send mail to firstname.lastname@example.org mentioning your email id and mobileno registered with us! if details not recieved
Resend Opt after 60 Sec.
Please verify your mobile number
Subscribe to Notifications
Stay updated with the latest Current affairs and other important updates regarding video Lectures, Test Schedules, live sessions etc..
Refer & Earn
My Abhipedia Earning
Kindly Login to view your earning
SWOT analyses are undertaken by organizations at the start of their strategic planning - and SWOTstands for Strengths, Weaknesses, Opportunities and Threats. A SWOT starts with another exercise- an external analysis of the business environment, often called a PEST analysis. PEST stands for Political, Economic, Socio-cultural and Technological aspects.
SWOT Analysis builds on the results of the PESTLE analysis. Its purpose is to identify and build on the organization's strengths and weaknesses. It also serves to identify opportunities and threats from external factors - especially those rhat have an impact on the company's strengths and weaknesses.
Organization's strengths and weaknesses, as stated earlier, are a matter of interpretation. Thus, a large cash reserve may appear to be a strength for a firm, but if it is not invested well it may cease to be a strength. Similarly, absence of own fleet of cars may be taken as a weakness, but if cars are frekly available at economical rentals it may cease to be a a weakness. Though, no definition may ever be complete, we would define strengths and weaknesses as follows:
Organizations' Strength: It refers to competitive advantages and other distinct competencies which a company can exert in the market place.
Organizations' Weakness: It refers to constraints or obstacles which check movement in certain desired direction, and may also inhibit organization in gaining a distinctive competitive advantage.
SWOT and TOWS are both acronyms for strengths, weaknesses, opportunities and threats. While both use the same basic ideas in their analysis, TOWS emphasizes the external environment whereas SWOT focuses on the internal environment. These models help you visualize strategic options and pivot your strengths and minimize your weaknesses to avoid threats and maximize opportunities.
Use the y-axis of your matrix to list your strength and weaknesses and the x-axis for your opportunities and threats. The result should be four quadrants: strengths and opportunities, strengths and threats, weaknesses and opportunities and weaknesses and threats.
he 7Ps in a marketing mix stand for product, price, place, promotion, people, process and physical evidence. The marketing mix is a widely -sed marketing model that helps organize the stages of a business strategy from its conception to its evaluation. By using the 7Ps breakdown, you can analyze each aspect of your company to identify ways you can optimize your strategy and meet your goals. Here's a breakdown of what each P represents:
Product refers to whatever is being sold.
Price stands for how much the product or service costs.
Place is the where (whether it's online, from a warehouse or a shop front).
Promotion details the methods you use to communicate your product to your audience.
People are the employees involved in the production, promotion and distribution of your product.
Process describes the methods you use to deliver your product or service to the customer.
Physical evidence is the proof needed to assure your customers your business exists (e.g. physical products, receipts, tracking information, etc.).
Or Segmentation, Targeting and Positioning (STP)
Any business should generate a profit while giving value to the market. The value to the market is a function of perceived value by the consumer of the product. One of the mantras of marketing is to identify customers with different state of same need and provide products suiting those variations in need. If done effectively, it would ensure that consumer sees value in the product and the business would generate profit. This process is called Segmentation, Targeting, and Positioning.
There are two types of marketing processes:
1. Mass Marketing: It is a process, which presumes that there is one market and one product would suit the requirement of all the customers. This strategy works for those companies where all the customers have the same need. For example, marketing for liquid milk.
2. The Value-delivery process: In this process a company follows a three step marketing strategy :
a. Segmentation: Segmentation is a process in which the company divides the marketplace into subsets of same consumer needs. As a milk producer, a dairy unit may segment the consumers into various segments like:
i. Children: l Infants who may need milk in powder form with different health supplements l Grown up infants and kids who may need milk with high fat content
ii. Health Conscious Adults l Adults who may need low fat content in milk l Adults who may not like milk flavor and may want milk in other flavors like banana; elaichi etc
iii. Travelers l This segment may want milk to be packaged such that its shelf life increases and it can be used over few days
b. Targeting: It is the process of reviewing the market and selecting the appropriate target segment. Suppose after review it comes out that there are three different segments exist e.g. one segment wants very low fat milk, the second wants milk that has moderate level of fat, and the third wants to have milk with very high fat content for their consumption. Then, there must be three different product lines that would cater to each segment. The product lines can be double toned milk, toned milk, and the full cream milk. Now, each product would target each customer segment individually
c. Positioning: It involves defining product attributes and then highlighting them during marketing or promotional . campaigns to generate interest and sales volumes for the business. Defining clear positioning by highlighting certain product attributes helps differentiate a product in the marketplace
One of the outcomes of a good marketing strategy should be to spell out goals of that strategy. These should be SMART goals. Each alphabet of the word stands for a word:
(S) Specific - A specific goal should answer six "W"s
(M) Measurable: The goal should clearly state the expected outcome and how will it be measured.
(A) Achievable: The goal should be a stretch one and yet achievable. Setting unachievable goals have the danger of the developing a defeated feeling and not working towards it.
(R) Realistic: The goal should emerge because of your analysis of your strengths, weaknesses and market opportunity and not just based on dreaming.
(T) Time: The goal should clearly state the timelines for achieving each of the sub goals and the overall goal of your business.
The product life cycle model can help you develop new products, refine existing products and recognize when it is time to discontinue a product. It has four stages that can guide your marketing efforts throughout product development:
Introduction: After research and development, a product goes through the introduction stage where you first introduce it to consumers. This typically involves intense marketing and promotional efforts to develop public awareness of the new release.
Growth: As the product gains popularity and the company expands to support distribution, it enters the growth phase. This is when the product gains popularity, develops a dedicated customer base and increases market share among competitors.
Maturity: Mature products often have many other competitors in a saturated market. During maturity, growth slows down and you may need to adjust your marketing strategy to find new audiences or applications of your product.
Decline: During decline, sales decrease and marketing efforts have less of an impact. When a product enters decline, you may shift your efforts to new product development instead of marketing existing ones.
In this framework, the dairy unit analyzes the external business environment for possible business opportunities and threats. The dairy unit may take up each business possibility and subject it to this analysis to decide the worthwhile ideas. For example, it may analyze the possibility of entering loose milk and milk products market.
Opportunities in Loose Milk
l Low cost of transportation, therefore pricing could be competitive
l Freshness can be offered because procurement is your strength
l Both cow and buffalo milk could be marketed
l Consistent supply as the procurement centre is closer to market
l The competitor may lower the prices significantly
l The competitor may package the milk in a more hygienic packaging
l The Govt. may announce high packaging standards
Porter's five forces are competitive rivalry, supplier power, buyer power, threat of substitution and threat of new entry. This model is unique because it gauges profitability by focusing less on the product or audience and more on outside influences and competition. Using this analysis can be a simple but powerful way to understand the competitiveness within your business environment. Here is a breakdown of the five forces:
Supplier power addresses the number and size of other suppliers, the uniqueness of the service and the cost of substituting your own product.
Buyer power refers to the customer's ability to influence company decisions.
Threat of substitution describes how your product performs compared to any alternatives.
Threat of new entry details any barriers you'd encounter entering the market.
Competitive rivalry reviews all other outside forces to evaluate how your product performs compared to the overall market.
The SOSTAC model is a versatile planning model used to create marketing strategies. SOSTAC stands for situation, objectives, strategy, tactics, action and control. It can be a suitable tool to review your process and discover areas of weakness.
Each step in SOSTAC represents an important part of the development process: Identifying the current conditions, defining your goals, crafting your strategy, outlining how you plan to execute your strategy, working your plan and reviewing these steps to ensure you're meeting your goals. Using this outline can be beneficial to finding potential holes in your marketing plan.
Portfolio Analysis is based on the premise that majority of the companies carry out multiple business / products / activities in a number of different product-market segments. Together these different businesses form the Business Portfolio, which can be characterized by two parameters:
1. Company's relative market share for the business, representing competitive position of the firm, and 2. The overall growth rate of the business.
The BCG model proposes that for each business activity within the corporate portfolio a separate strategy must be developed depending on its location in a two-by two matrix of high and low segments on each of the above mentioned axes. These parameters are discussed in detail below.
Relative Market Share is stressed on the assumption that the relative competitive position of the company would determine the rate at which the business generates cash.
An organisation. with a higher relative share of the market compared to its competitors will have higher profit margins and therefore higher cash flows. (This point of view can be debated, and will be discussed later. A high market share per se may or may not be linked to high profitability or growth in future).
Market Share' along the horizontal axis. The two axes are divided into Low and High sectors, so that the BCG matrix is divided into four quadrants (refer to Figure 6.1). Businesses falling into each of these quadrants are classified with broadly different strategic categories, as explained below:
CASH COWS: The business with low growth rate arid high market share are classified in this quadrant. High market share leads to higher generation of cash and profits. The low rate of growth of the business implies that the cash demand for the business would be low. Thus, Cash Cows normally generate large cash surpluses. Cows can be `milked' for cash to help to provide cash required for running other diverse operations of the company. Cash Cows provide the financial base for the company. These businesses have superior market position and invariably low costs. But, in terms of their future potential, one must keep in mind that these. are mature businesses with low growth rate.
DOGS: If the business growth rate is low and the company' s relative market share is also low, the product is classified as DOG. The low market share normally also means poor profits. As the growth rate is also low, attempts to increase market share would demand prohibitive investments. Thus, the cash required to maintain a competitive position often exceeds the cash generated, and there is a net negative cash flow. Under such circumstances, the strategic solution is to either liquidate, or if possible harvest or divest the dog business.
QUESTION MARKS: Like Dogs, Question Marks are products with low market share but the product has a high growth rate. Because of their high growth, the cash requirement is high, but due to their low market share, the cash generated is also low. As the business growth rate is high, one strategic option is to invest more to gain market share, pushing from low share to high. The Question mark business then moves to a Star (discussed later) quadrant, and subsequently has the potential to become cash cow, when the business growth rate reduces to a lower level. Another strategic option is when the company can not improve its low competitive position (represented by low market share). The management may then decide to divest the Question Mark business. These products are called Question Marks because they raise the question as to whether more money should be invested in them to improve their relative market share and profitability, or they should be divested and dropped from the portfolio.
STARS: Products, which have high growth rate and high market share, are called Stars. Such businesses generate as well as use large amounts of cash. The Stars generate high profits and represent the best investment opportunities for growth. The best strategy regarding Stars is to make the necessary investments and consolidate the company's high relative competitive position.
Building Procedure The Boston Consulting Group suggests the following step-by-step procedure to develop the business portfolio matrix and identify the appropriate strategies for different products.
Classify various activities of the company in to different business segments or Strategic Business Units (SBUs).
For each business segment determine the growth rate of the market. This is later plotted on a linear scale.
Compile the assets employed for each business segment and determine the relative size of the business within the company.
Estimate the relative market shares for the different business segments. This is generally plotted on a logarithmic scale.
Plot the position of each business on a matrix of business growth rate and relative market share. A bubble represents the size of the business; a circle with a diameter corresponding to say the assets employed in that business.
The Growth-share BCG Matrix has certain limitations and weak points that must be kept in mind while using portfolio analysis for developing strategic alternatives. These are now briefly discussed.
1. Predicting Profitability from Growth and Market Share BCG analysis assumes that profits depend on growth and market share. The attractiveness of an industry may be different from itg simple growth rate, and the firm's competitive position may not be reflected in its market share. Some other sophisticated approaches have been evolved to overcome such limitations. There have been specific research studies, which illustrate that the well-managed Dog businesses can also become good cash generators. These organisations relying on high-quality goods, with medium pricing and judicious expenditure on R&D and marketing, can still provide impressive return on investment of above 20 per cent.
2. Problems in Determining Market Share There is a heavy dependence on the market share of a business as an indicator of its competitive strength. The calculation of market share is strongly influenced by the way the business activity and the total market are defined. For instance, the market for helicopters may encompass all types of helicopters, or only heavy helicopters or only heavy military helicopters. Furthermore, from geographical point of view the market may be defined on worldwide, national or even regional bases. In case of complex and interdependent industries, it may also be quite difficult to determine the market share based on the sales turnover of the final product only.
3. Effect of Experience Ignored In the BCG approach, businesses in each of the different quadrants are viewed independently for strategic purposes. Thus, Dogs are to be liquidated or divested. But, within the framework of the overall corporation, useful experiences and skills can be acquired by operating low-profit Dog businesses, which may help in lowering the costs of Star or Cash Cow businesses. And this may contribute to higher corporate profits.
4. Disregard for Human Aspect The BCG analysis, while considering different businesses does not take into consideration the human aspects of running an organization. Cash generated within a business unit may come to be symbolically associated with the power of the concerned manager. As such the manager running a Cash Cow business may be reluctant to part with the surplus cash generated by his unit. Similarly, the workers of a Dog business which were decided to be divested may react strongly against changes in the ownership. They may deem the divestiture as a threat to their livelihood or security. Thus, BCG analysis could throw up strategic options, which may or may not be easy to implement.
5. Modifications in BCG approach It was in 1981 that the Boston Consulting Group realised the limitations of equating market share with the competitive strength of the company. They have admitted that the calculation of market share is strongly influenced by the way business activity and the total market domain is defined. A broadly defined market will give lower market share, whereas a narrow market definition will result in higher- market share resulting in the company as the leader. It was, therefore, recommended that products should be regrouped according to the manufacturing process to highlight the economies of scale manufacturing, instead of stressing the market leadership.
The AIDA marketing model focuses almost entirely on the customer. The acronym stands for awareness, interest, desire and action. These are the four stages a buyer goes through during the process of purchasing a service or product. Some models include an additional stage, retention, which addresses a buyer's choice to make return purchases and build brand loyalty.
This model is unique because it acknowledges the influence social media has on buyer-seller relationships and incorporates that into selling strategies. Now, sellers aren't the only ones getting the word out about their products, social media users can comment and share on a company's post. And as a result, other customers can share material and create communities online that influence buyer behavior.
General Electric (or McKinsey) matrix uses market attractiveness as not merely the growth rate of sales of the product, but a a compound variable dependent on different factors influencing the future profitability of the business sector. These different factors are either subjectively judged or objectively computed on the basis of certain weights, to arrive at the Market Attractiveness Index. The Index is thus based on a thorough environmental assessment influencing the sectoral profitabilities.
Factors determining Industry Attractiveness
S.No. Factors Typical weightage
1. Rate of growth of sales and cyclic nature of business 10%
2. Nature of competition including vulnerability to foreign competition 15%
3. Susceptibility to technological obsolescence and new products 15%
4. Entry conditions and social factors 10%
5. Size of market 10%
6. Profitability 40%
Total weightage 100%
The Competitive Position of the company is analysed not only in terms of company's market share, but also in terms of other factors often appearing in the Strength and Weakness analysis of the company. Thus, product quality, technological and managerial excellence, industrial relations etc. are also incorporated beside market share and plant capacity.
The Market Attractiveness Index is then plotted along the vertical axis and divided into low, medium and high sectors. Correspondingly, the Competitive Position is plotted along the Horizontal axis divided into Strong, Average and Weak Segments. For each product in the portfolio, a circle denoting the size of the market is shown in the 3x3 matrix grid while shaded portion corresponds to the company's market share GE rates each of its businesses every year on such a framework. If Market Attractiveness as well as GE's Competitive Position is low, a no-growth red stoplight strategy is adopted.
Thus, GE expected to generate earnings but does not plan for any additional investments in this business. If for a business the Industry Attractiveness is medium and GE's Competitive Position is high; a growth green stoplight strategy is evolved for further investment. But if a product has high Market Attractiveness index and low GE's Competitive Position, this is branded as yellow stoplight product that may be moved either to growth or no growth category` Such grids are developed at different managerial levels. GE's Corporate Policy Committee comprising the Chairman, the Vice-Chairman, makes the final strategic decisions and Vice-Presidents of Operational areas, including finance.
A program for the Profit Impact of Market Strategy (PIMS) was started at General Electric, and was Later used by the Strategic Planning Institute.
The PIMS program analyses data provided by member companies to discover `general laws, which determine the business strategy in different competitive environments producing different profit results'. Unlike the earlier approaches using judgement for multidimensional factors, the SPI uses multidimensional cross-sectional regression studies of the profitability, of more than 2,000 businesses. It then develops an industry characteristic, Business Average Profitability, and compares it with the performance in the concerned company.
This model uses statistical relationship estimated from past experience in place of the judgmental weights assigned for the importance of different factors behind Market Attractiveness and Competitive Position in previous approaches. This scientific objective approach has been criticised that the analysis of relationship is based on heterogeneous population, i.e., different types of business, taken at different time periods. Profitability is closely linked with market share.
A 10% improvement in profitability is linked with 5% improvement in Return on Investment (ROI). This has since been rationalised by a number of arguments, such as `the Experience Curve Effect' which implies reduction in average cost with increase in accumulated production. The larger company can use better quality management, and thus can exercise greater market power.
The Ansoff Matrix, also called the Product/Market Expansion Grid, is a tool used by firms to analyze and plan their strategies for growth. Often referred to as G, the sustainable growth rate can be calculated by multiplying a company's earnings retention rate by its return on equity
The Ansoff Matrix was developed by H. Igor Ansoff and first published in the Harvard Business Review in 1957, in an article titled "Strategies for Diversification."  It has given generations of marketers and business leaders a quick and simple way to think about the risks of growth.
Also known as the Corporate Ansoff Matrix and the Product/Market Expansion Grid, the Matrix (see figure 1, below) shows four strategies you can use to grow your business. It also helps you analyze the risks associated with each one. The idea is that each time you move into a new quadrant (horizontally or vertically), risk increases.’
The Four Quadrants of the Ansoff Matrix
Let's examine each quadrant of the Matrix in more detail.
By: NIHARIKA WALIA ProfileResourcesReport error
Access to prime resources