Reading: SWOT Analysis as a Tool for Strategic Management and Implementation in a Firm in Machine Industry

SWOT ANALYSIS AS A TOOL FOR STRATEGIC MANAGEMENT AND AN

IMPLEMANTATION IN A FIRM IN MACHINE INDUSTRY

Murat ARSLANDERE

Yasin  CAL

ABSTRACT: There are various frameworks and approaches used in the analysis of a company’s strategic

position. One of the most straightforward is the SWOT analysis. SWOT analysis is an acronym for strengths,

weaknesses, opportunities, and threats and is a structured planning method that evaluates those four elements of

a project or business venture. Knowing all these points of a company or of a supply chain is a good basis for

strategy formulation. Nowadays competition in the world is so increasing and therefore firms have to attach

importance on strategic planning so much. In this study we mentioned about SWOT analysis, which is the most

used strategic techique in strategic management and then performed an implementation in a firm in machine

industry.

Keywords: Swot Analysis, Strategic Plan, Machine Industry

INTRODUCTION

Corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes,

or goals, produces the principal policies and plans for achieving those goals, and defines the range of business

the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of

the economic and noneconomic contribution it intends to make to its shareholders, employees, customers, and

communities. All the classic definitions of strategy, of which this is one, highlight its complex nature. Strategic

management encompasses several different sets of considerations whose relative emphasis by business

strategists, consultants, and academic researchers has changed over time, as ideas have evolved about the

application of competitive thinking to the collective enterprise of value creation(Chen, Fairchild, Freeman,

Harris, & Venkataraman, 2010; Andrews, 1997; Hax,Majluf 1988; Liu, 1998). In SWOT analyses, one of the

strategic management tools, is used commonly at the starting point of strategic management in firms. If the

firms want to perform a strategic management, SWOT is indispensable tool which should used for determine the

firms situations easily and clearly.

Strategic Management’s Definition, History And Tools

Strategic Management Definition

Porter defined strategy as a crucial tool of companies to differentiate from competitors and create a sustainable

advantage for the company(Cao, Zhao, Yang, Xiong, 2015). Currently the strategy is one of the key factors of

the company and with its definition may be encountered in a number of domestic and foreign literatures dealing

with strategic management. In order to understand the dynamics of strategies from the current period, extremely

turbulent through its manifestations, and in order to identify the reference points to focus the future construction

of strategic management on, we must first understand the current context rules(Pricop, 2012).

Strategic management consists of formulating the vision, mission and goals of the organization, analysis of

external and internal environment of the organization, selection of an appropriate strategy at local, regional or

national level, depending on the level of government entities, organizational design changes, administrative

measures and control systems for implementing strategy(Gec kov a, Papcunov b, 2014).

Strategic management defines goals for operational environment

Strategic Management History

The strategy was considered in the past as the science about planning and defining directions of military actions,

while the birth of company strategy occurred in         s by publication of Alfred Chandler who pointed out the

problem solving by managers in American companies connecting with long-term objectives, allocating

resources and creating a structure to enable and support their implementation. The

roots of strategic management research can be traced at least to the early 1960s, the field’s prominence grew

dramatically following the publication of Schendel and Hofer (1979) and the emergence of the Strategic

Management Journal (SMJ) in 1980(Shook, Ketchen, Hult, Kacmar, 2004). Since the time of the early Greeks,

the concept of business strategy has changed from a macro to a micro and back to a macro viewpoint (see Table-

1). Now business researchers and practitioners need to move from a concern with definitions of the concept to a

consolidation of terminology. Such a consolidation would facilitate the empirical testing of hypotheses as part

of an attempt to validate or reject traditional constructs and to develop useful applications to organizational

environments(Bracker, 1980).

Strategic Management Tools

Strategic management tools are consist of SWOT analysis, customer satisfaction analysis, price analysis,

analysis of views and employee attitudes, cost-benefit analysis, analysis of customers complaints, analysis of

customers’ opinions and attitudes, Porter’s five forces, PEST analysis, level of service analysis, market

segmentation, market – share analysis, customer profitability analysis and benchmarking(Afonina, Chalupský,

2012).

Swot Analysis’ Definition, History And Swot Analysis In Strategic Management

Swot Analysis Definition

SWOT Analysis is (one of many possible strategic planning tools) used to evaluate the Strengths, Weakness,

Opportunities and Threats involved in a project, or any other situation requiring a decision and has been a useful

tool for industry. SWOTs are defined based on the following criteria:

   Strengths are internal attributes of the organization that are helpful to the achievement of the objective.

   Weaknesses are internal attributes of the organization that are harmful to the achievement of the objective.

   Opportunities are external conditions that are helpful to the achievement of the objective.

   Threats are external conditions that are harmful to the achievement of the objective.

In theory, SWOTs are used as inputs to the creative generation of possible strategies, by asking and answering

the following four questions numerous times:

   How can we Use each Strength?

   How can we Stop each Weakness?

   How can we Exploit each Opportunity?

   How can we Defend against each Threat?

(Hay, Castilla, 2006; Balamuralikrishna, Dugger, 1995).

SWOT analysis, also known as SWOT-matrix (Figure 2), is a decision tool for organizations and a method to

develop their understanding of certain situation. The acronym stands for strengths, weaknesses, opportunities

and threats(Pystynen,2016).

Strengths

Strengths are internal originating positive factors, which need to be maintained. For example if you are planning

to start a business, you or an employee or family member may have previous experience in that industry. If not,

this may be viewed as a weakness. If you already know where to go to find the help you need, this would be

considered a strength for this analysis.

Weaknesses

Weaknesses are also generally considered internal and are the factors you will need to address to run a

successful business. For a start-up business, an example might be a lack of experience in the selected industry.

Opportunities

Opportunities are external originating positive factors, which need to prioritized or captured. What opportunities

are available for your business? You may be able to take advantage of low interest loan packages for start-ups or

grants for feasibility studies.

Threats

Threats are external originating negative factors, which need to be countered or minimized and managed.

Threats from outside of your business will directly affect you, but you may have very little control over them.

Unforeseen competition (local or foreign), dissolution of markets, and adverse weather may also have a negative

effect on your business(USDA, 2008; Pystynen, 2016).

The origins of the SWOT analysis technique is credited by Albert Humphrey, who led a research project at

Stanford University in the 1960s and 1970s using data from many top companies. The major goal was to

identify why corporate planning failed? The resulting research identified a number of key areas and thus the tool

used to explore each of the critical areas was called Satisfactory, Opportunity, Fault and Threat (SOFT)

analysis. Humphrey and the original research team used the categories “What is good in the present is

satisfactory, good in the future is an opportunity; bad in the present is a fault and bad in the future is a threat.” In

1964 Urick and Orr at a conference changed the F to a W, and it has stuck as that, SOFT to SWOT. Some

researchers reference the 1965 publication “business Policy, text and cases” by Learned, Christensen, Andrews

and Guth from Harvard University, in which a framework is used which closely resembles SWOT, however

these words are not used and certainly the framework is not described as succinctly as we know it today(George,

Pramod, 2013; Shrestha, 2012; Fine, 2009; Zavadskas, Turskis, Tamosaitiene, 2011).

Swot Analysis Importance

The importance for managers of a rigorous and consistent situation analysis is indisputable, and a SWOT

analysis can provide a useful lens(Allio, 2006). Examining a company's internal and external environment is

essential in the process of strategic planning. The SWOT analysis, which includes the analysis of strengths,

weaknesses, opportunities and threats investigates both, internal and external as well as positive and negative

factors of a corporation. On the basis of the SWOT analysis a marketing strategy can be developed using

corporate strengths as well as avoiding corporate weaknesses to enable a company to benefit from future

opportunities with regard of future risks(B hm, 2009).

Benefits of Swot Analysis

The biggest benefit of SWOT analyses is that it focuses on both the inside and outside environment. It

complements this thesis by providing a closer look at the provided solution and the company itself. The main

advantages are identified in the method, but also some weak sides are discussed. This will help the company

looking for expansion to focus on its strengths and manage its the weaknesses. The threats can be from different

origins. In the method they are considered as barriers. The opportunities also take a part in the method. SWOT

analysis requires no extensive training or technical skills to be used successfully and specialized training and

skills are not necessary, the use of SWOT analysis can actually reduce the costs associated with strategic

planning(Koseva, 2012; Karg, Jahn, Ahrberg, 2014). SWOT analysis assumes a central position in business

management. The external (environmental analysis) and internal (analysis of the company) analyzes are always

seen in a mutual dependency relationship. This dependence expresses in the

Swot Analysis In Strategic Management

As you can see on the Figure 1., strategy begins with objectives, which naturally follow from a company's

mission that is the reason for being. Objectives are concrete goals that a company seeks to reach. They should

be challenging but achievable and measurable. To devise a strategic plan to achieve these objectives, a company

has to analyse its situation. The SWOT analysis is a tool for such a situation analysis. As commonly defined,

SWOT analysis is an approach to considering the inhibitors and enhancers to performance that an organization

encounters in both its internal and external environments. The basic assumption of a SWOT analysis is that a

company must align internal activities with external realities to be successful. The SWOT analysis provides a

framework for analysing strengths and weaknesses (internal), and opportunities and threats (external). It helps to

focus on strengths, to minimize weaknesses, and to take the greatest possible advantage of opportunities

available(Pahl, Richter, 2007; Leigh, Pershing, 2006).

INES 2016

Figure 1. Strategic Planning Process

AN IMPLEMENTATION IN A MACHINE INDUSTRY FIRM

Data Collection Procedure

In this study, first of all, the related literature was reviewed and the necessary information was obtained in order

to form a theoretical basis. We observed the factory through strategic management perspective with production

managements and technicians. The required informations were gathered through face-to-face interviews with

the business managements and the other staff. And also we search the current market situation relating with the

company from statistical documents and studies.

Findings of the Study

This firm manufactures food machines for biscuit and cake sector in Karaman city. Staffs are consist of 20

people, all of them are qualified and expertise in their own work. Firms’ machine quality is high so there are few

complaints come from the customers. The company has some strengths relates with the staff, production style,

machines, software programs and other fixtures, expertise fields and finally administration. At the same time the

company has some weakness relates with production style, staff, machines, software programs and other

fixtures, administration, costs and incomes. Opportunities, the firm encounter, are relates with changing in

production styles, current markets, future trend for current market, new markets, state aids. The firm also

encounter threats relates with rivals, customers, current market structure and orders. All of them were mentioned

in the SWOT analyses as you can see at the Table-2. Generally the firm isn’t in a bad condition but they should

make some structural changes especially in the market positions and administration applications such as make a

vision and apply a strategic management. So they can perform the works as they do, with systematical approach.

General manager is open to change therefore the changes can perform so fast. It is a huge advantage for the firm

maybe it is the best advantage that they have. Production styles is in tendency of converting to assembly

manufacturing so the firm can evaluate to conduct a outsource applications easily. There will be lots of benefits

owing to these collaborations. State aids in Turkey are in high level currently therefore the company can use

these aids. These aids especially should be used in make an increase in exporting. Because in their sector the

competition is so high and the domestic market start to narrow. They should employ market stuff for performing

the marketing applications more professional and effective. As we search from the statistical document, food

and biscuit sector is in growing tendency in worldwide. Thanks to this dynamic, the company that we observed

through the strategic management, should use this opportunities immediately and make its location in the both

domestic and international area.

CONCLUSION

A framework that will guide businesses in managing complexity and interconnections of multiple and

diversified elements in their internal and external environments. The discipline of strategic management is

naturally evolving in the direction of systemic and comprehensive solutions(Witek, 2012). SWOT analysis is

the most used tools of strategic managements. SWOT analyses makes brief and effective picture of company’s

situation. But theorists and practitioners generally agree that the result of a SWOT analysis can lead to a quick

analysis of the situation, which remains approximate and incomplete(Speth, 2015). Therefore SWOT analysis’

findings should be used quickly in the subsequent stages of strategic management. This firm that we made

SWOT implementation, should start at make a vision , this is the most important finding and so evaluations and

studies should be start from there. After that they should make some structural changes such as using ERP,

employ a marketing stuff and make marketing department, then they should tend to international markets

because of the narrowing in the domestic market.

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