A key meaning for shaping a strategy of an enterprise is born by its material and non-material assets, their size and structure, as well as opportunities of acquiring them. The group of material assets embraces: machines, devices, raw material for production, products, etc. When it comes to non-material assets, these group comprises of: knowledge and experience of employees, trust of customers, brand and qualifications of the managing personnel.
While planning a strategy, we need to take into account, which assets are owned by the company and which are not. A strategy should be planned in a realistic manner, i.e. it should not require resources bigger than those possessed by a company or those possible to be acquired in the future.
Strong sides of a business embrace such resources and skills, in which a company has a competitive advantage over current and potential competitors on the market. These are those assets and abilities that are significant from the point of view of creation of value for a recipient. They need to be created, and we should make every attempt to maintain them.
They enable a company to take a beneficial position on the market. These may be marketing assets (e.g. a product, a system of promotions, distribution), as well as factors of one of the spheres of company’s functioning (e.g. staff management, B+R). They may relate to assets and skills of the company in the scope of management, behavior on the market, creation of advantageous climate.
The bigger the advantage provided by the particular strong side of an enterprise, the stronger the company. In the SWOT analysis there is a need to specify at least several strong sides.
Examples of strengths:
– a good opinion of customers;
– position of a leader on the market;
– ownership rights towards a technology;
– significant qualifications of a management staff;
– possessed financial resources;
– product’s brand;
– well-organized service;
– loyal employees.
Weak sides are those assets and aspects of company’s operations, which limit its efficiency, block its development. They are connected with limited resources and insufficient skills. If they are not defeated in a timely manner, they may weaken the strong sides. A high number of weak sides, evaluated as significant, weakens developmental potential of a company and its ability to compete.
Examples of weaknesses:
– company’s debts;
– defective marketing;
– low quality of a product;
– low managerial competences;
– negative image of a company on the market;
– low financial assets;
– a strategic direction of the company vaguely specified.
Identification of strong and weak sides may apply to the whole enterprise, its all crucial aspects or to only those selected, e.g. there are some spheres of company’s operation differentiate (marketing, organization and management, etc.), which are taken into account. The spheres, in which you should perform the analysis, depends on the company’s needs.
While selecting strong and weak sides, take into consideration those filed, which you believe are significant. The following list will help you do that:
- earnings – profit generated by the company, costs, when a company breaks even, and whether there are no problems to do that;
- machines, equipment, objects – their conditions, whether they need to be replaced, where they are currently located, how to apply them, how they influence the products’ quality;
- raw materials – whether you possess a proper supply of raw materials, their quality, where you take them from, whether you have used them before, their price offered by suppliers, what influences this value;
- management and organization for he company – how do managerial procedures look like, what is the plan, what is the strategy, whether the organization holds proper skills, what are the company’s aims and why, what can be said about structure and organizational culture;
- personnel – what qualification and skills are held by managers and employees, is there any system of motivation and gratification, what is the atmosphere, whether the employees are loyal towards the company;
- marketing – who are the customers, why they buy the product, are they loyal, how much money they have, do they have any common features, why will they choose your product instead of the competitive one, how does the base of distributors look like, their engagement, do you motivate them, how does organization of sales and service look like;
- finances – whether you have a budget, a plan, prognoses, at your disposal, what are thy, whether the company possesses proper systems of control.
However, it is not enough to list strong and weak sides of the company. You need to evaluate them in terms of their force and significance. Otherwise, it would be difficult to construct a strategy on their basis. Here, point and weigh evaluation is applied. A way, in which it can be done has been presented in the article entitled Evaluation of strengths and weaknesses.