Strategic Management: SWOT Analysis and Business Levels

The SWOT Analysis Process

1. Selection of SWOT factors: Identify the most strategic Strengths, Weaknesses, Opportunities, and Threats (S, W, O, T).
2. Assessment of SWOT factors: Evaluate these factors on a defined scale.
3. Construction of a SWOT graph: Visualize the relationship between internal and external factors.
4. Application of the SWOT matrix: Choose a strategy based on the results:

Types of SWOT Strategies

• Aggressive strategy: This is based on the primacy of internal strengths and external opportunities. When an organization has a strong competitive position, it can continue to grow, expand, improve, and innovate its core operations.
• Defensive strategy: This should be formulated if the organization is in a difficult position because its weaknesses are greater than its strengths and it faces many threats that can complicate its competitive position. It may be necessary to abandon the business.
• Diversification strategy: This should be used if the company has strengths but faces many external threats.
• Strategy of internal change: This is the choice when an organization is weak but can find many opportunities. It is necessary to take over strategic projects, secure funds, and restructure the capital of the firm to explore these opportunities and turn weaknesses into strengths.

Levels of Strategic Planning

• General (Corporate) Strategy: This is the strategy of the whole company. It determines the strategic portfolio, what businesses a company is in or wants to be in, and what it wants to do with those businesses. It is based on the vision, mission, and strategic goals of the organization. It determines which Strategic Business Units (SBUs) will be supported for further growth, which will be stabilized at their current position, which will be closed, and which new activities will be joined to create a new SBU.
• Competitive (Business) Strategy: If a company is diversified, there is a strategy for each SBU. Competitive strategies emphasize the improvement of the competitive position of the corporation's SBUs. The competitive strategy formulation can be based upon generic strategies such as overall cost leadership or differentiation. The purpose of this strategy is to find new sources of competitive advantage.
• Functional Strategy: This is the strategy of functional areas like marketing, HR, production, IT, and so on. Functional strategies are created to support the business strategy and focus on the maximization of resource productivity.