SWOT

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SWOT Internal Analysis
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SWOT Analysis
Strengths
Weaknesses
Internal
Threats
Opportunities
External
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SWOT AnalysisWhy use it?

• A SWOT analysis can be used identify the
  Strengths and Weaknesses of your organization, as
  well as the Opportunities and Threats revealed by
  the analysis of the external environment the
  external environment through tools like a STEEP
  analysis or Porter's Five forces Analysis.
• It is often used in strategic panning with the
  idea being to help develop a plan that takes into
  consideration many different internal and
  external factors, and maximizes the potential of
  the strengths and opportunities while minimizing
  the impact of the weaknesses and threats.

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SWOT AnalysisInternal Analysis

• Examine the capabilities of the organisation by
  analysing its strengths and weaknesses. Some
  management areas that are often considered during
  this analysis are
• ? Management capabilities
• ? Programming capabilities, and
• ? Financing capabilities

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SWOT AnalysisInternal Analysis Management
Capabilities

• Aim and Objectives Are the organisations aims
  and objective clearly defined and communicated
  (to both staff and customers).
• Organizational structure Is the organisational
  structure optimum for the customer. How well do
  different departments work with each other?
• Jobs Are jobs/work roles well designed and
  managed?
• Management Information System Do managers have
  accurate information to help them ensure they are
  meeting objectives?

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SWOT AnalysisInternal Analysis Venture
Capabilities

• Capacity What is the potential capacity of a
  venture to provide services/products? Does the
  current level of business match this capacity?
• Quality How is quality defined and measured?
  What mechanisms are in place for improving
  quality ? How is client satisfaction defined and
  measured? What is the level of client
  satisfaction?

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SWOT AnalysisInternal Analysis Financial
Capabilities

• Internal What is the organisations own ability
  to fund investment?
• External What are the organisations present
  sources of financing? How stable are these
  sources? What new sources might be available?
  (Note the overlap here with the external analysis)

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SWOT AnalysisExternal Analysis

• Look at the main points relevant in the
  environmental analysis (eg, from a STEEP
  analysis) and identify those points that pose
  opportunities for the organization, and those
  that pose threats (or inhibit performance),
• As well as using a STEEP you can also use
  user/customer surveys and decide whether the data
  reveals external opportunities or threats.

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SWOT AnalysisExample

• Strengths
• ? Willingness of staff to change
• ? Good location
• ? Perceptive as brand leader

• Weaknesses
• ? Low profitability
• ? Aging equipment
• ? Low share price

Internal

• Threats
• ? Take over by competition
• ? Shareholders unhappy
• ? Foreign companies with low labour costs

• Opportunities
• ? Develop overseas markets
• ? Use e-Business to lower costs
• ? Low interest rates

External
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SWOT AnalysisExample Identify Relationships

• Strengths
• ? Willingness of staff to change
• ? Good location
• ? Perceptive as brand leader

• Weaknesses
• ? Low profitability
• ? Aging equipment
• ? Low share price

Internal

• Threats
• ? Take over by competition
• ? Shareholders unhappy
• ? Foreign companies with low labour costs

• Opportunities
• ? Develop overseas markets
• ? Use e-Business to lower costs
• ? Low interest rates

External
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SWOT AnalysisCommon Mistakes

• Failure to lay the analysis out as a grid
• Not identifiable sources for external aspects
  (like a STEEP or Five Forces analysis)
• Confusing internal aspects with external aspects
  ie, confusing strengths with opportunities and
  weaknesses with threats
• Not using bullet points
• Too many bullet points
• Failure to make links (between strengths and
  opportunities and, weaknesses and threats)

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Nolan and Venkatraman
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SIX STAGES OF DP GROWTH
( Nolan )
Transition Point
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
Stage 6
INITIATION
CONTAGION
CONTROL
INTEGRATION
MATURITY
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1. Initiation Stage

• First Introduction of Computers
• Offline Batch Processing Labour and Cost Saving
• Little Management Interest
• Centralised Information Systems Development

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2. Contagion Stage

• Rapid Growth but still centralised
• Move to on-line systems
• Little Management Control, therefore
• IT expenses increase rapidly

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3. Control

• Management seek control computing projects
  subject to ROI
• Planning, standards and methodologies imposed
  through management control
• Backlog of application development scarce
  resources

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4. Integration

• Integration via telecommunication and database
  technology leads to heavy investment
  networks, servers
• User involvement and accountability in systems
  development
• ISD begins to provide service to users (as well
  as solutions)
• TRANSFORMATION POINT
• Data processing to
• Information and Knowledge processing

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5. Data Administration

• Information not processing drives application
  portfolio
• Database capabilities aid sharing of data and
  information
• Information shared with other organisations

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6. Maturity

• IT planning and development closely co-ordinated
  with business development
• Corporate system in place
• ISD and users share accountability for allocation
  of computing resources
• IT is a strategic partner within the organisation

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Nolans Work

• Nolan R. L., Managing the crises in Data
  Processing, Harvard Business Review, Vol 16, No
  3, March 1973, pp 81-91
• Nolan R. L., Managing Computer Resource a stage
  hypothesis, Communications of the ACM, Vol 16, No
  3, March 1973, pp 399 405.

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Venkatramans Business Transformation Levels
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Level 1 Localised Exploitation

• IT put to work successfully in 1 or 2 depts
  within an organisation
• Costs and savings are easily identified
• Investment expenditure is easily justified by
  cost savings
• Other obvious benefits service, speed, quality
• Little coordination needed
• Strategic view not necessary
• Confined to narrow areas of organisation

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Level 2 Internal Integration

• Departments implement an integrated IT platform
• Aim is to integrate business processes across the
  organisation
• Costs are obvious Savings not so obvious
• Benefits available only when IT platform widely
  available
• Investment expenditure less easily justified
• Needs a co-coordinating strategic overview
• Management required to overcome resistance and
  inertia within the organisation

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Transition

• We move from the
• Evolutionary Levels of Transformation
• To the
• Revolutionary Levels of Transformation

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Level 3 Business Process Redesign

• Business uses IT to transform the business
• Aim is to rethink core characteristics and change
  businesses processes across the organisation
• Permits the re-engineering of the internal value
  chain
• Substantial loss of jobs and Retraining
• Investment expenditure may be forced by
  competitor/competitive advantage activity
• High Cost - Considerable risk
• Management required to align business strategy
  with IT strategy

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Level 4 Business Network Redesign

• IT connectivity used to improve the external
  value chain
• IT used to improve business relationships with
  suppliers and customers
• Wider business relationships can become a virtual
  organisation
• Costs and Benefits?
• Management required to recognise how value chain
  activities can be improved by connectivity

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Level 5 Business Scope Redefinition

• Business scope review, IT enables the
  organisation in its strategic thrusts
• Diversification, Divestment, Consolidation,
  Mergers, Acquisitions
• Enlarging business Scope eg British Telecom
• Using its database as a source of business
• Shifting Business Scope
• Think about banks and financial institutions

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The strategic significance of business networks

• This is not about
• EDI Electronic Data Interchange
• EIOS - Electronic Integration between
  organisations
• This is moving data between organisations
• It is
• Strategically linking the business processes of
  organisations

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The strategic significance of business networks

• Vertical Integration
• This is redefining (usually) enlarging an
  organisations boundaries
• Accessing upstream or downstream capability
  value chains!
• Horizontal Integration
• Either across different business units in the
  business or by acquiring similar capabilities
• Think about hotel companies using a common
  booking system

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The strategic options of business networks

• Business Governance business relationships
  between participants
• Loosely Coupled relationships
• Tightly coupled relationships

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The strategic options of business networks

• Loosely Coupled relationships
• No bias between participants
• Dealings are at arms length via market
  transactions
• Involve many players
• Low added value
• Price based
• Can easily switch between suppliers

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The strategic options of business networks

• Tightly Coupled relationships
• Participants have a close and biased relationship
• Involves few players
• High added value
• Insensitive to price
• Switched to other suppliers with difficulty

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The strategic options of business networks

• IT Governance concerns the technological
  approach
• Loosely Coupled with IT common role
• Loosely Coupled with IT unique role
• Tightly coupled with IT common role
• Tightly coupled with IT unique role

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The strategic options of business networks

• Loosely coupled with IT common role
• Organisations trade trough san electronic
  infrastructure
• Do not gain competitive advantage from electronic
  advantage
• Competitive advantage comes from their power
  relative to other players
• Stock market system
• Foreign currency market

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The strategic options of business networks

• Loosely coupled with IT unique role
• Temporary competitive advantage
• Advantage comes from proprietary uniqueness
• Players can exclude others from participating
• May be some technically unique value added
  service
• Competitors react by neutralizing advantage

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The strategic options of business networks

• Tightly coupled with IT common role
• Tight and biased relationships
• Provides advantage from collaboration
• Network improves transfer of information
• Sharing of
• Sales or buying information
• Plans
• Market and business analysis

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The strategic options of business networks

• Tightly coupled with IT unique role
• Tight and biased relationships
• Offers opportunities for business network
  redesign
• Enables shifting of functions between
  participants
• Cuts out duplicated cost
• The aim is to increase the overall effectiveness
  and efficiency of value chain

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• Venkatramans work
• Venkatraman, N. "IT-Enabled Business
  Transformation From Automation to Business Scope
  Redefinition." Sloan Management Review. pp.
  73-87. Winter 1994
• The Corporation of the 1990s Information
  Technology and Organizational Transformationedite
  d by Michael S. Scott Morton

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• DeSanctis and Gallupe
• Time / Place Framework

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IT Technologies for Communications

• Several factors determine the IT technologies
  used to provide communication support to an
  organization
• Participants. The number of people sending and
  receiving information can range from two to many
  thousands.
• Nature of sources and destinations. Sources and
  destinations of information can include people,
  databases, sensors, and so on.
• Location. The sender(s) and receiver(s) can be in
  the same room, in different rooms at the same
  location, or at different locations.
• Time. Messages can be sent at a certain time and
  received almost simultaneously.
• Media. Communication can involve one or several
  media.

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Time / Place Framework DeSanctis and Gallupe
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Time / Place Framework DeSanctis and Gallupe
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Communications

• e-mail is the most used service of the Internet.
• Instant messaging services allow users to
  identify and exchange instant messages in real
  time.
• ICQ is the most popular instant messaging tool on
  the Internet.
• Messaging in wireless environments offer access
  to the Internet from cellular phones.
• Software agents are programs that execute mundane
  tasks for the benefit of their users.
• E-mail agents assist users with the often
  time-consuming task of managing their e-mail

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Communications

• Web-based call centers provide effective product
  support and deliver live customer-service
  capabilities for any online company.
• Peer-to-peer networks are systems that include a
  large number of small computer systems used for
  information exchange and sharing resources.
• E.g., Napster (napster.com)
• Chat rooms are virtual meeting grounds where
  groups of regulars come to gab.
• Chat rooms can be used to build a community, or
  to promote a commercial, political, or
  environmental cause

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Aims Objectives
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Strategy DefinitionAims/Mission

• Strategic Analysis, eg
• STEEP
• Five forces
• SWOT
• Nolan, Venkatram, DeSanctus and Gallup

• Corporate strategy
• External environment
• Strategy
• Aims (Mission statement)

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Strategy DefinitionExample Aims

• Become known as one of the top businesses in
  selected markets
• Secure long term survival
• Be known as a quality business that is customer
  driven

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Strategy DefinitionObjectives

• S pecific
• M easurable
• A greed
• R ealistic
• T ime framed

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Strategy DefinitionExample Objectives

• Be rated in market surveys as one of the top five
  businesses within two years.
• Gain an 80 rating in customer satisfaction
  surveys this year.
• Be rated first on quality in competitive customer
  surveys by next year.

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Strategy DefinitionBusiness Units

• Individual business units may have their own
  (sub) objectives
• It is important that these contribute to the
  overall aims of the organisation ie, at all
  business units operate synergistically.
• Eg, if an organisational aim was to grow its
  customer base, it would not be synergistic for a
  particular business unit to specialise in a
  sub-set of its customer base with the effect of
  reducing the number of customers

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Self Study

• Read Venkatramans papers
• IT enabled Business Transformation
• The strategic significance of business networks