Download - SWOT and PORTER- -²S FIVE FORCES
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 1/48
SWOT ANALYSIS AND
PORTER’S FIVE FORCES
Presented by : Ces Abris
Marketing Management – Dr.Ed Garrovillas
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 2/48
S.W.O.T. ANALYSIS
Strengths
Opportunities
Weakness
Threats
Factors Internalto Organization
Factors Externalto Organization
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 3/48
S.W.O.T.
•The origins of the SWOT analysis technique is
credited by Albert Humphrey, who led a researchproject at Stanford University in the 1960s and1970s using data from many top companies.
• Humphrey and his research team used thecategories “What is good in the present isSatisfactory, 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 changedthe F to W and changed the soFt to sWot
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 4/48
SWOT: DESCRIPTION
• A SWOT analysis generates information that is
helpful in matching an organization or group’s goals, programs, and capacities to the socialenvironment in which it operates.
• It is an instrument within strategic planning, whencombined with dialogue becomes a participatoryprocess
• It is a process to identify where you are strong andvulnerable – where you should defend and attack.
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 5/48
SWOT: INTERNAL FACTORS
Strengths- Positive tangible and intangible
attributes, internal to an organization.They are within the organization’s
control.
Weakness
- Factors that are within anorganization’s control that detract fromits ability to attain the core goal. Whichareas might the organization improve?
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 6/48
SWOT: EXTERNAL FACTORS
Opportunities External attractive factors that represent the reasonfor an organization to exist and develop. What opportunities exist in the environment, whichwill propel the organization?
Identify them by their “time frames” Threats
External factors, beyond an organization’s control,which could place the organization mission or operationat risk.The organization may benefit by having contingencyplans to address them if they should occur.Classify them by their “seriousness” and “probability ofoccurrence”.
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 7/48
STEPS ON HOW TO DO A SWOT
ANALYSIS
1. Information collection - here and now
- List all strengths and all weaknesses that
exist now.2. What might be
- List all opportunities that will exist in thefuture.
3. Plan of action
- Review you SWOT matrix with a view tocreating an action plan to address each ofthe four areas.
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 8/48
WHAT MAKES A SWOT ANALYSIS
WORK?
• Trust• Ability and willingness to implement change• Diversity• Time
Generating Strategies: get them USED How can a firm
U se each strength?
S top each weakness?E xploit each opportunity?D efend against threat?
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 9/48
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 10/48
Threat of
Substitute
Products
Threat of
New
Entrants
Threat of New
Entrants
Rivalry Among
Competing Firms
in Industry
Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
PORTER’S FIVE FORCES
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 11/48
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 12/48
ADVANTAGE OF THE MODEL
According to Porter, businesses can use the model to identify how
to position itself to take advantage of opportunities and overcome threats.
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 13/48
Expected Retaliation
Government Policy
Economies of Scale
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages Independent
of Scale
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 14/48
Suppliers are likely to be powerful if:
Supplier industry is dominated by afew firms
Suppliers’ products have few
substitutes
Buyer is not an important customerto supplier
Suppliers’ product is an important
input to buyers’ product
Suppliers’ products are differentiated
Suppliers’ products have high
switching costs
Supplier poses credible threat of
forward integration
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 15/48
Buyer
Buyers are concentrated or purchases
are large relative to seller’s sales
Purchase accounts for a significant
fraction of supplier’s sales
Products are undifferentiated
Buyers face few switching costs
Buyers’ industry earns low profits
Buyer presents a credible threat of
backward integration
Product unimportant to quality
Buyer has full information
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 16/48
Threat of Substitute Products
Products
with similar
function limitthe prices
firms can
charge
Keys to evaluate substitute products:
Products with improving
price/performance tradeoffs
relative to present industryproducts
Example:
Electronic security systems inplace of security guards
Fax machines in place of
overnight mail delivery
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 17/48
Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Making new product introductions
Increasing consumer warranties or service
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse
offAdvertising battles may increase total industry demand,
but may be costly to smaller competitors
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 18/48
PORTER’S 5 FORCES AND PROFIT
Force Profitability will be
higher if:
Profitability will be
lower if:
Bargaining power
of suppliers
Weak suppliers Strong suppliers
Bargaining power
of buyers
Weak buyers Strong buyers
Threat of new
entrants
High entry barriers Low entry barriers
Threat of
substitutes
Few possible
substitutes
Many possible
substitutes
Competitive rivalry Little rivalry Intense rivalry
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 19/48
SUMMARY …
As rivalry among competing
firms intensifies , industry
profits decline , in some cases to the point where an industry
becomes inherently unattractive .
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 20/48
COMPETITIVE POSITIONING SCHOOL OF
THOUGHT (“OUTSIDE IN”)
Based on Porter’s 5 Forces, generic strategy,
and value chain frameworks
In which industry should the organization compete?(Use Porter’s 5 Forces Model)
Which generic strategy to use? (Use Porter’s Generic
Strategy Framework)
How to configure the value chain to support the strategy?
(Use the value chain analysis framework)
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 21/48
GENERIC STRATEGY
According to Porter, competitive advantage , and thus higher profits will result either from:
Differentiation of products (distinctive, more
product features) and selling them at a premium
price , OR
Producing products at a lower price than
competitors
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 22/48
GENERIC STRATEGY (CONT.)
In association with choosing differentiation or cost leadership, the organization mustdecide between:
Targeting the whole market with the chosenstrategy, OR
Targeting a specific segment of the market
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 23/48
GENERIC STRATEGY FRAMEWORK
Cost leadership Differentiation
Cost focus Differentiationfocus
S
t r a t e gi c S c o p e
B r o a d
N ar r ow
Low cost Differentiation
NOTE: If 2 or more competitors choose the same box, competition will increase
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 24/48
GENERIC STRATEGY FRAMEWORK
Cost leadership Differentiation
Cost focus Differentiationfocus
S
t r a t e gi c S c o p e
B r o a d
N ar r ow
Low cost Differentiation
NOTE: If 2 or more competitors choose the same box, competition will increase
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 25/48
COST LEADERSHIP STRATEGY:
ADVANTAGES
• Higher profits resulting from charging pricesbelow that of competitors, because unit costs arelower
•
Increase market share and sales by reducingthe price below that charged by competitors(assuming price elasticity of demand)
• Ability to enter new markets by charging lowerprices is a barrier to entry for competitors trying toenter the industry
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 26/48
COST LEADERSHIP AND THE VALUE
CHAIN
With a cost leadership strategy, the value chainmust be organized to:
• Reduce per unit costs by copying, rather than
original design, using cheaper resources,producing basic products, reducing labor costsand increasing labor productivity
• Achieve economies of scale by high-volume
sales using high-volume purchasing to getdiscounts
• Locating where costs are low
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 27/48
COST LEADERSHIP AND PRICE
ELASTICITY OF DEMAND
• Cost leadership strategy is best used in a marketor segment when demand is price elastic, OR
• When charging a similar price to competitors atthe same time as increasing advertising toincrease sales
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 28/48
GENERIC STRATEGY FRAMEWORK
Cost leadership Differentiation
Cost focus Differentiationfocus
S t r a t e gi c S c o p e
B r o a d
N ar r ow
Low cost Differentiation
NOTE: If 2 or more competitors choose the same box, competition will increase
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 29/48
DIFFERENTIATION STRATEGY:
ADVANTAGES
• Products will get a premium price
• Demand for products is less price
elastic than that for competitor’sproducts
• It is an additional barrier to entry for
competitors to enter the industry
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 30/48
DIFFERENTIATION STRATEGY AND THE
VALUE CHAIN
Analysis of the value chain identifies in
what parts of the chain and through
which links superior products can becreated and customer perception may
be changed
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 31/48
DIFFERENTIATION STRATEGY AND THE
VALUE CHAIN
With differentiation strategy, the valuechain must be organized to:
• Create products that are superior to
competitors’ products in design, technology,performance, etc.
• Offer superior after-sales service
• Have superior distribution channels• Create a strong brand name
• Create distinctive or superior packaging
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 32/48
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 33/48
GENERIC STRATEGY FRAMEWORK
Cost leadership Differentiation
Cost focus Differentiationfocus
S t r a t e gi c S c o p e
B r o a d
N ar r ow
Low cost Differentiation
NOTE: If 2 or more competitors choose the same box, competition will increase
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 34/48
FOCUS STRATEGY: ADVANTAGES
•Lower investment costs required comparedto a strategy aimed at the entire market or
many markets
•It allows for specialization and greaterknowledge
•It makes entry into a new market more
simple
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 35/48
ALTERNATIVE TO 5 FORCES ANALYSIS:
RESOURCE-BASED FRAMEWORK
•Resource-based framework is designed tocompensate for disadvantages in traditionalmodels (like Porter’s 5 Forces)
•Emphasizes the importance of corecompetence in achieving competitive
advantage
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 36/48
RESOURCE-BASED FRAMEWORK
• Complicated and comprehensive analysis of 5 inter-related
areas:
Organization
Industry
Product markets
Resource markets
Other industries
• Focuses on competences, core competences, resources andvalue chain This part of the analysis includes an analysis of:
•Resources•Organizational competences, core competences andactivities
•Value chain
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 37/48
RESOURCE-BASED FRAMEWORK
ResourceMarkets
ProductMarkets
Organization
CompanyIndustry
CompetenceRelatedIndustry
Organization’s Products
New Markets
Substitutes
SupplierPower
Competitive Rivalry
Threat of new entrants
Buyer
Power
Threat of Substitutes
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 38/48
RESOURCE-BASED FRAMEWORK:
INDUSTRY
Focuses on analysis of competitors’:
•Skills and competences
•Configuration of value-adding activities
•Technology•Number and size
•Performance (focus on financial performance)
•Ease of entry and exit (barriers)•Strategic groupings
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 39/48
A NOTE ON STRATEGIC GROUPINGS
Strategic groups – the group of competitors
representing an organization’s closest competitors
Example:A group of branded clothes including Polo (Ralph
Lauren), Tommy Hilfiger, and Izod (Lacoste),among others, may be a strategic group, eventhough there are other lower quality brands thatare technically competitors
Example 2:Rolex, Tag Heuer, Tissot may be part of a strategicgroup that does not include Swatch, Timex, Seiko,
even though they are all watchmakers
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 40/48
RESOURCE-BASED FRAMEWORK:
PRODUCT MARKETS
Analysis is focused on:•Customer needs and satisfaction
•Unmet customer needs
•Market segments and profitability•Number of competitors to the market and relativemarket share
•Number of customers and their purchasing power
•Access to distribution channels
•Ease of entry
•Potential for competence leveraging
•Need for new competence building
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 41/48
PRODUCT-BASED FRAMEWORK:
RESOURCE MARKETS
Resource markets: where organizations obtainfinance, human resources, human resources,physical resources, technological resources
Analysis focuses on:•Resource requirements
•Number of actual and potential suppliers
•Size of suppliers
•Potential collaboration with suppliers (cooperation)
•Access by competitors to suppliers
•Nature of the resource and availability of substitutes
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 42/48
RESOURCE-BASED FRAMEWORK:
COMPETENCE-RELATED INDUSTRIES
Focuses on analysis of other industries withsimilar competences and which may produceproducts that can be substitutes of the
organization’s products
Analysis is useful to identify:
•Potential threats
•Other industries in which the organization maybe able to leverage their competences
•New markets
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 43/48
PORTER’S FIVE COMPETITIVEFORCES:
SAN MIGUEL CORPORATION
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 44/48
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 45/48
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 46/48
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 47/48
Tarlac-Pangasinan-La UnionExpressway to be completed on2013
Universal LRT Corp. Ltd. MRT Line 7from San Jose Del Monte Bulacan toNorth Avenue, Quezon City
Caticlan Airport with Trans Aire
- Daguma Agro Minerals Inc- Bonanza Energy Resources Inc- Sultan Energy Phils. Inc.,
Sual Power Plant
8/3/2019 SWOT and PORTER- -²S FIVE FORCES
http://slidepdf.com/reader/full/swot-and-porter-s-five-forces 48/48
END OF REPORT.
THANK YOU FOR LISTENING!