Nowadays, activities. It is effective in sectors such as

Nowadays, there are
many Strategy Analysis tools to better define the strategy that a company must
undertake in order to better prepare for the competition. Among them, the SWOT
and the BCG matrix make it possible to determine the efficiency and the
positioning of the company on the market.

 

During the strategic
diagnosis, using the SWOT Analysis is a very
practical tool to facilitate thinking. It is an indispensable tool in the
strategic planning process. It has the advantage of synthesizing the Strengths
and Weaknesses of a company with regard to the Opportunities and Threats
generated by its environment. The SWOT Analysis can create relevant strategies
to exploit a new potential or develop an existing deposit. It also makes it
possible to anticipate a threat weighing against the company’s activity. It
uses two different axes: the internal one and the external one. The internal
axis identifies the current characteristics of the organization, seen as
strengths or weaknesses according to the exploited activities. It is effective
in sectors such as human resources, production, or even in finance. This axis
makes is good to summarize the resources possessed and competing skills of the
company against the competition, but does not determine a key factor to make it
more valued. In the other hand, the external axis lists items that have a
potential impact on the business. The opportunities show the business
environment and the potential areas to develop. As for the threats, they
present current or future changes that may have a negative impact on the
company’s activities. The factors of the external axis are independent and are
related to the economic, demographic, technical, and political environment. A
typical mistake is to perform a SWOT Analysis at in an entire company, no
matter how big it is. This model is only relevant in a specific strategic area
of activity inside the firm.

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The other useful tool
during the strategic planning is the Boston Consulting Group’s product matrix
(BCG matrix). It allows the company to build and expand in the long term.
Thanks to it, businesses are able to position themselves in their investment,
as well as the development of the product on the market. The BCG matrix is
??divided into four parts, deriving from the market share (cash generation) and
the growth rate (cash usage). The Growth/The Star is when the product has a
high growth market and a high market share, means it is at the best of its
performance. When its market share falls, it positions itself in the Launch/Question
Mark phase where its market share is too small compared to the competition. Conversely,
when the growth market falls, the product is in Maturity/Cash Flow. This is the
time when companies are investing to better reach the expanding market.
Finally, when both the growth market and the market share are in decline, the
product is then in the Decline/Dog phase and risks being withdrawn from the
market because of its non-performance. Even if it is a simple tool, the BCG
matrix can be difficult to use in small businesses where the relative market
share is too small to quantify. It is also based on the concept that market
share can be achieved by spending more on the marketing budget.

 

 These two tools are effective for businesses
due to their arrangement in four phases that give a vision at a precise moment
of the market. Both prepare for decision-making, and help maximizing the
performance and minimizing the damage in case of a decline. Nevertheless, given
the speed at which a growing market may vary, the results of these analyzes may
change at any time. Indeed, these are based on the accuracy of the results,
itself dependent on the accuracy of the analysis on the short to medium and
long term, as well as the awareness of the internal and external environment
can quickly change. That is why, a regular update of the analysis is
recommended.