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Strategic Analysis Method in regards to SWOT

Analyse of the factors that determine the success or the failure of a company (business) has led to the making of specific analyse and diagnostic methodologies of a company activity (business). Strategic management is the process by means of which a company can achieve significant growth of its performance on strengthening its market position i.e. by developing, implementing and monitoring the company’s strategy in order to achieve the agreed mission and to ensure competitive advantage.

Business strategy statement is the process by which the company management defines its strategic mission, concludes its strategic objectives required to achieve its mission, choose appropriate strategy to achieve its objectives and works out modalities of its implementation. Taking strategic decisions concerning company mission definition, setting strategic objectives and the strategy required for achieving them, implementation of the plan materializing that strategy is based on an extensive analysis and company action environment evaluation process, of its competitiveness in this environment and on the company situation, of its ability to face changes.

On the one hand, it is specific for strategic management a continuous analysis of the company external environment to anticipate or notify the changes on time and of the internal situation of the company to evaluate its ability to face changes on the other hand.

SWOT is a tool for strategic analysis, flexible and easily to apply that an organization or team project uses to identify the most appropriate course of action. Any new project should be based on such analysis in order to determine the degree of opportunity and feasibility.

General principles of SWOT analysis

SWOT analysis is actually a technique that can identify strengths and weaknesses and can examine opportunities and threats of a project, action or person and can be used as part of achieving the balance.

Analyse of the factors that determine the success or the failure of a company (business) has led to the making of specific analyse and diagnostic methodologies of a company activity (business).

SWOT English comes from the initials of words Strenghts (strengths), Weaknesses (weaknesses) Opportunities (opportunities) and Threats (threats).

These elements are summarized in a table with four quadrants (Fig. 1.) depending on relevant aspects of settling the most appropriate strategy for action and detailing appropriate measures [1].

Company’s strengths are distinctive characteristics or skills the company possesses at higher level compared with other companies, especially competitors, providing it a certain advantage.

Company’s weaknesses are characteristics that determine a performance level below that of competitors.

Opportunities are positive external environmental factors for the company that is opportunities offered by the environmental to the company to establish a new strategy or to reconsider existing strategy for a profitable exploitation of arising opportunities.

Threats are negative external environmental factors for the company, i.e. events or situations that may adversely affect the company’s ability to achieve its full objectives.

Strenghts

Weaknesses

Opportunities

I. (S-O)

II. (W-O)

Threats

III. (S-T)

IV. (W-T)

Fig. 1. SWOT Matrix [2]

Combining the four characteristics of the organization identified by SWOT analyse more strategic alternatives can be developed as it follows [1]:

• SO strategies – they are the type max-max strategies combining both the two favorable elements of the company internal and external environments that contribute to the strategy development. Using the strengths of the company external environment opportunities are valued, they are aggressive strategies to maximize profit and to achieve a competitive advantage to the competitors.

• WO Strategies - they are the type min-max strategies that mean it is a combination of weaknesses of the company with external environment opportunities, aiming to eliminate or at least reduce identified weaknesses or even turning them into strengths by means of identified opportunities.

• ST strategies - are max-min type strategies that mean they use the strengths of the organization to reduce or eliminate the risks / threats coming from the external environment. There are also known as defensive strategies.

• WT strategies - they are min-min strategies and their purpose is to minimize the weaknesses and to avoid threats in the external environment. They are defensive strategies and are used to avoid bankruptcy or severe periods of organizational decline.

Graphic example on the SWOT analysis at SC TEHNOSUD Engineering Ltd.

Overview of SC TEHNOSUD Engineering Ltd.

Founded in the early 90s as an alternative to large enterprises TEHNOSUD Engineering Ltd the company has soon gained the reputation of a dynamic company, well known for its quality services [3].

The Company development was based on research in welding, applied research in the works and services performed for clients and quality of performed services.

The company collaborates with ISIM Timisoara, Welding Association in Romania, Oil and Gas University of Ploiesti, SITON Bucharest.

Society has implemented welding standards developed by the International Organization for Standardization and the ASTM International Standards Worldwide as well.

Establishment of SC TEHNOSUD Engineering Ltd. is a procedural establishment. It consists of decomposing the production process into components of, analyzing them and their recomposition compared to certain economic, technical and personnel criteria to achieve the objectives set in terms of increased efficiency.

SWOT Analysis

The internal environment

Internal environment is identified with society itself, and is composed of: material, human and financial resources.

Out of material resources are: equipment (equipment, technologies, information, and infrastructure) processes of production and supply are based on. Supply with material resources is the first way of obtaining competitive advantage.

Engineering TEHNOSUD financial resources are based on the possibilities the company gets at one moment in development of market relations, but also on making certain expenses in order to achieve market objectives.

Relations with competitors

Market activities of this society are marked by the presence of a various number of competing companies; acting on the same markets, they compete; they dispute the opportunities the market offers. To face competition, TEHNOSUD Engineering moved from philosophy based on service and sales to that one based on customers and marketing.

TEHNOSUD Engineering is constrained to provide quality services to the customers in order not to throw them in the arms of competition (it costs 5-6 times more to attract a new customer than to keep the existing ones). Today’s customer has a higher education and his expectations are becoming higher.

Success belongs to the company which put customers as centre of its, offering them a superior value.

TEHNOSUD Engineering has reviewed its costs and performances related to each activity creating value and found ways to improve them. As a point of comparison, the company analyzed the costs and performances of the competition. It has arrived in a better position compared to its competitors because it has been operating with better results.

Engineering TEHNOSUD success depends not only by the performances of each compartment, but also the way various activities are coordinated conducted within it. TEHNOSUD Engineering has acted primarily in the interest of clients, watching from the experience that is the only way you can keep to the forefront.

Being a strong company, TEHNOSUD Engineering has managed to create a high capacity for managing of production processes, inventories, order execution, serving the customer.

SWOT Matrix

SWOT matrix describes the strengths and weaknesses of a company associated with existing opportunities on the market at one moment.

Objectives of SC TEHNOSUD Engineering Ltd. are:

TEHNOSUD Engineering - number one in Eastern Europe in equipment repairs;

Start of solar panel

Foundation of a welding school

Profit maximization

Following the SWOT analysis together with financial indicators, company management came to the result of strategy SO type max-max implementation, which combines the two favorable elements of internal and external environment of the company that contributes to the strategy development. Using the strengths of the company external environment opportunities are valued they are aggressive strategies to maximize profit and achieve a competitive advantage over its competitors.

Outlining the main strategic options

Strategic goals require designing and operation of specific ways, the most important among them are:

Company upgrading technology is one of the most important strategic options, which helps to achieve most strategic objectives. It is focused on:

acquisition of the latest welding equipment;

implementation of an information system for production planning and tracking;

Management Redesigning. Weaknesses and those acting as support for conceiving of strategic and tactical recommendations which aims are to increase the managerial potential of SC TEHNOSUD Engineering Ltd. The most important are:

a redesign of the company management system, especially the organizational subsystem;

providing an organizational flexible and efficient framework and climate with a modern human resource management

development of strategies and realistic policies in management to be correlated with global industry trends.

POZITIVE

NEGATIVE

INTERN

Strengths

Weaknesses

Modern repairs

Compliance with customer requirements

Observance of the execution term

Effective marketing department;

Existence of a self-financing capacity;

Existence of a debt capacity;

it has the required liquidities to cover short-term debt

Non-collecting money for provided services on time, it accumulates temporary debts to the budget and suppliers

High cost of production

Unconsolidated Internet Advertising

Difficult to change organizational culture

High levels of personnel;

High costs in this area

Difficult communication

EXTERN

Opportunities

Threats

Development of solar systems in a market still in the exploration, as an expansion of alternative energy use

Founding a welding school in the context this profession is endangered because Western Europe labor market expansion

Strong competitors with an aggressive market position

Lack of required funds to make investments in modern technologies;

Lack of liquidities in economy

Loss of qualified personnel in favour of competitors;

Fig. 2 SWOT matrix for case SC TEHNOSUD Engineering Ltd.

Company computerization is the base of achieving the company objectives concerning its IT strategy and addresses both to the management level and to the supplyer level, including organization, applications and infrastructure.

Material resources include production equipment, raw materials, materials, energy resources to be sized according to volume, complexity and diversity of strategic and tactical objectives and to the nature and complexity of strategic ways to achieve them.

Total financial resources allocated for a three year period are devided by industries according to the followed objectives:

to attain a leader objective - 40% of resources;

for starting production of solar panels - 30% of resources of co-financing share;

For the welding school foundation - 30% of of co-financing share.

Human resources can be provided as it follows:

quantitatively increasing and a stabilization of the number of employees;

qualitatively, improving the level of training classes

Whole strategy covers a period of four years between 2010 - 2013.

Conclusions

Using SWOT analysis on the presented example in this paper has facilitated following conclusions to be drawn:

The analytical basis for achieving business goals is considered strong enough to justify the conclusions that were on the basis of foundation the strategy;

Strategy is relevant versus the issues, needs and potential that were identified in the analysis;

The strategy objectives are in line with current legislation;

On the other hand the following recommendations can be made:

In order to maintain its clients TEHNOSUD Engineering must also look competitive advantages beyond its own chain of values, i.e. in supplier, distributor and customer chain of values.

TEHNOSUD Engineering will have to pay attention to the client infidelity factor of and look for ways to reduce its level.


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