Take the perspective of S&W’s Director of Strategic Planning to develop a full SWOT analysis of S&W, identifying and explaining at least five factors for each category (strengths, weaknesses, opportunities, and threats) and propose a complete strategy (implementation, ramification, and evaluation) which addresses one of S&W’s weaknesses and what you would do about it.
Ans.) In the case of S&W’s, there are many things we can consider as its strength, weaknesses, and many things that could be opportunities and threats. The company’s strengths are its internal factors that make the organization strong. In the case of S and W, its strengths are its unified strategy for all its products which means that it advertises and markets all its products, whether they are professional tools or consumer tools.
This provides them with another strength which is brand equity. The brand equity that they have has enabled them to have a large share in the market and stay strong in the market and gain market share and the size of the pie. Another strength is that they have a demand-pull strategy which means they create demand for their product, this, in turn, gives them benefits of synergy, which allows better shelf placement, cross-promotion, and the ability to keep high prices in the market. Their time in the market and experience in the field of both professional and consumer tools gives them an edge over new and small companies. Their major strength is that they are a conglomerate business which gives them the diversification and risk management that helps them sustain in the market. (Knox, 2005)
Weaknesses are the environmental factors that are internal and basically create problems problem or hamper the business from within the company. For example, S&W’s weakness could be its high prices for its products. Due to its high pricing policy, it might be losing a sizeable amount of market share. Another weakness is that their cost of production is also extremely high as they produce in the urban areas where the labor cost is high and they use old production methods which get reflected again in high costs. Then the fact that they are the market giants, threatens the position of the distributor and makes them feel neglected and abused.
This is a major weakness as it is the distributors who finally decide how well to promote the product. Another reason could be their high-cost structure, which means that their entire production process works on a high-cost structure leading to a great reflection of that cost on prices which affects the market price. Another weakness is that they are right now producing a product that is starting to get outdated. This will lead to a loss in market share. (Knox, 2005)
Opportunities are all those factors that are external and help the organization grow in the market ad help them sustain. It includes all political, socio-cultural, economical, and technological changes. Opportunities for S&W are the new technology or the new cordless segment that the consumers are demanding. Then it can be the latest change in the technology that could help reduce production costs and help them reduce their high-cost structure. It can also be any of its international presence. Its international presence is an opportunity as well as it allows them to be more sensitive to the market changes and overall consumer preference.
Another opportunity for them could be the loosening of government regulation which could help them trade in places where they were unable to do so before and that ease will translate into bigger market share and hence more profit. Another opportunity could be if the government decides to remove all trade barriers. This will make it easier for the company to trade in the market internationally. (Knox, 2005)
Threats are the opposite of opportunities and are a result of external changes. Their threats could be their sheer size and spread which makes it difficult for them to change rapidly with the change in the trend, Their lack of technological advancement hampers their production process which leaves them with higher costs and lesser competition. Their inability to provide alternative products to their customers is also a threat. Maybe the government imposes trade barriers; this will make it difficult for them to trade internationally. If new regulations are introduced it will be difficult for S&W to keep its costs low. And lastly, it could be the emergence of new competitors in the market. (Knox, 2005)
One problem that could be solved through a defensive strategy, which is a combination of weaknesses and threats, is the problem of high production cost due to the units being in urban areas where labor cost is high. This could be a weakness and a threat as it makes the company more susceptible to being overtaken by competitors. As it is a big firm with a lot of capital a step-by-step transition of new production processes and shifting the plants is the way to deal with this is how S&W can tackle the situation. (Stapleton & Thomas, 1998)
Take the perspective of Makatume’s Director of Strategic Planning to develop a full SWOT analysis of Makatume, identifying and explaining at least five factors for each category (strengths, weaknesses, opportunities, and threats) and propose a complete strategy (implementation, ramification, and evaluation) which addresses one of Makatume’s weaknesses and what you would do about it.
Ans.) As Makatame’s is a relatively new company it has many strengths. Its major strength is its new production plants which help them reduce the cost of production. Then it is its newer products that are a part of the wireless segment which enables them to capture the market which is not being done by other competitors. Their focus on one segment of product is also a strength as all their resources are put towards it and there is no waste of resources.
It can also be its good reputation within the local market. As it owns over 50% of the shares in its local market that is Japan, it enables the company to have a position internationally. Its strength also lies in the good reputation it has within its customers for producing good quality, reliable products. (Zahorsky, 2006)
Its weaknesses could be the fact that since it has entered a niche market, it does not know how risky it is to diversify and its area is so specific that diversification is an issue. Then it is the fact it does not have that many distribution channels as it does not cater to a variety of products. This can have a great effect on the market share. It could also be due to the fact that it does not have an extremely strong brand name as compared to S&W. the only reason they are the biggest name is due to the exchange rates between dollar and yen. This is not sustainable. Then it can also be brand loyalty. The consumers have brand loyalty in terms of cost which is a weakness. (Zahorsky, 2006)
Opportunities for the company are a lot. First and foremost is the economical factor. the company is enjoying the favorable exchange rate between American and Japanese currency which has enabled them to grow internationally. As the political situation is sound and smooth between American and Japan which are its two major markets, it allows them flexibility as there are no trade barriers or regulations. As they have implemented the new technology for production techniques, it has enabled them to reduce their costs. (Zahorsky, 2006)
Threats are related to Makatame’s Opportunities only. Analysts have forecasted that the exchange rates that they have been enjoying will not last long which is a threat. Another threat to the company is the emergence of new markets of a wireless segment that is China, with its low cost and good quality products; it is creating a strong market for itself. Their reluctance to adopt new technologies and to cater to other areas has become difficult as they have started with an exclusive niche market of low voltage wireless segment is a threat to its overall market share. The emergence of substitute products is also a major threat for them, how will they tackle it, will they let the competitor take the initiative or will they delve into a new product segment is a tricky question to solve. (Zahorsky, 2006)
In the case of Makatame, they should use an S-O strategy that is they should use their opportunities to increase the advantages of those opportunities through improving the strengths of the business. They should use this for penetrating into different markets through using their strength of producing good quality and low-priced products. That means that while the exchange rates are favoring them they should increase international market share and make low-cost production their strength to sustain and thrive in the international markets. (Quick MBA, 1997-2007)
If you were Makatame, propose a complete strategy explaining what would you do about the higher voltages issue?
Ans.) In the situation of Makatame’s dilemma over introducing High voltage issues and whether to cater to that segment or not, I would first carry out a SWOT analysis of the company and then see how strong would be the effect of introducing high voltage batteries also. the problem that they face is that if they carry it out, they will be allowing other competitors to also penetrate that market and take the share. So I would suggest the company analyze the performance and the movements of other organizations.
Since it is very difficult to be sure whether the competitor will enter the market or not and what decisions it’s going to make, we have to make sure we are positive if not accurate, when and how will the competitor react through a thorough analysis of their past and how they tend to go around the business. If the company’s major competitors according to Makatame’s analysis will start entering the market, it should also enter the market and go head to head.
References
Knox, Tim (2005). SWOT Analysis Is No Magic 8 Ball. Web.
Quick MBA (1997-2007). SWOT Analysis, quickMBA. Web.
Stapleton, John and Thomas, Michael J. (1998). How to prepare a marketing plan.
Zahorsky, Darrell (2006). A Business Owner’s Secret Weapon: Swot Analysis SWOT Analysis for Small Business. Web.