and shortage of skilled labor. I do propose to extend the factory space and to train more new workers.
Finance manager conferred that our profits are steadily increasing, but due to expenditures on automated machines and on research & development activities, we are facing shortage of cash flow. We need to borrow funds but we would be in trouble as interest rate has increased. At the same time, we must constantly be aware of exchange rate fluctuations as recent depression helped us to be more competitive in local market.
You are required to conduct SWOT analysis for SKI ltd by identifying its one strength, one weakness, one opportunity and one threat, only in bulleted form.
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The following diagram shows how a SWOT analysis fits into an environmental scan:
SWOT Analysis Framework
A firm’s strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Examples of such strengths include:
strong brand names
good reputation among customers
cost advantages from proprietary know-how
exclusive access to high grade natural resources
favorable access to distribution networks
The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses:
lack of patent protection
a weak brand name
poor reputation among customers
high cost structure
lack of access to the best natural resources
lack of access to key distribution channels
In some cases, a weakness may be the flip side of a strength. Take the case in which a firm has a large amount of manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.
The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include:
an unfulfilled customer need
arrival of new technologies
loosening of regulations
removal of international trade barriers
Changes in the external environmental also may present threats to the firm. Some examples of such threats include:
shifts in consumer tastes away from the firm’s products
emergence of substitute products
increased trade barriers