Lecture 5 - SWOT & TOWS & Strategy Clock Flashcards
What is the purpose of SWOT & TOWS?
Create strategic options to obtain/renew a competitive advantage (CA)
What is a SWOT-analysis?
SWOT stands for Strenghts, Weaknesses, Opportunities and Threats. Moreover;
S: Distinctive competences & resources
W: Competences & resources that are becoming weaknesses
O: Future Oriented trends, industry positions, key success factors, geographical markets, products/services…
T: Vulnerabilities that can be exploited as attack points by competitors
S&W can be obtained via a Internal analyses( VRIO-analysis etc) while O&T can be obtained via External analyses (PESTEL)
a SWOT analysis explores the relationship between the environmental influences and the
resources and capabilities of an organisation compared with its competitors (from the book).
What is a TOWS-analysis?
This analyses turns around the bad eggs into good eggs, how are we gonna proceed and generate options with the intel from the SWOT. We combine the Internal Factors (S&W) with External Factors (O&T) to produce strategies for the future.
see slide 14 - very good.
What is the Strategy Clock analysis and what parts does it consist of?
it consists of: 1. Cost Focus 2. Low Price 3. Hybrid 4. Differentiation 5. Focused Differentiation 6, 7 & 8. Strategies destined for ultimate failure
On the Y-axes there are “Perceived Product/Service Benefits”, from Low to High.
On the X-axes there is “Price”, from Low to High.
In terms of the the Strategy Clock, what is meant by Cost Focus?
low PERCEIVED product benefits focusing on price sensitive commodity segment – a “cost focus” strategy (route 1) to avoid major competitors
In terms of the the Strategy Clock, what is meant by Low Price?
similar product benefits – to become low price leader in main market segment (route 2)
In terms of the the Strategy Clock, what is meant by Hybrid?
1) differentiation without price premium (route 3 Hybrid) – used to disrupt competitors & become market reference offer. (IKEA is a good example).
2) Simultaneously achieve differentiation and low price
3) - Disrupt competition to become reference offer in market —> Danger: stuck in the middle
In terms of the the Strategy Clock, what is meant by Differentiation?
differentiation with no or a small price premium (route 4 Differentiation) – used to increase profit margins.
In practice, a differentiated product/service fills one or more customer benefits better than the prod/serv of competitors
In terms of the the Strategy Clock, what is meant by Focused Differentiation?
focused differentiation with large price premium (route 5 Focused differentiation) – used for customers that demand top quality and will pay a big premium.
In practice, a differentiated product/service fills one or more customer benefits better than the prod/serv of competitors
What is meant by the stuck in the middle-effect from the strategy clock scenario of Hybrid?
We becomes stuck between 2 strategies ending up with non of them being good. (low cost & and Differentiation)
What is meant by route 6 in the Strategy Clock?
Increase prices without increasing service/product benefits (route 6):
- In competitive markets such strategies will be doomed to failure.
- Only feasible where there is strategic ‘lock-in’ or a monopoly
What are the 2 main dangers with the SWOT-analysis?
1) Listing - Listing the impacts, from the environment and the competitors of the firm, can be very long and hence it becomes unclear what to do. Three brief rules are used to prevent this: Focus on relative differences, focus on relevant differences and summarize the results to draw conclusions.
2) This analysis is a SUMMARY, not a SUBSTITUTE, meaning that actions should not only be based on the conclusions of the SWOT but the organisation also has to understand the reasons behind this.
