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SWOT Analysis

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
Environmental Scan
/ \
Internal Analysis External Analysis
/ \ / \
Strengths Weaknesses Opportunities Threats
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SWOT Matrix

Strengths
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:
patents
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

Weaknesses
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.

Opportunities
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

Threats
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
new regulations
increased trade barriers

The SWOT Matrix
A firm should not necessarily pursue the more lucrative opportunities. Rather, it may
have a better chance at developing a competitive advantage by identifying a fit between
the firm's strengths and upcoming opportunities. In some cases, the firm can overcome
a weakness in order to prepare itself to pursue a compelling opportunity.
To develop strategies that take into account the SWOT profile, a matrix of these factors
can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below:
SWOT / TOWS Matrix
Strengths Weaknesses

Opportunities
S-O strategies W-O strategies

Threats
S-T strategies W-T strategies

S-O strategies pursue opportunities that are a good fit to the company's
strengths.
W-O strategies overcome weaknesses to pursue opportunities.
S-T strategies identify ways that the firm can use its strengths to reduce its
vulnerability to external threats.
W-T strategies establish a defensive plan to prevent the firm's weaknesses from
making it highly susceptible to external threats.

In pursuit of our vision, we will create knowledge - based jobs that are supportive of strategy
execution in product research and development, design and business process engineering, market
research and testing, e-commerce development and customer service. Nurturing these
competencies successfully must result in higher productivity, superior postal products, good
profitability, attractive salaries for our staff and hundreds of new job opportunities for many
jobless university graduates roaming our streets. Our future business prospects which are
motivated by the quest to better the lives of thousands of people are euphemistically too bright to
be looked into without using sunglasses! We therefore wish to share our strategic odyssey with
all our stakeholders through many fora including this page in Zambia's largest newspaper.
We will state from the outset that there is no guarantee for our desired success; the marketplace
can make today's winners into losers tomorrow. It is business mantra that "in business the only
certainty about the future is its uncertainty". As a corporation, therefore, we are focusing on
fitting our core competences to industry key success factors while anticipating the direction that
the "change drivers" may be pointing into. First, let us turn to a generic discussion of the
antecedents of an organization's strategic vision.
The different business strategies that business organizations craft and implement encapsulate the
competitive approaches and conduct of their businesses towards achieving the chosen strategic
vision. These strategies are also adjudicators between winners and losers. Business organizations
exist in a free Darwinian environment characterized by combined competitive pressures
explained by the authoritative five forces model developed by Professor Michael Porter of
Harvard University. In this "survival of the fittest" business world, assaults from rival companies
are launched using an arsenal comprising lower prices, product innovation, higher quality, better
customer service, expanding network distribution, emphasis on new or more product features,
stronger after sales support and novel ways of advertising and promotion. Of the five - forces
which include the competitive pressure from the threat of new entrants, substitute products of
closely related industries, supplier bargaining strength and pressure from buyers given the rise of
the "informed sophisticated customer" who can compare rival sellers' product quality and
pricing, the fiercest force originates from the existing rival sellers as they jockey and manoeuvre
for buyer patronage.
Strategy formulation requires a comprehensive analysis of both the external and internal
environments facing an organization using established techniques. The clear - minded
application of these conceptual techniques ensures that strategic vision is not a mere high
sounding proclamation. We will run through a brief tour of the strategic analysis of these two
environments.
Analyzing the external environment, according to Johan Hough et al (2011),comprises seven
dimensions that focus on a company's industry and competitive environment within a larger
macro environment with influences such as the economy, regulation and legislation; technology
and social - cultural values and lifestyles. Industry and competition analysis includes an analysis
of the industry's dominant economic features such as market size and growth, number of rivals,
pace of industry technological change and product innovation, economies of scale and
learning/experience curves. The analysis then centres on the kinds of competitive pressures faced
by industry members and an assessment of the strength of each force. The forces driving change
in the industry are identified and the impacts they portend on the competitive intensity and
industry profitability is ascertained. Strategic group mapping follows with analysis of the
respective strategic positions occupied by rivals and an anticipation of what the next moves of
rivals are likely to be ensues. The sevenfold conceptual analysis climaxes with identifying what
the industry key success factors are and whether the industry's outlook presents the company
with an attractive likelihood of profitability by examining the preceding six strategic dimensions.
The foregoing analysis of the external situation does shape significant conclusions for ZamPost's
strategy. New customer groups will lead to growth in the parcels and small packets sector
underpinned by our use of e - commerce capabilities. In contrast, the letter posting business has
been declining the world over. The increased use of email and other real time communication
tools predicts further decline in both the market size and growth rates for the letter business
rendering future letter post prospects unattractive. Given the decline of the letter, ZamPost will
have to commit to re - engineering its labour intensive mail processing business in order to drive
out high operating costs. Except for our EMS courier service, we will soon start using sms and
email notification as "call outs" for collecting ordinary small parcels instead of hiring costly low
- skilled labour and burning fuel to simply drop call-outs in residential areas.
Our rival sellers are generally competing on lower price rather than product innovation, customer
service and other differentiators. ZamPost will deliver cost - efficient value propositions which
are inimitable. Our customers are assured that our entire value chain will be steadily tilted to
deliver high quality. Zambia like other third world countries is an emerging market with
relatively low quality service offered by most service providers. The future however belongs to
those who will raise the bar to the benefit of our country and continent! Business organizations
can transform people's lives in our country more than any other organization (can). As argued by
Thomas L. Friedman in his book "The World is Flat", business is transcending borders, unifying
global cultures and tastes through the use of common brands.
Following the recent entry of a major chain store into money transfer service, many of our staff
and customers queried us whether government could not restrict money transfer service to the
postal sector. There is of course not much money in money transfer and the increasing number of
players may compete profit away. However since the Post Office is required by law to provide
money transfers, SwiftCash money transfer service will be increasingly differentiated and evolve
a sort of "4th Generation" money transfer service following the initial TMOs, SwiftCash and the
current experiments with mobile money. We love the adrenalin rush produced by competition.
We embrace the strategic management perspective of the "resource - based view of the firm"
which asserts that cutting - edge knowledge and intellectual capital are valuable competitive
resources to be managed diligently. Our previous article highlighted the nearly ripe partnership
with the Copperbelt University with an inherent strategic goal of ensuring that our individual
staff members can upgrade their skills and competencies.
Change drivers of today's industry increasingly lie in harnessing emerging internet capabilities
and applications. At ZamPost, we anticipate a journey to the past to salvage our former role in
the lost world of telegrams. We were the providers of the quickest way of communicating for
most of the population. The only exception who had a quicker way of communicating were the
few "upper class folk" who were served by land lines in their homes. Today the internet is
teaming with different technologies which are changing business. ZamPost will harness this
change driver by investing in Information Technologies in the organization as well as entering
into strategic alliances with reputable IT firms.
Review of the external situation forms one part of the analysis. The complementary part analyses
the internal environment and probes whether the company is meeting its set targets and whether
it is an above - average industry performer. ZamPost esteems its monthly financial statements -
drawing insights for its pricing strategies, effectiveness, efficiency and profitability from them.
Our strategic analysis of the internal environment facilitates the assessment and development of
competitive capabilities and resources that underpin and ignite our corporate and business
strategies for the subsidiaries and the business units. Secondly we are purposefully developing
favourable relative cost positions for the corporation using value chain analysis and
benchmarking. Thirdly we are weighting and comparing the competitive strengths and resources
which are relevant to our industry key success factors against the standing of the companys
key rivals on those parameters. Overall, our market position is fundamentally healthy and the
prospects for success are very strong as we seek to serve our esteemed customers and meet
shareholder expectations.
Moreover, there is one more reason for our planned future success namely, you, our reader of
this weekly article.