SWOT ANALYSIS | TOWS ANALYSIS

SWOT ANALYSIS: THE QUICK AND EASY STRATEGY PLANNING TOOL

2015-05-02T17:53:00.002-07:00

From board rooms to command centers, from business schools to strategic forums, the SWOT analysis is one of the most popular and effective planning tools. It gives a quick but clear evaluation of a business venture or project.

BUT WHAT IS A SWOT ANALYSIS?

As the name suggests, SWOT analysis is an evaluation of the Strengths (S), Weaknesses (W), Opportunities (O), and Threats (T) of a project. Let us now take a look at each of these elements separately.

STRENGTHS

This indicates the advantages of the project in question over others. In which ways is it better than other similar ventures? To understand this better, let us consider the example of Apple.

As we all know, Apple is known for great quality products, which are considered superior to those of its competitors.

Apple products are also supposed to be great looking. So whether it is an iMac, iBook, iPhone or an iPad, Apple products are known to display great design.

Apple also has a huge army of extremely loyal consumers, world-wide. These are people who would always use and buy Apple products, no matter what.

All these three points – better product quality, superior design and loyal consumer base can be considered as the strengths of Apple.

WEAKNESSES

This indicates the disadvantages of the project as compared to others.

To go back to the example of Apple – Apple products are known to be more expensive than its competitors.

In fact similar products can be twice as costly. This can be a major weakness of the company as the consumers might not be able to afford the Apple products they want.

Apple products also have major compatibility issues. From operating systems to software, from hardware to accessories, Apple does not synch well with products made by other companies. So, if you use an Apple iPhone but a mobile PC laptop, they will not work together. Similarly, you have to migrate to a whole new set of software when you get an Apple machine. Many consumers hesitate to purchase their first Apple product particularly because of this reason.

OPPORTUNITIES

Opportunities are factors that the project can utilize to its benefit. These often give a direction for future growth.

For example, in the case with Apple – the company stared out by making personal computers in 1984. Since then they have come out with the laptop, the iPad, the iPhone as well as the wristwatch. Except the wristwatch, every new product of Apple has met with great success in the market.

It can safely be said that Apple has been able to ride the recent trends and create new products successfully. Herein lies the greatest opportunity for Apple. If they continue with this tradition of innovation, they are likely to meet with more success.

THREATS

What can potentially create the greatest challenges to the venture in question? Threats tell us what we need to be wary of in the future.

For Apple, the greatest threat lies in the competition. Other companies have started bringing in products that are equally good and as well designed. These companies are also investing a lot of money and effort in Research & Development and designing. As a result, the gap in quality between Apple products and those of its competitors is steadily shrinking.

The day the consumers start looking at Apple as just any other company, the huge advantage they have could be lost.

BENEFITS OF SWOT ANALYSIS

Short and Sweet

This is the biggest advantage of a SWOT analysis. In very short, it gives us a clear indication of the current situation. There is no need to read pages and pages of reports. The SWOT analysis can also help in the following ways:

Guide us in taking decisions as to the future path to take.
Help us in creating policy decisions.
Plan a new venture or business project.
Help us in judging the progress of a certain project.

SHORTCOMINGS

The SWOT analysis however has a major disadvantage – sometimes it is too shallow. It does not take into consideration a lot of factors that may eventually be critical in determining the fate of a business venture.

For instance, the SWOT analysis of Apple does not tell us of the impact the death of the founder, Steve Jobs can have on the future of the company.

EASY, QUICK, CONVENIENT

However, the SWOT analysis continues to be an extremely convenient tool. Despite its shortcomings, it can help us get a clearer picture of the situation. Of course, it is best to corroborate the decisions taken by the SWOT analysis with other in-depth analysis.

SAMSUNG SWOT ANALYSIS

2015-03-20T23:50:00.002-07:00

Before we get into the discussion of SWOT analysis at Samsung’s company, let’s take a look first for the internal analysis of the company as follows.

INTERNAL ANALYSIS Samsung Company

The company is focusing on five major aspects, there are :

1 . Hardware

Samsung emphasizes more on hardware production and chooses not to develop software proprietary and content such as music, movies, and video games. Although software is estimated to have a greater margin in profit and a longer cycle economically, however, Samsung has its own strategy to focus on hardware and its’ devices and will collaborate with content providers when has been considered as feasible.

2. Vertical integration

Samsung has their external supplier outsourced while taking their attention more serious on an independent manufacturing activity. Samsung thinks that by controlling the manufacture independently, they can gain much on advance products. Samsung therefore is brave enough to invest their funds on chip manufacture. Samsung has great concern to have a low-cost as possible for their operation. This revealed on their choice of location, whereas Samsung operated 12 factories in China and India on 2003 with the objective is to have high profits with low wage rates particularly on technology sector.

Samsung’s clever was act manifested in how they prevent their commodity from stuck, by customize/ combining production as many as they can. As an example, half of their memory chips produced were special order made for Dell, Microsoft, and even Nokia. As a result, Samsung’s average price is 17% above the industry level.

3. Digital Product Innovation

Samsung is very fond of innovation, one of them are by doing changes in technology from analog to digital. Focusing on the investment of digital technology products, Samsung therefore can put their products into premium class. Samsung also applies Sashimi theory, that is, selling the product with high price on the launch day while it’s still fresh, and decrease it dramatically afterwards.

4. Product Diversification

Samsung aims to raise profit and price by selling its’ high quality products, not only for those with new technology, but it also includes design as well. This of course requires an innovative strategy that can generate new interesting products. CEO Yun has decided that Samsung will only sell high-end devices, thus requiring a high value of investment in terms of research. Such innovation about design applied not only for final consumer products, but also for important inputs. Consequently, this diversification has made Samsung different from its’ competitors, making it able to penetrate to each category of electronic products. Diversification also enable Samsung to have part on chip cycle which also utilized by several other electronic producers. With a detailed product positioning strategy, Samsung will then be easier to market their products to the right segment.

5. Digital-Convergence Strategy

Samsung has focusing its company to play role on digital technology products. Not only that, Samsung also manage to become a leader on digital era. Samsung’s digital convergence refers to two trends, that is, combining several technologies into one major product and several technologies into one network. As an example, Plam OS which is combined with a cell phone and a cell phone which is combined with a camera as of SPH-i700. By focusing on digital technology, ultimately this can lure the network everywhere.

Samsung SWOT Analysis

The following are the analysis of Strenghts, Weakness, Opportunities and Threats on Samsung’s company.

Strengths

Samsung has brand image embedded on a society
Samsung has initiated the digital age
Samsung offers a high quality products
Samsung constantly perform innovations on their products improvements
Technology developed align with changing times
Samsung has superior design on their products
Samsung has varied price and reachable price
Samsung has product diversification
Samsung is a high-end mobile headset supplier
Samsung holds the biggest global market share for thirteen items among Samsung products, including TFT-LCD, monitor and CDMA phones
On 2008 Samsung sat on the first position on US markets for cell phones, stood on the first chart for TV market share for nine times in a row
With an advance view, Samsung has made an improvement in history on research and development for semiconductor, including memory flash and non-memory, a custom by-request semiconductor, DRAM and SDRAM, and also product the finest LCD on its’ class, cell phones, digital devices, and many more
Samsung involved with leading partnership companies in the US

Weaknesses

Korean culture which emphasize more on hierarchy may lead into retardation for any creative ideas or different opinions
Korean corporate culture is inflexible
Limitation on experience in managing global company
The existence of high strain on employees to reach their goals making them ultimately try to sell classified technology of Samsung to its’ competitors

Opportunities

Products offered by Samsung mostly part of household products needed by society
Increase on society demand on electronic devices which already becomes a necessity
Level of prestige from the community that always want to have the newest and most advance electronic device
Influence on globalization that encourage marketing for electronic products without limitation
Demand from society on market change for products related to lifestyle, best practice, simple, and fast response

Threats

The existence of local product dependence on certain country making the market hard to penetrate
Other brand strength that dominates the market at earlier time
The presence of new more innovative products from other company
The presence of products from other companies that offers lower, more valuable price with the same quality
The economic instability that occurs on each country
Financial crisis that causes a decline in society purchasing power
Globalization era that might trigger European company to enter and penetrate Asian market

Conclusion

Samsung is a company that focuses on a technology. The company has conducted various improvements making it a company with well-known products. Strategies performed has a tremendous impact on its’ achievements. It focuses on brand image, product innovations, sponsorship, R n D, and design, which all of them reveal a good result. Even so, old Korean culture still firmly attached, which has impact on the management style making it not flexible.

Apple SWOT Analysis

2015-03-16T07:39:00.000-07:00

SWOT | TOWS Analysis: Before we go to the swot analysis of Apple Inc. We need to know about the company history. According to http://en.wikipedia.org/wiki/Apple_Inc. Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976, to develop and sell personal computers. It was incorporated as Apple Computer, Inc. on January 3, 1977, and was renamed as Apple Inc. on January 9, 2007, to reflect its shifted focus towards consumer electronics.

The Company Business

Apple Inc. designs, develops, and sells consumer electronics, computer software, online services, and personal computers. Its best-known hardware products are the Mac line of computers, the iPod media player, the iPhone smartphone, and the iPad tablet computer. Its online services include iCloud, iTunes Store, and App Store. Apple's consumer software includes the OS X and iOS operating systems, the iTunes media browser, the Safari web browser, and the iLife and iWork creativity and productivity suites.

APPLE SWOT ANALYSIS

Strength:

Brand Awareness and Reputation
Superior design
Apple Inc. have a large number of loyal user in the world
Elegant design and great quality of materials
Marketing, promotion | advertising capabilities
In term of sales Apple retail stores are the most profitable

Weakness:

Expensive | Highly Price. This is the weakens point of Apple because nowadays customer is easy to get a similar product but with lower price.
Lack of innovation
Incompatibility with another operating system. For example the function of Bluetooth on Iphone. The Bluetooth connection only compatible with another Apple device. User can’t using the Bluetooth connection with other brand.
Patent Infringements
Defects of new product

Opportunities

Demand of Smartphones and tablet are highly growing, Apple Inc can seize on this.
iTV Launch. It will support and increase sales in TV Market.
Obtaining patents through acquisitions.
Developing the software of the product. Users always want to using their device with easy and compatible with other OS.
Damaged from patent infringements
Increasing demand for cloud based service

Threat

Rapid technological change is the biggest threat which Apple and its competitors are experiencing now days. As customers are become more technology lover and they want more and more new products in very short time due to this, companies are facing pressure. So competition is very high and the one who cannot remain themselves with rivalry shortly be unsuccessful.
Other similar company such as Samsung and other brand continue to cut Apple's market share.
Android Growth. Android operating system is the main competitor of Apple OS. The dominance of Android decreases the iOS.
Increasement in Tax (2013) in US affect the Apple’s growth.

SWOT ANALYSIS of Student Example| A way to Sell yourself

2015-02-13T20:20:00.000-08:00

If you are student and want to know and try to create your personal SWOT Analysis, you can use the example below for your reference. Remember, if you can identified your strengths, weaknesses, opportunities, and threats then you will know what you should do and what strategy what will you choose for the future. This method absolutely the right way to "sell yourself".

Example of Student SWOT Analysis

Strengths

What do you do well?
What unique resources can you draw on?
What do others see as your strengths?

Good at character creation
Can talk and present in front of large crowds|public speaker
Pretty tech savvy
Good with detailed lines, cross hatching
Can draw with a graphics tablet
Variety of unique styles
Uses colour schemes well

Weaknesses

What could you improve?
Where do you have fewer resources than others?
What are others likely to see as weaknesses

Easily distracted
Jump to the final image without showing development
Not always confident with diverse poses
Don't read through the brief properly so I sometimes miss crucial parts
In order to get things right in my head I have to talk it through out loud
Stryggle to make fast decisions
Impulsive

Opportunities

What opportunities are open to you?
What trends could you take advantage of?
How can you turn strengths info opportunities?

The colleges printing facilities offer me a chance to work with new media
I have been taught how to make basic zines which I could sell at fairs for a small profit
Digital workshops
Weekly updates for potential job
Get to collaborate with others to make images and product e.g. badges, tee shirts and small characters prints

Threats

What threats could harm you?
What is your competition doing?
What threats do your weaknesses expose you to?

Others illustrators -- large competitive field
Similar styles to me -- don't want to blend in with the crowd
Getting easily distracted can hinder the quality of my work
Lack of development doesn't support my image making and is bad practise
Being impulsive can lead me to making drastic choice about my work which I could regret further down the line.

SWOT Analysis of Coca Cola

2015-02-04T00:23:00.000-08:00

In this article I tried to analyze SWOT from COCA COLA. In addition, I also create a simple strategy for COCA COLA in the future.

Strength

Large Market share, in this world it's very easy find this products.
Very strong advertisement campaign.
Customer loyalty to Coca Cola Brand

Weaknesses

Seen as an unhealthy product. Most people thingking, soda is dangerous for body and they often avoid this, especialy for kids.
Low popularity in the Middle East
Use of fossils fuels to make bottles.

Opportunities

Growing population in the world
Technological Advancements
Growing demand for healthier products

Threats

Exchange rates in different countries.
Tight and large competition
Growing global warming problems.

Strategy Option

1. Coca Cola can create a healthier products which is more appealing which will also help them with the threat of competition

2. They can buy local products to help break into the middle east market and also more minimize exchange rates

3. Coca Cola can build a more sustainable bottle that doesn't use fossil fuels and is also more recyclable to help with global warming.

1. Coca Cola need to make their product healthier so they can get a better image and also target the rising demand for healthier products.

2. They need to use the rise in technological advances so they can build a more sustainable bottle and not use a fossils fuels.

3. They can try to target a different market in the Middle East. The growing population has opened a lot more markets everywhere and they can try to target a different one to become more popular in the Middle East.

1. Coca Cola Have a strong customer loyalty so they can afford to increase the cost of their products in order to tackle the different exchange rates.

2. Coca Cola have strong advertisement campaigns. If they come up with better and smarted ways to advertise then they can easy compete with other brands.

3. Coca Cola have large market share. Because of this they can are more popular compare to other brands and they can try to make partnerships with other organizations and together try to battle global warming

1. The rise in population has opened up more markets which Coca Cola can target to increase their market share

2. They can take advantage to technological advances to create better advertisement campaigns.

3. They can make a healthier product to meet the demand for healthier products which in turn will also increase their customer loyalty

Hopefuly the article about SWOT analysis of Coca Cola above useful for you.

SWOT Analysis Examples|for your Business

2015-01-24T03:15:00.002-08:00

Before we start to run our businesses and taking a decision, it very is important to analyze all factors and situations. If we do that, certainly there will be fewer chances of making mistakes and designing strategies that won’t work. Several analytical tools are available, one of them being the SWOT Analysis. So, before you start using and implementing a SWOT Analysis template on your businesses plan, then you should understand what this analytical method is all about.

I already publish the article about SWOT|TOWS ANALYSIS SWOT definition in this blog. Lets review again, SWOT analysis is a strategic planning method used to evaluate and identified the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. SWOT analysis is used to list down favorable and unfavorable factors that go against a particular situation. It is analyzes Strengths, Weaknesses, Opportunities and Threats that are associated with a situation by considering all the internal and external factors of the business. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.

First thing you need to do to create SWOT analysis is try to defining a desired end state or objective. With this strategy, business director can understood whether a situation has enough aspects in its favor and ultimately worth being pursued. Well, that is review for SWOT definition. To help you understand better how it works and how to write a SWOT analysis, it may be a good idea to see the SWOT Analysis examples below.

Yamaha Motor SWOT Analysis

Here is the strengths:

Excellent|outstanding branding, promotion| advertising and worldwide distribution.
Yamaha Motor Corporation has 53,958 employee (as of December 31, 2012)
Major brand in motorsport like MotoGP 250cc and 500cc, World superbike etc.
Yamaha produces scooters from 50 to 250 cc or 3.1 to 15.3 cu in). The original layout is still widely used in this application. Maxi-scooters, with engines from 250 to 850 cc (15 to 52 cu in) have been developed for Western markets, and a range of motorcycles from 50 to 1,900 cc, including cruiser, sport touring, sport, dual-sport, and off-road
Extremely high Size and reach of company.

Here is the weaknesses:

Expensive price for model like R15, R1

Here is the opportunities:

Two-wheeler segment is one of the most growing industries. A lot of People in developing countries like India or Indonesia prefer to use motorcycle then a car or four-wheel vehicle
Export of bikes is limited i.e. untapped international markets

Here is the threats:

Strong competition from other brand
Dependence on government policies and rising fuel prices
Better public transport like MRT and busway will affect two-wheeler sales

With the SWOT Analysis example above, hopefuly you can easily understand how to use it, so you can analyze a business situation in a comprehensive way.

Honda SWOT Analysis

2011-05-22T21:05:00.000-07:00

Honda is one of the best as well as a leading company in the market, the which is producing well with the help of all the latest and innovative technologies. Apart from automobile, Honda is one of the best and the Largest producer of engines. Honda was the one, the which Compete with Nissan and achieved the highest productivity. Honda was the first Japanese-based automobile manufacturer, the which produced the luxury-based brand. This company is thus working well and generating effective outcomes. Apart from this, numerous threats as well as Weaknesses are there the which plays an Important role in weakening this company. Therefore, in order to analyze the weak areas and to highlight the strong areas of a company, SWOT analysis is done the which results in better and productive outcome. (Dyck & Neubert, Pg 624, 2008)

Below mentioned is the SWOT analysis of the Honda Company.

Strengths

• High and powerful research and development R & D

• Innovation

• Best market share leadership

• Strong and powerful brand equity

• Different and unique products

• One major strength is the revolutionary engine technology with the help of the which Honda is Gaining success day by day

• Popularity is termed as one of the best strength of the which results in betterment for the company

Weaknesses

• Cost structure of the Honda is high as compare to other automobile manufacturers

• Apart from Nissan and Toyota, Honda requires privileged purchase deposit

• Honda focus more on international deposits as compare to domestic deposits

• Civic model is Consider as one of the major weakness for the Honda Company

• Honda products are termed as inoffensive in terms of style and design

• Prices for non-luxury vehicles are far high as compare to other manufacturers

• In truck line, the Honda Company is not offering strong products and proposals

Opportunities

• Honda has the best opportunity to use its R & D in producing cars According to the needs and demands of Their customer. This is only possible Because of the increase is in demand for less pollution cars.

• Emerging markets is one of the best opportunity for this company

• Various models there are the which caters the lower segment

• Fuel efficiency is now a days termed as one of the best opportunity the which cans results in the best productivity for the company

• Alliances are the best opportunities for the Honda Company

• Honda cans increase of its production by focusing on sales and research

• cans They gain more popularity by doing better research and development

Threats

• One of the major threat is the economic slowdown

• All the external changes for instance taxes, politics as well as government are the major threats for the Honda Company

• Another threat is the lower cost competitors

• Price war is Also Consider as an Important Threat for this company

• Oil prices are contributing a lot Towards the loss of the Honda company

• Second movers are the major threat for the Honda company

• Substitute products are the major threats for the Honda company

REFERENCES

Aaron Frank, (2003), Honda Motorcycles, MotorBooks International, page 192

Bruno Dyck, Mitchell Neubert, (2008), Management: Current Practices and New Directions, Cengage Learning, page 624

Google: Swot Analysis

2011-04-25T04:25:00.000-07:00

SWOT | TOWS Analysis: Before we go to the swot analysis of Google, lets try to remember the Google history. Google was started as a research project by two Stanford PhD students named Sergey Brin and Larry Page. They registered the domain name google.com in the year 1997 and in September 1998, it Became a privately Owned incorporate Google Inc. With its extensive research on search algorithms and use of state of the art technology, Google is successfully established its brand name in internet search engines market. By the year 2004, Google Came up covering over 75% of U.S. web search market. Though Google is a dominating player in the internet searching market, it has to Compete with its Rivals Nowhere in this field long time 'there is no entry barrier. Google cans expand / change its business model to survive in this best-search engine race.

SWOT Analysis:

Strengths:

Google - Already number one search engine has established a brand name, in the which its users trust. It's dependable, reliable and fast.
Google's end user needs very little marketing as the name Itself is getting word by mouth publicity.
Google has a simple interface and it Gives comprehensive results without confusing its users.
Google has a low operation cost as it uses low cost Unix web servers for indexing Millions of web pages across the Internet.
Google has hired PhDs WHO are continuously working hard in order to enhance the search algorithms and make searching faster, efficient and relevant.
By 2003, Google has already powered over 75% of the 300 million searches conducted daily in the U.S. and 300 million outside the U.S. plus
Provides an interface to Google's 88 languages to make it comfortable to search for its users in different countries.
Google uses state of the art search technology to index pages regularly in order to give most updated results to its users.
Also Google weights the votes and Ranks web pages with its PageRank technology to give its users access to most Important pages first.
Google is not biased Towards advertisers. It clearly separates relevant advertisements and actual results by giving "Sponsored Links" tag to sponsored results Pls user searches to get information with Some keyword. Moreover, it Ranks Also sponsored links to keep most relevant sponsored links on the top.
Google offers localized search called "search by location" Nowhere cans users get results showing vendors, products and services Nearby Their areas.
Also Google has a range of innovative additional services like Images, Groups, Directory, and News. Google Did not complicate its website by making Itself a portal, rather it kept tabs for these services on its homepage so users cans Easily navigate and That Also keeps the website as simple as it was Earlier.
Also Google has come up with solutions for wireless handheld devices, personalized toolbars, catalogs the which are added essence strengths.
Google Quickly routes the user to the webpage and does Linger for ad revenue.

Weaknesses:

Many spammers manipulate Google's ranking technology by creating dummy sites with Thousands of links to pages That They wanted Google to rank highly.
Google's link-based ranking did not employ the actual traffic analysis.
Google's Cost Per Click advertising charging and ranking policy is confusing and makes it Difficult for marketers to Predict Nowhere Their ads would be positioned and how much They Would cost.
Google's contextual advertising was perceived by marketers to be less effective in generating sales Because visitors to web pages showing editorial content Searchers Than were the resource persons as less likely, to be ready to buy.
Contextual search algorithms are not 100% perfect and many a times make Mistakes.
Google's localized search algorithms Sometimes too result in errors due to automated indexing.
Google's business model is complex, depending upon both google.com and mass market portals for its revenue.
Although Google is a dominating player Among the search engine websites, only 50% to 65% of web search queries are accurately Answered by it.
Google does not have "sticky" like Yahoo! And MSN cans have the which attract users.
Google does not have highly personalized search by which it Could charge users with switching costs if They Decide to leave Google's services.

Opportunities:

Google cans increase of switching costs by tracking users' search histories with Their permissions and Could Remind users through emails for the relevant search updates as per Their personal interest.
• Google cans changed from a mass-market portals like Yahoo and MSN and cans increase of switching costs for its users.
• Google cans add "sticky" like chat rooms and email systems to attract users and to survive in tough competition.
• cans enhance Google's personalized and localized searching and cans Also add localized listings of paid advertisers.
• Google cans start new services like multimedia, product search, private databases, and print media.
Google cans • Also merge with an established mass-market portal to lock in large numbers of users and advertisers.
• Google cans start giving full-fledged services on hand held mobile devices to capture markets beyond conventional internet.

Threats:

Google partially Depends upon Some portals like AOL. Getting those contracts terminated, Google Would lose considerable share of its revenue.
There is no long-time entry barrier in this business. Many competitors cans emerge in coming years with Same services, better interface and names and cans catch up Google's market.
Google's confusing Cost Per Click rankings and charging policy disappoint Could Would its advertisers and companies start loosing many of Them.
Competition and Rivalry:
Portals like Yahoo Provide more services and solutions with conventional search Than Google do. Google Would start loosing its users due to added attractions in. Such portals.
MSN is coming up with its new operating system, called "Longhorn" which would be having "implicit query" feature. Longhorn search will from be Able to search the web, blogs, news sources, the hard drive files, emails plus attachments all from a keyword search without a browser. Users Will Be Able to search directly from already established Microsoft programs like MS word. Would this handcuff users and ultimately It would harm Google's market.
Overture has been Google's old competitors. Though Google has more advertisers acquitted Than Overture, Google's share of market revenue lags behind overture by 20% and there is always competition for getting collaborated with well known mass-market portals like AOL, Yahoo and MSN.
Google's scale Might Also changed from a liability in order to cop up with new and enhanced search techniques if company's ability to modify its algorithms and database architecture was constrained by its server infrastructure and the size of its index.
If Google comes up Becoming a portal, it May lose its simplicity and comprehensiveness Because of the which it is a favorite Among its users.
Google cans get trapped in. Regarding privacy issues if it decides to go for highly personalized search for the which it has to capture a user's personal information.
If Google decides to merge with Some already established mass-market portal, it will from start loosing its brand name well earned.
Recommendations:
Google's core competence is its strong search technology, the which Gives accurate results to its users and That Also at the right place without misleading Them. Google Should concentrate on making its search engine much more accurate, relevant and dependable the which is most Important thing as far as the user's objective is Concerned. Getting more users Would Also help the company in getting more advertisers and ultimately earning revenue.
Should Google start giving services like print, multimedia, travel, mail, Instant Messaging, etc. to Compete with one-stop portals like Yahoo and MSN, but without changing its simplicity and comprehensiveness. Google cans by putting simple users navigate links on its homepage and at the Same time it would be Able to sustain its traditional looks.
Google has already started contextual and localized search solutions. It Should improv the quality and relevance of results of these services as well as gathering REVENUES Should start from advertisers Who Are covering perform certain areas and willing to pay only for the results the which are accessed by the users of the area in the which They are Providing services or products.
Google Should Also put in Efforts to improv its search algorithms and stop spammers from spoofing and getting Their pages Ranked high.
Google Should Also start Providing personalized search solutions by Storing users' information with permissions Their comfortable and making a web search for Them Pls They come back. Would this help the company in generating long term relationships with the customers.
Google Should regularly take feedback from its advertisers and Should make changes in its charging and ranking of policies if it is Appropriate for both the parties as well as in favor of search engine users.
Google cans • Also generates revenue by indexing databases of large organizations and Providing Them a private search solutions.

Conclusion:

It is not recommended for Google to merge with mass-market portals. Though That Would Help Google in SECURING users and advertisers but Also It would harm Google's independent growth. Google has cutting edge technology and excellent minds behind it and use it Should That in Providing users with 100% relevant search results. Though rival portals are coming up with strategies to handcuff users but Would users finally choose the one WHO Gives most accurate search results. As far as profit is Concerned, locking in maximum market from quality services automatically Would help Google in attracting more number of advertisers to make revenue from.
Thus, Google Should keep updating its technology and services with the Same simplicity and comprehensiveness as it has been since its establishment Providing.

SWOT Analysis Method

2011-03-31T00:03:00.000-07:00

The implemented of SWOT analysis can be very useful for decision-making, and the SWOT template enables initiative thinking, rather than instinctive reactions.

Normally, the template of SWOT analysis presented as a grid, comprising four sections: Strengths, Weaknesses, Opportunities, and Threats. The following SWOT template includes sample questions, whose answers are inserted into the relevant section of the SWOT grid. The questions are examples, or discussion points, and obviously can be altered depending on the subject of the SWOT analysis. Note that many of the SWOT questions are also talking points for other headings - use them as you find most helpful, and make up your own to suit the issue being analysed. It is important to clearly identify the subject of a SWOT analysis, because a SWOT analysis is a perspective of one thing, be it a company, a product, a proposition, and idea, a method, or option, etc.

Here are examples of what a SWOT analysis can be used to assess:

a company (its position in the market, commercial viability, etc)
a method of sales distribution
a product or brand
a business idea
a strategic option, such as entering a new market or launching a new product
a opportunity to make an acquisition
a potential partnership
changing a supplier
outsourcing a service, activity or resource
an investment opportunity

Be sure to describe the subject for the SWOT analysis clearly so that people contributing to the analysis, and those seeing the finished SWOT analysis, properly understand the purpose of the SWOT assessment and implications.

Creately for Online SWOT Analysis Templates

2011-03-22T02:49:00.000-07:00

Creately for SWOT Analysis Templates

Creately is an online collaborative diagram software for creating free SWOT diagrams to analyze the internal and external factors that may affect your business.

Free SWOT Analysis Template

* Easy to use web interface to edit & create SWOT templates
* Ready-made templates for online SWOT diagrams
* Easy online collaboration with shared team projects
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SWOT | TOWS Analysis with Example

2011-03-05T17:54:00.000-08:00

TOWS | SWOT Analysis is a planning method used to analyse the Strengths, Weaknesses, Opportunities, and Threats involved in a business venture. Beside that, SWOT analysis also can be used for identifying the internal and external factors that are favorable and unfavorable to achieving objective.

A SWOT analysis may be incorporated into the strategic planning model. An example of a strategic planning technique that incorporates an objective-driven SWOT analysis is Strategic Creative Analysis (SCAN). Strategic Planning, including SWOT and SCAN analysis, has been the subject of much research.

SWOT or TOWS Matrix is a matrix table that contained the Four SWOT factors and Four categories of Strategies.

The Four Categories of Strategies are :

1. Strengths-Opportunities (SO) Strategy

2. Weaknesses-Opportunities (WO) Strategy

3. Strengths-Threats (ST) Strategy

4. Weaknesses-Threats (WT) Strategy

Examples of Four Strategies that It might be:

Strengths

Strengths are the strong areas or attribute of the company, which are used to overcome weakness and capitalize to take advantage of the external opportunities available in the industry. Examples of what your strengths might be:

Any other aspect of your business that adds value to your product or service.
A new, innovative product or service.
Quality processes and procedures.

Weaknesses

Weakness are painful for the company means these are the weak factors which needs to be improve in future otherwise if they exposed to the competitors they can take the advantage of it. A weakness could be:

Lack of marketing expertise
Damaged Reputation
Undifferentiated products or services ( ex. In relation to your competitors

Opportunities

Opportunities are the chances exist in the external environment, it depends firm whether the firm is willing to exploit the opportunities or may be they ignore the opportunities due to lack of resources, Example of Opportunities might be:

A developing market such as the internet
Social changes (for example demographics)
Merger, joint venture, or strategic alliance

Threats

Threats are always evil for the firm, minimum no of threats in the external environment open many doors for the firm. Maximum number of threats for the firm reduce their power in the industry, It could be:

New competition in the market, possibly with new products or services
Price wars
Economic conditions
Political changes
Competitor oligopoly or monopoly
Taxation
Availability of resources

One of the best example in Business is the Starbucks Corporation using the four tools (Strengths, Weakness, Opportunities and Threats)
Quality processes and procedures:

Strength

Starbucks is the largest coffeehouse company in the world and one of the very competitive organization worldwide.Aside of that starbucks corporation is a very profitable organization, earning in excess of $ 600 million in 2004. While the company generated its revenue of more than $ 5000 million in the same year. One of the strategy that can bring them as the world best coffee is their strong ethical values and ethical mission statement as follows " Starbucks is committed to a role of environmental leadership in all facets of our business.

Weaknesses

The bad side of the organization is that they are dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise. But the organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk.

Opportunties

The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge that's why they claim to be as the largest coffeehouse nationwide.Starbucks are very good at taking advantage of opportunties. Like last 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD. Other is that they give stuff like souvenir items for their loyalty customers.Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.

Threats

Starbucks are exposed to rises in the cost of coffee and dairy products that's why many of the competitors are trying to follow the same taste of coffee in starbucks. Since its conception in Pike Place Market,Starbucks success has lead to the market entry of many competitors and copy cat brands that pose potential threats. Even though their are a lot of threats in starbucks corporation, But still the starbucks uncompromising that they will grow .

SWOT Analysis: How to Create a useful one

2011-02-25T03:15:00.000-08:00

Managers need to plan and organise SWOT analysis so that the people and processes deliver the desired results. The idea is simple; the execution is harder to do well. Lets see this interesting video below

Microsoft SWOT |TOWS ANALYSIS

2011-02-21T06:29:00.000-08:00

This about Microsoft SWOT Analysis.

Strengths

1. Some strengths of Microsoft are its name recognition and its rapid product development. The Microsoft Office productivity suite (Word, Excel, Outlook, etc.) are widely used throughout the business community. Microsoft is also known for releasing new product updates and product fixes throughout its network.

Weaknesses

2. Microsoft did not recognize the growth opportunities of the Internet; therefore, Google was able to get a foothold in the search engine arena.
Opportunities

3. Microsoft is expanding into the video game market by producing items such as the Xbox.

Threats

4. Microsoft has numerous court battles with other entities regarding antitrust and software developer lawsuits.
Next steps

5. With Microsoft, as with any company that performs a SWOT analysis, the next steps are to begin to work to enhance strengths, minimize weaknesses, capitalize on opportunities and address threats.

Starbucks SWOT Analysis and Strategy-Tactics

2011-02-12T21:26:00.000-08:00

In Marketing Planning and Control, we learn to combine the SWOT analysis with STEEPLE / C to produce a full understanding of a brand. I tried to analyze the SWOT from Starbucks. In addition, we also make a strategy and tactic Starbucks future.

SWOT Analysis

Strengths

1. Starbucks is the leading retailer and roaster for brand specialty coffee in the world.
2. Strong brand image with the motto ‘The Starbucks Experience’.
3. Starbucks is a global organization with more than 16.000 retails in 48 countries in the entire world.
4. One of the strongest franchises in the world with more than 6500 licenses shops in the world.
5. Starbucks is known for providing superior products and services.
6. Starbucks offered both functional and emotional benefits.
7. Starbucks is number 7 on Fortune Magazine's "100 Best Companies to Work For" for 2008.
8. Have loyal customers in all of Starbucks’ existing countries.
9. High quality control in all Starbucks’ retails.
10. Have a consistent high quality of service.
11. Sophisticated atmosphere typical of the Italian Coffee houses, music, interior design and artwork.
12. Outlets positioned in high street locations, malls, within other businesses areas like offices building.
13. Wi-Fi Internet service in all of Starbucks retails.
14. Fast coffee serving.
15. The process of preparing the product does not need highly sophisticated technology.
16. Have a lot of flavors variation.
17. Limited number of strong competitors.
18. High market share and market growth.
19. Always aim to help support environment, ex: by using recyclable tissue.
20. Always treat the employees as a partner not just as employees.
21. Welcome all questions, comments and feedback where customers could send it by email, sms or just inform it in Starbucks retails.
22. Have a Starbucks Workers Union which helps employees to inform their thoughts to management.

Weaknesses

1. High pricing which cost not all kind of market could buy Starbucks’ products.
2. Starbucks considered ‘American Global’ which cost sentimental issue for customers in some countries.
3. Too focus on US domestic market.
4. Starbucks refuses to guarantee that milk, beverages, chocolate, ice cream, and baked goods sold in the company’s stores are free of genetically-modified ingredients.
5. Because of its perfectness of employees service, some employees complaints about the management which push them to always be perfect. That is why they make Starbucks Workers Union.

Opportunities

1. The potential employees are educated people which make it easier to train them.
2. Customer is not price sensitive.
3. Could be able to change negative image of coffee into positive one.
4. High consumerism in Indonesia.
5. Easier to penetrate market because what it sells is the fulfillment of self esteem and need to be love or to belong to community which is the major reason why peoples buy a product.
6. Strong financial support.
7. High growth of economy and market in Indonesia, especially in urban areas.
8. The democratic economy policies in Indonesia make it easier for Starbucks to expand their business.
9. Peoples in Indonesia positioned Starbucks places as one of the best meeting point.
10. Could diverse their product not only in coffee.
11. Many of Starbucks coffee are using organic beans.
12. Some of Starbucks beans are harvested in Indonesia island of Sumatra and Sulawesi. Starbucks purchasing high quality beans in these island at premium prices to help farmers to support their families and invest in a sustainable production. Starbucks paid an average price of $1.20 per pound against the commodity average price of $0.40-0.50 per pound

Threats

1. Global financial crisis which make peoples tend not to spend too much money.
2. Low income in Indonesia makes it hard for Starbucks to penetrate more market segmentation.
3. Sentimental issue to the bad effect of coffee from society.
4. Some people believes that Starbucks turning the world into a giant corporate generic mess.
5. Critics said that it exploits farm workers in third countries.
6. It said that Starbucks domination driving small cafes out of business.
7. Issues stated that Starbucks exploit their workers by paying a very minimum wage with a very high standard of work they need to fulfill.
8. Threats of substitute products and services include other drink items such as colas, teas or juices that are sold in retails.

Strategy and Tactics for Starbucks

Strategy

Strategy for Starbucks in Indonesia for the next 1 year that we proposed is to make a campaign called Starbucks for health. This campaign will focus on the health benefits that peoples will get from drinking a cup of Starbucks. We will change people perception about coffee into positive one and cooperate with other companies in Indonesia to show our support in people health.
The fact is that coffee actually one of the healthiest beverages billions of people consume regularly.

The average of 300mg coffee with exercise increase energy by 20% and decrease fatigue level while burning fat increased 107% greater than without caffeine. This can be happened because coffee contains hydroxycitric acid and chromium that can increase up to 30% in metabolic rate. It might guard against gout, diabetes and Alzheimer's disease.
Studies has shown positive results that compare consumption with diabetes rates, including reports that suggest people who drink two cups a day were 50 percent less likely to develop diabetes and also has been proven by doctors. The trouble comes when people start adding sugar and cream to their coffee, or even worse, buying thick, blended drinks with whipped cream on top.

Coffee when consumed in excess can be very addictive, stimulate, and a mood charger.
A large amount of coffee or caffeine consumed all at once can have a negative effect on blood. Too much coffee over time can stain people’s health.
We believe that this negative perception of coffee could be a threat to Starbucks. But we also see this as an opportunity when we can actually change people behavior in Indonesia to consume healthy coffee and make it as part of their life.

Tactics
Product:
We will create a new flavor of Dark Coffee with Fruits topping. This coffee can also be added with skim milk. Dark coffee is the best coffee for health considered it has not been mixed with full cream milk, whipped cream, etc. Fruits topping in this product is a real fruit, not blended with the coffee but just a complementary to add more vitamin while drinking the coffee. For people who want to add milk in it, we will just add skim milk because it contains low fat rather than full cream milk which contains fat for body.

This product will provide a free one fruit topping. But if people want to add more than one topping, they could by add Rp 5.000, - for each coffee. The size of the product is the usual size of Starbucks cup where a white cup for hot drinks and a transparent cup for cold drinks. This tactic will be launch and develop for one year and continue to be one of Starbucks flavor for years after.

Price:

The price for this product is Rp 29.500, - for tall size, Rp 34.500, - for grande size and Rp 39.500, - for venti size.

Place:

To support Starbucks for Health Campaign, more places will be a 24 hours Starbucks retails where Starbucks will also open 10 retails per year. This will be a convenience to customers where they can decide what time they would like to drink a hot or cold Starbucks coffee. Places that will be open for 24 hours are Starbucks Kemang Village, Citywalk, Rest area in Karawaci Freeway and Summarecon Serpong. This will support some of Starbucks 24 hours store in EX and Sarinah. This tactic will start immediately and finish in 2 months.

Promotion:

To communicate the message of healthy coffee we will use:

1. Advertising
Advertising for Starbucks will be done by advertising in magazines and newspapers. This will be conduct by one advertising per month.
Another kind of advertising is by creating roll banner in retails. The message of the advertising is to communicate the benefits of drinking a cup of coffee in daily life. The banner will be displayed for the first 3 months and there will be a change in design and displayed for another 3 months and continuously for one year.

2. Sales Promotion
Sales promotion that will be conduct is a buy one get one Starbucks Dark Coffee with toppings by using BCA Credit Card. This will be implemented for one year.
Other tactic is cooperating with GNC, companies that produce vitamins for health. When customers buy Starbucks for Rp 500.000, - by combining recipients in one month start from the first recipient, they will get 10% discount when buying GNC product in any amount. This will be conduct for the first 6 months.

For the next 6 months, Starbucks will cooperate with Fitness First. If Starbucks customers buy a total of Rp 100.000, - in one transaction, they will get a free trial voucher in any Fitness First. This tactic will be implemented in 6 month after cooperating with GNC tactic.

SWOT ANALYSIS | TOWS ANALYSIS The Body Shop

2011-02-11T18:07:00.000-08:00

...However, to carry out a more in depth analysis we also used SWOT analysis or TOWS analysis, which is a measure of the strengths, weaknesses, opportunities and threats of the business, in order to see how the external pressures influence the business and how they can react to them.

This is about The Body Shop SWOT |TOWS analysis

Internal factors:

Strengths

Brand (name, image, ethic natural ingredients)

Experience, financial ... expertise of L’Oreal

Body Shop targets a niche market. By stating that it is not testing its products on animals and by appearing to have an ecological profile, it has appealed to customers with ethical issues. Being the only shop in the shopping centre that sells ecological

Increased awareness of organic and eco friendly products (89% avoid synthetic chemicals in personal care goods)

Lack of Marketing, guerrilla/viral strategy

Connection to political issues

Strong customer community

Strong social mission

Lack of shareholder "consideration"

The first to break the market

Weaknesses

Loss of trust from different... the supply chain (publication...)

Number of stores in the UK

Not "purple" in the US Market (they have been copied)

Opportunities

Increased interest of men in their

(The Metrosexual factor)

Threats

Slower distribution (because of the chemical legislation)

Unstable supplies of ingredients, materials and

On the other hand the collapse of banking institutions and economy indicates

tougher times ahead for anybody trading on the high street.

Exchange rate. The fall of pound indicates higher prices for imported ingredients and products

New legislation banning animal tested products and the marketing of such policy may raise the competition.

Strengths

The Body Shop International has many strong traits of strength that have catapulted them into the limelight throughout the years. Many of them are extremely unique to their business which also grips them into political controversy and "drama" as they undergo "business as usual".
Their first strong strength revolves around The Body Shop's lack of a traditional marketing strategy. Instead, their focus rests on a viral marketing strategy where consumers/customers take the burden of advertising upon The Body Shop and tell their friends. It is completely free and is proven.

Building on their lack of a marketing program – The Body Shop has built an incredibly strong community of customers as they build up their "trade" dollars. Entering the viral strategy requires customers that are willing to go out of the way to "trade" and to tell their friends about the entire experience and their incredible community supports this strategy.

Their strong social mission helps to build upon the previous strength as another strength. Not only is The Body Shop paving the way for corporate responsibility and community engagement – but they are building a clientele that wildly supports their views and once again will tell their friends about it. The fact that they are changing the world seems to be just a small afterthought.
The Body Shop has many other strengths that stay out of the norm of traditional business. Their lack of shareholder "consideration" helps them to maintain their mission without...

Source:Mintel national statistics

TOWS Analysis of Blackberry

2011-02-09T00:32:00.000-08:00

When Research In Motion Ltd. brought the BlackBerry to the market, much of the way business used to be done is now anything but the same old, same old. Also, with its acceptance into business came its acceptance into the general population, but with that came the growth of many competitors looking to take some of the market share from the company. The objective of this paper is to do a TOWS analysis for this product, based on openly available information, to see where the product stands today, and where it may look to move tomorrow. Prior to 2002 the BlackBerry was simply a two-way pager with a thumb keyboard attached to it.

With the introduction of the 5000 and 6000 series BlackBerry, the abilities began to expand with the introduction of Java and the ability to transmit email. With the 7000 series came the integration of a full color screen, making web browsing a more enhanced experience. Followed by the introduction of the 7100 series, this is where the company began to market to the general consumer rather than just the business professional. Then, with the 8000 series, the market for the general consumer was cemented with the addition of features such as Wi-Fi capabilities, built in cameras, and memory expansion options. With today's 9000 series phones RIM has expanded the Blackberries capabilities with the addition of full HTML support for web pages, the ability to receive RSS feeds, and many enhanced online social networking capabilities (Vercillo, n.d.). With this history of innovation behind it, a SWOT analysis of this product may help us to see what the future holds in store.

Due to the innovative history of the BlackBerry up to this point, it's strengths have helped to keep it in the American consumers consciousness, with 37% of the US market for smartphones
as compared to its next closest competitor Windows Mobile at 26% (Hansberry, 2009). Much of this strength in market share comes from the business world, due to IT professionals pushing for its use because, "with BlackBerry Enterprise Server, IT administrators can enforce hundreds of policies on the phone, from disabling multimedia features like the camera and music player to restricting which websites users can visit" (Morisy, 2008). Up to this point none of the Blackberries competitors come even close to this functionality from an IT standpoint. Along with that RIM has looked to upgrade the BlackBerry's looks and general consumer appeal (Morisy, 2008), to help garner even more of the market.

The weaknesses of the BlackBerry can be attributed to some of the reasons that IT departments seem to show a real love for its capabilities, because as Hansberry, 2006 points out the IT department "aren't terribly interested in media, web browsing and other goodies that Windows Mobile and other platforms seem to handle better." Along with this, until the latest models of the 9000 series the BlackBerry did not have touchscreen capabilities, so it is yet to be seen if this latecomer to touchscreen technologies has a good solution in place (Vercillo, n.d.). Also, with only one BlackBerry model available with High-Speed Downlink Packet Access (HSDPA), RIM has opened itself up to the multitude of cheaper offerings from other competitors that have been offering this capability; this may have been a misstep for them not to offer this capability in more models (Chan, 2009). Also, at question has been the BlackBerry's network architecture, since a worldwide outage took place in April of 2007. Although, such outages sometimes happen on a localized basis, it can be a huge liability to have the entire worldwide network go down (Blackberry outage, 2007).

One of the biggest opportunities for RIM and the BlackBerry line is the BlackBerry Partners Fund, which is being used to help create downloadable applications for the BlackBerry from independent companies (Gardner, 2008). Apples iPhone has really dominated this market, and the BlackBerry has been slow to adopt this model for creating applications, but with both an already commanding presence in the US market and the addition of useful applications the BlackBerry would be well positioned to gain even more market share. Also, based on some of the examples given earlier in this paper, the BlackBerry could certainly benefit from upgraded web capabilities, and overall multimedia capabilities.

With nearly every electronics manufacture from LG, to Nokia, to Samsung coming out with their own smartphones, the threats to RIMs BlackBerry are many fold. This is especially true with the already mentioned weakness in
its web interface. In the global market, the BlackBerry's market share rose by nearly five percent, at the same time Nokia's market share fell from 51.4% to 38.9%, showing that with the shear number of offerings available in this market, even when you have a near dominating hold on the market it can quickly fall away. With the BlackBerry's often late arrival to new technologies, such as the use of touchscreens, HSDPA, and the availability of add-on applications, to help maintain and expand their market share, the engineers and designers at RIM need to begin catching the technology curve and getting in front of it to help create more market share for their offerings.

While SWOT analysis can help to show many of the aspects of what is right and wrong with different products, businesses, or systems, what it fails to show is to what quantitative degree each of these aspects may hold sway. As can be seen by the growing market share that the BlackBerry is currently able to capture, the BlackBerry's current strengths outweigh its weaknesses. The real question at this point is, how long will it be before a star performer that excels in the areas in which the BlackBerry is lacking, starts to meet the level of security that many IT departments enjoy about the BlackBerry and being to eat at its market share? Or, will the team at RIM rise to the challenge and upgrade their interfaces and applications to the level that their security applications have risen? Thus, setting the stage for the BlackBerry to begin taking even more market share from its competitors. Only time and the ever-incessant demands for the new, the useful, and the innovative that permeate the market place will tell.

References
Blackberry outage exposes weakness for RIM. (2007). Retrieved July 23, 2009, from: http://www.blackberryblast.com/articles/2007/4/2007419-Blackberry-outage-exposes-weakness.html

TOWS Analysis of Starbucks

2011-02-01T22:30:00.000-08:00

This is about Starbucks TOWS analysisThreats.

Who knows if the market for coffee will of grow and stay in favour with customers, or whether another type of beverage or leisure activity will from replace coffee in the future?

Starbucks are exposed to rises in the cost of coffee and dairy products.

Since its conception in Pike Place Market, Seattle in 1971, Starbucks' success has lead to the market entry of many competitors and copy cat brands That poses potential threats.

Opportunities.

Starbucks are very good at taking advantage of opportunties. In 2004 the company created a CD-burning service in Their Santa Monica (California USA) cafe with Hewlett Packard, Nowhere customers create Their own music CDs.

New products and-services That cans be retailed in Their cafes, Such as Fair Trade products.

The company has the opportunity to expand its operations globally. New markets for coffee Such as India and the Pacific Rim nations are beginning to emerge.

Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.

Weaknesses.

Starbucks has a reputation for new product development and creativity. However, They Remain Vulnerable to the possibility That May falter Their innovation over time.

The organization has a strong presence in the United States of America with More Than Their three-quarters of cafes located in the home market. It is argued Often That They need to look for a portfolio of countries, in order to spread business risk.

The organization is dependent on a main competitive advantage, the retail of coffee. Could this make Them slow to diversify into other sectors Should the need Arise.

Strengths.

Starbucks Corporation is a very profitable organization, earning in excess of $ 600 million in 2004.The company generated revenue of More Than $ 5,000 million in the Same year.

It is a global coffee brand built upon a reputation for fine products and services. It has Almost Almost 9000 cafes in 40 countries.

Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. The company is a Respected That employer values its workforce.

The organization has strong ethical values and an ethical mission statement as follows, 'Starbucks is committed to a role of environmental leadership in all Facets of our business'.

'Starbucks' mission statement is' Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while We grow. " The Following six guiding principles will of help us measure the appropriateness of our decisions'

Using SWOT Analysis to formulate Strategy

2010-12-21T18:21:00.000-08:00

Using SWOT Analysis as a tool to formulate Strategy is one of the most effective tool in Strategic Planning. It is a factual analysis due to its extensive data collection and analysis of the data collected. It is effective because the analysis covers a wide spectrum of business environment during data collection. Its takes into consideration external business environment as well as internal capabilities. This is perhaps the most powerful usage of SWOT Analysis in the Strategic Planning Process. I am going to show you how to used the four factors of SWOT to develop Strategies Assuming you have collected several data pertaining to the Strengths, Weaknesses, Opportunities and Threats. Then you will use them to formulate strategy. Not sure how to do it? Don't worry, I take you through the steps.

Step 1 - Evaluate the surrounding

Let's take a moment to think about both of us as the coach for two teams of football teams. Before the game starts, you and I have certain strategies that we want the team to follow. As the game progresses, there is sign of difference between the two teams in terms of the game as well as the condition of the team members.

Step 2 - Identify the Strengths, Weaknesses, Opportunities and Threats

Now, it is time to evaluate the teams in the four factors of SWOT. Lets take the following examples as the result of the evaluation:

- Strengths -- Your team is full of fighting spirit

- Weaknesses -- One of your team members is hurt

- Opportunities -- Your opposition team seems to loose stamina

- Threats -- Your opposition team is full of energy

Note: Some of these factors seem to be conflicting each other. For the purpose of this step, this conflict is ignored.

Step 3 - Pair the SWOT factors to formulate strategies

Now, you would start to formulate strategies in the four categories. Namely:

SO Strategies (Strengths and Opportunities Strategy )
ST Strategies (Strengths and Threats Strategy )
WO Strategies (Weaknesses and Opportunities Strategy )
WT Strategies (Weaknesses and Threats Strategy )

In this case, your strength is " your team is full of fighting spirit " and paired with your opportunities is " Opposite team is loosing stamina" . With this scenario, what would you do? Perhaps you formulate a strategy to " ATTACK ". There it goes, you just formulate a attacking strategy. Then you do the same procedure for SW Strategies, WO strategies and WT strategies.

Step 4 - Evaluate the strategic options

At the end of this paring of SWOT factors, you would have end up several strategic options. Do a quick evaluation of each of these strategies to the extent of meeting the company objectives.

Step 5 - Selecting Strategic Options

At this step, you would have a long list of strategic options. Too many strategies to implement may not be practical. Therefore, you need to shorten the list to perhaps maximum three strategies. After you have completed all the 5 steps to use SWOT Analysis to Formulate Strategies, you have a list of strategies for you to implement to your business.

SWOT Analysis on an Example

2010-12-21T18:11:00.000-08:00

Strengths and weaknesses in the SWOT analysis are internal value creating factors such as assets, skills, or resources a company has at its disposal relatively to its competitors. Below you can find a few examples of what your strengths might be:

Unique product
Location of your business
Patents, know-how, trade secrets
Worker's unique skill set
Corporate culture, company image
Quality of your product
Access to financing
Operational efficiency

The following list shows a few examples of weaknesses:

Location of your business
Lack of quality and customer service
Poor marketing and sales
Access to resources
Undifferentiated products or services

Opportunities and threats are external value creating (or destroying) factors a company cannot control but emerge from either the competitive dynamics of the industry or market or from demographic, economic, political, technical, social, legal, or cultural factors.

An opportunity in the SWOT model could be for example:

A new emerging or developing market (niche product, place - new country, less competition)
Merger, joint venture, or strategic alliance
Market trends
New technologies
Social changes (for example demographics)

And now the final one, threats. A threat could be:

New competition in the market, possibly with new products or services
Price wars
Economic conditions
Political changes
Competitor oligopoly or monopoly
Taxation
Availability of resources

Factors related to each aspect of the SWOT model depend very much of the nature of your business. SWOT for a manufacturing company will be different from a SWOT for an internet start-up.

Undertaking a SWOT analysis

2010-11-19T17:09:00.000-08:00

This checklist is for those carrying out a SWOT analysis, SWOT being the acronym for Strengths, Weaknesses, Opportunities and Threats. It is a simple, much-used technique which can help to prepare or amend plans, in problem solving and decision making.

Definition

SWOT analysis is a general technique which can be applied across diverse functions and activities, but it is particularly appropriate to the early stages of planning for a TIPD visit. Performing a SWOT analysis involves the generation and recording of the strengths, weaknesses, opportunities, and threats in relation to a particular task or objective. It is customary for the analysis to take account of internal resources and capabilities (strengths and weakness) and factors external to the organisation (opportunities and threats).

Benefits

SWOT analysis can provide:

a framework for identifying and analysing strengths, weaknesses, opportunities and threats
an impetus to analyse a situation and develop suitable strategies and tactics
a basis for assessing core capabilities and competences
the evidence for, and cultural key to, change
a stimulus to participation in a group experience.

Action checklist

Establish the objectives The first key step in any project: is to be clear on what you are doing and why. The purpose of conducting a SWOT may be wide or narrow, general or specific.
Select appropriate contributors. Important if the final outcome is to result from consultation and discussion, not just personal views, however expert.
Allocate research and information gathering tasks. Background preparation is a vital stage for the subsequent analysis to be effective, and should be divided among the SWOT participants. This preparation can be carried out in two stages: exploratory, followed by data collection, and detailed, followed by a focused analysis. Gathering information on Strengths and Weaknesses should focus on the internal factors of skills, resources and assets, or lack of them. Gathering information on Opportunities and Threats should focus on the external factors over which you have little or no control, such as social or economic factors.
Create a workshop environment. If compiling and recording the SWOT lists takes place in meetings, then do exploit the benefits of workshop sessions. Encourage an atmosphere conducive to the free flow of information and to participants saying what they feel to be appropriate, free from blame. The leader / facilitator has a key role and should allow time for free flow of thought, but not too much. Half an hour is often enough to spend, for example, on Strengths, before moving on. It is important to be specific, evaluative and analytical at the stage of compiling and recording the SWOT lists - mere description is not enough.
List Strengths. Strengths can relate to the group, to the environment, to perceptions, and to people. "People" elements include the skills, capabilities and knowledge of participants. Other people strengths include:

friendly, cooperative and supportive participants
appropriate levels of involvement through delegation and trust.

6. List Weaknesses
This session should not constitute an opportunity to focus on the negative but be an honest appraisal of the way things are. Key questions include:

what obstacles may prevent progress?
which elements need strengthening?
are there any real weak links in the chain?

It is not unusual for "People" problems - poor communication, inadequate leadership, lack of motivation, too little delegation and no trust - to feature among the major weaknesses.

7. List Opportunities

This step is designed to assess the socio-economic, environmental and demographic factors, among others, to evaluate the benefits they may bring to the TIPD visit. Examples include:

the availability of new technology

Bear in mind just how long opportunities might last and how the group may take best advantage of them.

8. List Threats

The opposite of Opportunities - which may, with a shift of emphasis or perception, have an adverse impact. Weighing threats against opportunities is not a reason to indulge in pessimism; it is rather a question of considering how possible negative experience may be limited or eliminated. The same factors may emerge as both a threat and an opportunity, for example, Information Technology. Most external factors are in fact challenges, and whether the groups perceives them as opportunities or threats is often a valuable indicator of morale.

9. Evaluate listed ideas against Objectives

With the lists compiled, sort and group facts and ideas in relation to the objectives. It may be necessary for the SWOT participants to select their five most important items from the list in order to gain a wider view. Clarity of objectives is key to this process, as evaluation and elimination will be necessary to cull the wheat from the chaff. Although some aspects may require further information or research, a clear picture should, at this stage, start to emerge in response to the objectives.

10. Carry your findings forward

Make sure that the SWOT analysis is used in subsequent planning. Revisit your findings at suitable time intervals e.g. on return from you visit to check that they are still valid.

Dos and don'ts for SWOT analysis

Do

Be analytical and specific.
Record all thoughts and ideas in stages 5-8.
Be selective in the final evaluation.
Choose the right people for the exercise.
Choose a suitable SWOT leader or facilitator.

Don't

Try to disguise weaknesses.
Merely list errors and mistakes.
Lose sight of external influences and trends.
Allow the SWOT to become a blame-laying exercise.
Ignore the outcomes at later stages of the planning process.

Case Study- Application of the TOWS Matrix to Volkswagen

2010-11-16T04:56:00.001-08:00

TOWS Analysis is an effective way of combining a) internal strengths with external
opportunities and threats, and b) internal weaknesses with external opportunities and threats
to develop a strategy.

Volkswagen (VW) was chosen because it demonstrates how a successful company experienced great difficulties in the early 1970s, but then developed a strategy that resulted in an excellent market position in the late 1970s. The TOWS Matrix shown in Figure 1 will focus on the crucial period from late 1973 to early 1975. The external threats and opportunities pertain mostly to the situation VW faced in the United States, but a similar situation prevailed in Europe at that time.

Weaknesses and Threats (WT)

A company with great weaknesses often has to resort to a survival strategy. VW could have seriously considered the option of a joint operation with Chrysler or American Motors. Another alternative would have been to withdraw from the American market altogether. Although in difficulties VW did not have to resort to a survival strategy because the company still had much strength. Consequently, a more appropriate strategy was to attempt to overcome the weaknesses and develop them into strengths. In other words, the direction was toward the strength-opportunity position (SO) in the matrix shown as Figure 1. Specifically, the strategy was to reduce the competitive threat by developing a more flexible new product line that would accommodate the needs and desires of the car-buying public.

Weaknesses and Opportunities (WO)

The growing affluence of customers has resulted in 'trading up' to more luxurious cars. Yet, VW had essentially followed a one-model policy which presented a problem when the design of the Beetle became obsolete A new model line had to be introduced to reach a wider spectrum of buyers. In order to minimize the additional costs of a multi product line, the building block principle was employed in the design of the new cars. This allowed using the same parts for different models that ranged from the relatively low-priced Rabbit to the higher priced Audi line. Another weakness at VW was the rising costs in Germany. For example, in 1973 wages and salaries rose 19 per cent over the previous year. Similarly, increased fuel costs made the shipping of cars to the United States more costly. This situation favored setting up an assembly plant in the United States. However, this also created some problems for VW because it had no experience in dealing with American organized labor. To overcome this weakness, VW's tactic was to recruit managers from Detroit who were capable of establishing good union relations.

Strengths and Threats (ST)

One of the greatest threats to VW was the continuing appreciation of the Deutsche Mark against the dollar. For example, from October 1972 to November 1973 the mark appreciated 35 percent. This meant higher prices for the buyer. The result, of course, was a less competitive posture. Japanese and American automakers obtained an increasingly larger share of the small-car market. To reduce the threats of competition and the effects of the unfavorable exchange rate, VW was forced to build an assembly plant in the United States. Another strategy for meeting competitive pressures was to build on VW's strengths by developing a car based on advanced design technology. The result of this effort was the Rabbit, a model with features later adopted by many other car manufacturers.

FIGURE 1

Understanding TOWS Matrix

2010-11-13T02:18:00.000-08:00

Why use the tool?

TOWS Analysis is an effective way of combining a) internal strengths with external
opportunities and threats, and b) internal weaknesses with external opportunities and threats
to develop a strategy.

How to use tool:

To carry out a TOWS Analysis, consider the following combinations:
Strengths/Opportunities:
Consider all strengths one by one listed in the SWOT Analysis with each opportunity to
determine how each internal strength can help you capitalize on each external opportunity.

Strength/Threats:

Consider all strengths one by one listed in the SWOT Analysis with each threat to determine
how each internal strength can help you avoid every external threat.

Weaknesses/Opportunities:

Consider all weaknesses one by one listed in the SWOT Analysis with each opportunity to
determine how each internal weakness can be eliminated by using each external opportunity.

Weaknesses/Threats:

Consider all weaknesses one by one listed in the SWOT Analysis with each threat to
determine both can be avoided.

SWOT ANALYSIS | TOWS ANALYSIS | A Note on Marketing Planning

2010-10-30T21:44:00.000-07:00

SWOT (Strengths, Weaknesses, Opportunities, Threats) is a popular framework for developing a marketing strategy. A Google search for “SWOT” and “planning” turned up almost 93,000 hits (August 2004), most all of which laud the use of SWOT Analysis. Some students have said that it is the most important thing they learned at the Wharton School.

Although SWOT is promoted as a useful technique in numerous marketing texts, it is not universally praised: One expert said that he preferred to think of SWOT as a “Significant Waste of Time.”

The problem with SWOT is more serious than just wasting time. Because it mixes idea generation with evaluation, it is likely to reduce the range of strategies that are considered. In addition, people who use SWOT might conclude that they have done an adequate job of planning and ignore such sensible things as defining the firm's objectives or calculating ROI for alternate strategies. I have observed this when business school students use SWOT on cases.

What does the evidence say? Perhaps the most notable indication is that I have been unable to find any evidence to support the use of SWOT.

Two studies have examined SWOT. Menon et al. (1999) asked 212 managers from Fortune 1000 companies about recent marketing strategies implemented in their firms. The findings showed that SWOT harmed performance. When Hill and Westbrook (1997) examined the use of SWOT by 20 companies in the UK in 1993-94, they concluded that the process was so flawed that it was time for a “product recall.”

One advocate of SWOT asked: if not SWOT, then what? Borrowing from corporate strategic planning literature, a better option for planners is to follow a formal written process to:

(1) set objectives, (2) generate alternative strategies, (3) evaluate alternative strategies, (4) monitor results, and (5) gain commitment among the stakeholders during each step of this process.

I describe this 5-step procedure in Armstrong (1982). Evidence on the value of this planning process, obtained from 28 validation studies (summarized in Armstrong 1990), showed that it led to better corporate performance:

20 studies found higher performance with formal planning, 5 found no difference, and 3 found formal planning to be detrimental.

This support was obtained even though the formal planning in the studies typically used only some of the steps, the steps were often poorly implemented, and the conditions were not always ideal for formal planning.

Given the evidence, SWOT is not justified under any circumstances. Instead use the comprehensive 5-step planning procedure.

References

Armstrong, J. S. (1982) “The Value of Formal Planning for Strategic Decisions,” Strategic Management Journal, 3, 197-211. Available in full text at http://jscottarmstrong.com

Armstrong, J. S. (1990), “Review of Corporate Strategic Planning," Journal of Marketing, 54, 114-119 also found in full text at http://jscottarmstrong.com.

Hill, T. & R. Westbrook (1997), “SWOT Analysis: It’s Time for a Product Recall,” Long Range Planning, 30, No. 1, 46-52.

Menon, A. et al. (1999), “Antecedents and Consequences of Marketing Strategy Making,” Journal of Marketing, 63, 18-40

SWOT ANALYSIS: How to Reboot Your Life with the SWOT MATRIX

2010-10-04T03:33:00.000-07:00

We often see, when the computer locks up and nothing functions, there is a convenient option: you can reboot it. There are times when our life gets locked up as well. At those times we feel paralyzed and if we stay in the feeling of paralysis, we can end up with depression or other health problems.

When we’re stuck, we need to reboot our life. Unfortunately there isn’t a convenient button to push. But it’s possible all the same. The first thing we need to look at is why and where our life has got stuck. A great tool to get this overview is the SWOT matrix. SWOT is an acronym for Strength, Weaknesses, Opportunities, and Threats. The first two, Strengths and Weaknesses, are our personal attributes that we bring to our life. The second two, Opportunities and Threats are what the outside world brings to us.

The way to reboot our life with the help of the SWOT matrix is to look at each of the seven areas of life and check out where we may be stuck and how to move forward. The important point here is that stuckness can result from internal forces, that is from our own personal attributes and how we bring them to bear on the various areas of our life. Stuckness can also result from external factors, that is from forces that impinge on our life from outside.

Here are seven areas of life that we need to consider:

Mental
Physical
Spiritual
Social
Professional
Recreational
Creational

If we take each one and investigate it in terms of the SWOT Matrix, we can see how to reboot our life.

1. Mental

This area includes our emotional, as well as our intellectual well-being. Right now, what are your strengths and weaknesses in this particular area? Are you involved in learning something new? Learning is important for our intellectual well-being. We need to use our brain, in order to develop it. After all, the good news is that we can develop intelligence at any age. What threats or opportunities to you see in regard to your mental wellbeing?

How is your emotional health right now? What is strong about it and where are there weaknesses? What threats or opportunities to you see in regard to your emotional wellbeing?

2. Physical

How is your physical health? Which basket are you in: fit or flab? What are your strength or weaknesses in regard to your body? What threats or opportunities do you perceive? Threats could be health problems.

Maybe you’re out of shape, overweight, or you have other health threats to deal with. Opportunities are actions that we can take to optimize our physical condition.

3. Spiritual

Is there a spiritual component to your life? Do you have a spiritual practice, like meditation or prayer? Or are there moments in nature where you feel connected? I’m talking about natural spirituality here.

What are your strength and weaknesses in respect to spirituality? What threats or opportunities do you perceive?

4. Social

The social aspect of our life covers all the areas of connection. How are your connections? Are you in a relationship with a special person? Do you have family? Do you have strong friendships? What about colleagues – do you have strong connections? And how is your social life?

Take a look at the SWOT Matrix and consider what your strengths and weaknesses are in respect of your social connections. What threats and opportunities can you discover?

5. Professional

The professional area of life covers what we do for a living, and what we do in order to develop new areas of expertise. How is your motivation? What are your strengths and weaknesses in this area? Are there threats and opportunities on the horizon?

6. Recreational

What do you do for fun? We all need time out where problems recede and we do something that is pure enjoyment.

How easy is it for you to include fun in your life? What are your strengths and weaknesses? How to you see opportunities and threats in this area of your life?

7. Creational

We need to be creative in one way or another if we are to feel in balance and happy. How is your creativity? What are your strengths and your weaknesses?

Many people find it difficult to be creative. Creativity is something we can misplace along the way. Any creative activity can kickstart it again.

Now that you’ve looked at the various areas of your life with the help of the SWOT Matrix, you’ll have a better understanding about how to reboot your life. Even if you just choose one area of your life and look for opportunities, your life will start to open in a new way.m If you focus on all areas of your life and focus on opportunities, your life will reboot completely.

What did you notice about your life when you looked at the various areas with the help of the SWOT Matrix?

Bancassurance: A SWOT ANALYSIS (SWOT STRATEGY)

2010-09-15T18:15:00.000-07:00

Before we go to SWOT ANALYSIS or SWOT STRATEGY of Bancassurance you should understand well about Bancassurance. Lets goto the point, Bancassurance in its simplest form is the distribution of insurance products through a bank's distribution channels. In concrete terms Bancassurance, which is also known as Allfinanz - describes a package of financial services that can fulfill both banking and insurance needs at the same time. It takes various forms in various countries depending upon the demmography and economic and legislative climate of that country. Demographic profile of the country decides the kind of products Bancassurance shall be dealing in with, economic situation will determine the trend in terms of turnover, market share, etc., whereas legislative climate will decide the periphery within which the Bancassurance has to operate.

The motives behind Bancassurance also vary. For banks it is a means of product diversification and a source of additional fee income. Insurance companies see Bancassurance as a tool for increasing their market penetration and premium turnover. The customer sees Bancassurance as a bonanza in terms of reduced price, high quality product and delivery at doorsteps. Actually, everybody is a winner here.

Why should banks enter insurance?

There are several reasons why banks should seriously consider Bancassurance, the most important of which is increased return on assets (ROA). One of the best ways to increase ROA, assuming a constant asset base, is through fee income. Banks that build fee income can cover more of their operating expenses, and one way to build fee income is through the sale of insurance products. Banks that effectively cross-sell financial products can leverage their distribution and processing capabilities for profitable operating expense ratios.

By leveraging their strengths and finding ways to overcome their weaknesses, banks could change the face of insurance distribution. Sale of personal line insurance products through banks meets an important set of consumer needs. Most large retail banks engender a great deal of trust in broad segments of consumers, which they can leverage in selling them personal line insurance products. In addition, a bank’s branch network allows the face to face contact that is so important in the sale of personal insurance.

Another advantage banks have over traditional insurance distributors is the lower cost per sales lead made possible by their sizable, loyal customer base. Banks also enjoy significant brand awareness within their geographic regions, again providing for a lower per-lead cost when advertising through print, radio and/or television. Banks that make the most of these advantages are able to penetrate their customer base and markets for above-average market share.

Other bank strengths are their marketing and processing capabilities. Banks have extensive experience in marketing to both existing customers (for retention and cross selling) and non-customers (for acquisition and awareness). They also have access to multiple communications channels, such as statement inserts, direct mail, ATMs, telemarketing, etc. Banks' proficiency in using technology has resulted in improvements in transaction processing and customer service.

By successfully mining their customer databases, leveraging their reputation and 'distribution systems’ (branch, phone, and mail) to make appointments, and utilizing 'sales techniques’ and products tailored to the middle market, European banks have more than doubled the conversion rates of insurance leads into sales and have increased sales productivity to a ratio which is more than enough to make Bancassurance a highly profitable proposition.

Benefits to insurers

Insurers have much to gain from marketing through banks. Personal-lines carriers have found it difficult to grow using traditional agency systems because price competition has driven down margins and increased the compensation demands of successful agents. Over the last decade, life agents have sold fewer and larger policies to a more upscale client base. Middle-income consumers, who comprise the bulk of bank customers, get little attention from most life agents. By capitalizing on bank relationships, insurers will recapture much of this under served market.

Most insurers that have tried to penetrate middle-income markets through alternative channels such as direct mail have not done well. Clearly, a change in approach is necessary. As with any initiative, success requires a clear understanding of what must be done, how it will be done and by whom. The place to begin is to segment the strengths that the bank and insurer bring to the business opportunity.

Collaboration is the key

In their natural and traditional roles and with their current skills, neither banks nor insurance companies could effectively mount a Bancassurance start-up alone. Collaboration is the key to making this new channel work.

Banks bring a variety of capabilities to the table. Most obviously, they own proprietary databases that can be tapped for middle-market warm leads. In addition, they can leverage their name recognition and reputation at both local and regional levels. Strong players also excel at managing multiple distribution channels, cross-selling banking products, and using direct mail. However, most banks lack experience in several areas critical to successful Bancassurance strategies: in particular, developing insurance products, selling through face-to-face "push" channels underwriting, and managing long-tail insurance products.

Where banks usually fall short, a strong insurer will excel. Most have substantial product and underwriting experience, strong "push" - channel capabilities, and investment management expertise. On the other hand, they tend to lack experience or ability in the areas where banks prevail. They have little or no background in managing low-cost distribution channels; they often lack local and regional name recognition and reputation; and they seldom possess access to or experience with the middle market.

Bancassurance in India - A SWOT Analysis

Even though, banks and insurance companies in India are yet to exchange their wedding rings, Bancassurance as a means of distribution of insurance products is already in force in some form or the other. Banks are selling Personal Accident and Baggage Insurance directly to their Credit Card members as a value addition to their products. Banks also participate in the distribution of mortgage linked insurance products like fire, motor or cattle insurance to their customers. Banks can straightaway leverage their existing capabilities in terms of database and face to face contact to market insurance products to generate some income for themselves which hitherto was not thought of.

Once Bancassurance is embraced in India with full force, a lot will be at stake. Huge capital investment will be required to create infrastructure particularly in IT and telecommunications, a call center will have to be created, top professionals of both industries will have to be hired, an R & D cell will need to be created to generate new ideas and products. It is therefore essential to have a SWOT analysis done in the context of Bancassurance experiment in India.

Strengths

In a country of 1 Billion people, sky is the limit for personal lines insurance products. There is a vast untapped potential waiting to be mined particularly for life insurance products. There are more than 900 Million lives waiting to be given a life cover (total number of individual life policies sold in 1998-99 was just 91.73 Million). There are about 200 Million households waiting to be approached for a householder's insurance policy. Millions of people travelling in and out of India can be tapped for Overseas Mediclaim and Travel Insurance policies. After discounting the population below poverty line the middle market segment is the second largest in the world after China. The insurance companies worldwide are eyeing on this, why not we preempt this move by doing it ourselves?

Our other strength lies in a huge pool of skilled professionals whether it is banks or insurance companies who may be easily relocated for any Bancassurance venture. LIC and GIC both have a good range of personal line products already lined up, therefore R & D efforts to create new products will be minimal in the beginning. Additionally, GIC with 4200 operating offices and LIC with 2048 branch offices are almost already omnipresent, which is so essential for the development of any Bancassurance project.

Weaknesses

The IT culture is unfortunately missing completely in all of the future collaborators i.e. banks, GIC & LIC. A late awakening seems to have dawned upon but it is a case of too late and too little. Elementary IT requirement like networking (LAN) is not in place even in the headquarters of these institutions, when the need today is of Wide Area Network (WAN) and Vast Area Network (VAN). Internet connection is not available even to the managers of operating offices.

The middle class population that we are eyeing at are today overburdened, first by inflationary pressures on their pockets and then by the tax net. Where is the money left to think of insurance ? Fortunately, LIC schemes get IT exemptions but personal line products from GIC (mediclaim already has this benefit) like householder, travel, etc. also need to be given tax exemption to further the cause of insurance and to increase domestic revenue for the country.
Another drawback is the inflexibility of the products i.e. it can not be tailor made to the requirements of the customer. For a Bancassurance venture to succeed it is extremely essential to have in-built flexibility so as to make the product attractive to the customer.

Opportunities

Banks' database is enormous even though the goodwill may not be the same as in case of their European counterparts. This database has to be dissected variously and various homogeneous groups are to be churned out in order to position the Bancassurance products. With a good IT infrastructure, this can really do wonders.

Other developing economies like Malaysia, Thailand and Singapore have already taken a leap in this direction and they are not doing badly. There is already an atmosphere created in the country for liberalisation and there appears to be a political consensus also on the subject. Therefore, RBI or IRA should have no hesitation in allowing the marriage of the two to take place. This can take the form of merger or acquisition or setting up a joint venture or creating a subsidiary by either party or just the working collaboration between banks and insurance companies.

Threats

Success of a Bancassurance venture requires change in approach, thinking and work culture on the part of everybody involved. Our work force at every level are so well entrenched in their classical way of working that there is a definite threat of resistance to any change that Bancassurance may set in. Any relocation to a new company or subsidiary or change from one work to a different kind of work will be resented with vehemence.

Another possible threat may come from non-response from the target customers. This happened in USA in 1980s after the enactment of Garn - St Germaine Act. A rush of joint ventures took place between banks and insurance companies and all these failed due to the non-response from the target customers. US banks have now again (since late 1990s) turned their attention to insurance mainly life insurance.

The investors in the capital may turn their face off in case the rate of return on capital falls short of the existing rate of return on capital. Since banks and insurance companies have major portion of their income coming from the investments, the return from Bancassurance must at least match those returns. Also if the unholy alliances are allowed to take place there will be fierce competition in the market resulting in lower prices and the Bancassurance venture may never break-even.

Looking Around

Hardly 20% of all US banks were selling insurance in 1998 against almost 70% to 90% in many W. European countries. Market penetration of Bancassurance in new life businesses in Europe ranges between 30% in U.K. to nearly 70% in France. Almost 100% banks in France are selling insurance products. In 1991 Nationale Nederlanden of Netherlands merged with Post Bank, the banking subsidiary of the post office to create the ING Group - a new dimension to the Bancassurance i.e. harnessing the databank of the post office as well. CNP, the largest independent insurance company in France has developed its product distribution through post offices. The merger of Winterthur, the largest Swiss insurance company with Credit Suisse and Citibank with Travellers Group have resulted in some of the largest financial conglomerates in the world.

Despite the phenomenal success of Bancassurance in Europe, property and casualty products have not made much inroads. In Spain, Belgium, Germany and France where more than 50% of all new life premium is generated by Bancassurance, only about 6% P & C business comes from banks in Spain, 5% in Belgium, 4% in France and Italy.

A recent study by Boston Consulting Group and Bank Administration Institute in USA claims that if banks made a major commitment to insurance and a more narrowly targeted commitment to investors, within 5 years they could increase retail revenues by nearly 50%. It further states that Banks could capture 10% to 15% of the total U.S. insurance and investment market by selling products to 20% of their existing customers.

Banks' existing infrastructure enables them to operate at expense levels that are 30% to 50% lower than those of traditional insurers.

Bancassurance's bank-branch based sales system sells 3 to 5 times as many insurance policies as a conventional as a conventional insurance sales and distribution force.

By simplifying Bancassurance products each back office bank employee can quintuple managing policies compared to traditional insurers.

Lessons

We should take a leaf from the experienced players and develop Bancassurance only gradually. As happened in France, Italy, Germany and Canada - banks were allowed first only to distribute the insurance products for a fee. This itself amounted to substantial income for banks since they were not carrying the risks and product development was also left to insurance companies. This seems fair since each player should contribute towards something in which he excels; banks in mass distribution and insurance companies in risk management. After stabilization, the roles may be expanded in opposite directions.

We need to develop innovative products and services. CIBC in Canada relieves the customer of having to report and resolve auto claims. The bank assumes responsibility for the process, even phoning the police for the customer at the time of the accident. Another example is provided by Banco Bilbao Vizcaya of Spain who offers a term life policy with simple premium payments and a clear contract that is designed to be sold, issued and signed at the point of sale within 15 minutes.

Banks and insurance companies in India wishing to pursue high aspiration insurance strategies would do well to learn from European bancassurers, who have decades of experience managing insurance subsidiaries. Some of them - Lloyds TSB in the UK, Credit Agricole in France and Spain's Banco Bilbao Vizcaya - are delivering outstanding results. These bank have profitably sold insurance products to more than a fourth of their customers while generating more than 20% on sales. Credit Agricole, the second largest life insurer in France, with $11 billion of premium in force, employs only 170 people in its insurance subsidiary. It is able to limit overhead by harnessing the bank's existing resources and capabilities.

Obstacles and success factors

Even insurers and banks that seem ideally suited for a Bancassurance partnership can run into problems during implementation. The most common obstacles to success are poor manpower management, lack of a sales culture within the bank, no involvement by the branch manager, insufficient product promotions, failure to integrate marketing plans, marginal database expertise, poor sales channel linkages, inadequate incentives, resistance to change, negative attitudes toward insurance and unwieldy marketing strategy.

Conversely, Bancassurance ventures that succeed tend to have certain things in common. Factors that appear to be critical to success include strategies consistent with the bank's vision, knowledge of target customers' needs, defined sales process for introducing insurance services, simple yet complete product offerings, strong service delivery mechanism, quality administration, synchronized planning across all business lines and subsidiaries, complete integration of insurance with other bank products and services, extensive and high-quality training, sales management tracking system for reporting on agents' time and results of bank referrals and relevant and flexible database systems.

Finally

The creation of Bancassurance operations has a material impact on the financial services industry at large. Banks, insurance companies and traditional fund management houses are converging towards a model of global retail financial institution offering a wide array of products. It leads to the creation of 'one-stop shop' where a customer can apply for mortgages, pensions, savings and insurance products.

Discovery comes from looking at the same thing as everyone else but seeing something different. Banks' desire to increase fee income has them looking at insurance. Insurance carriers and banks can become part of the vision through strategic partnerships. Now is the time to position your company for the new millennium of insurance product distribution.