The organizational strategies provide the ‘how’ we intend to achieve our strategic goals. These plans specify the activities by department and allocation of resources (people, equipment, money) needed to achieve the strategic goals over a given period. In order to recognize the proper direction an organization should take, the next step is to conduct an analysis of the company’s external and internal environment.
Conduct a SWOT Analysis
A common approach to environmental analysis is matching the strengths of your business with the opportunities available to it. It’s called SWOT analysis because it calls for analyzing an organization’s Strengths, Weaknesses, Opportunities, and Threats.
It begins with an examination of external factors that could influence the company in either a positive or a negative way (these were discussed in Chapters 1-4). These could include economic conditions, competition, emerging technologies, laws and regulations, and customers’ expectations.
One purpose of assessing the external environment is to identify both opportunities that could benefit the company and threats to its success. For example, a company that manufactures children’s bicycle helmets would view a change in federal law requiring all children to wear helmets as an opportunity. The news that two large sports equipment companies were coming out with bicycle helmets would be a threat.
The next step is to evaluate the company’s strengths and weaknesses, internal factors that could influence company performance in either a positive or negative way (these are discussed in Chapters 5-10). Strengths might include a motivated workforce, state-of-the-art technology, impressive managerial talent, or a desirable location. The opposite of any of these strengths could signal a potential weakness (poor workforce, obsolete technology, incompetent management, or poor location).
Armed with a good idea of internal strengths and weaknesses, as well as external opportunities and threats, managers will be better positioned to capitalize on opportunities and strengths. Likewise, they want to improve on any weak areas and protect the organization from external threats.
For example, Notes-4-You might say that by providing excellent service at a reasonable price while we’re still small, it can solidify its position on campus. When the market grows due to increases in student enrollment, the company will have built a strong reputation and be in a position to grow. So even if a competitor comes to campus (a threat), the company expects to be the preferred supplier of class notes. This strategy will work only if the note-takers are dependable and if the process does not alienate the faculty or administration.