3BA6

Computers and Society

SWOT Analysis

3BA6 Computers and Society

 Outline

• More on core capabilities

• Capabilities: strengths or weaknesses?
• SWOT
– Strengths
– Weaknesses
– Opportunities
– Threats

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 Core Capabilities

• A core capability or core competence must be

described in terms of:
– (1) a customer benefit
– (2) a competitive advantage
– (3) defined individual skills and technologies
• It is what the company is best at doing that
others don’t or can’t do
• Matching core capabilities with suppliers =>
reduced SCM problems

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 Strategic Importance of Capabilities
Strategic Importance of
Core Capabilities to the
Firm
high

Core

Enabling

low Supplemental

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 Core Capabilities - Defined
• Definition: “Core capabilities constitute a competitive
advantage for a firm: they have been built up over time
and cannot easily be imitated”
• A system, comprised of:
– Skills
– Physical systems
– Managerial systems
– Values
• Distinct from supplemental and enabling capabilities
– Supplemental: add value, but could be imitated
– Enabling: necessary, but not sufficient in themselves

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 Capability – Skills and Knowledge

• This is the dimension most often associated with

core capabilities
• Skills can be considered deep and broad (T-
shaped)
• Firms have limits to how deep or broad these
skills can go
• Decisions for the firm in how to apply available
skills and knowledge:
– e.g why design inhouse?

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 3 Types of Skills & Knowledge

Time
Lag
Public or
Firm-Specific
Scientific

Not easily
duplicated
Industry-Specific

Diffused
among many
experts
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 Acquiring Skills and Knowledge

• So, what if a firm hires in the appropriate

expertise from external sources?
• Will they be able to “buy in” core capabilities
from other firms?
• Answer lies in looking at the three other
elements in the system of core capabilities:
– Physical technical systems
– Managerial systems
– Values and norms

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 Physical Technical Systems
• Physical systems preserve knowledge of individuals who
have moved on
• Hiring key staff to duplicate processes may not be
enough
• Duplication of systems can be difficult due to legal
protection, e.g. patents
• Not the only protection – knowledge can also be tacit
– Embedded
– Combinations of experts
• Therefore: time advantage until other firms “catch up”

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 Managerial Systems

• Organised routines
– Less obvious dimension of core capabilities
• Behaviours rewarded: incentives, reward,
education etc.
• Less formal:
– learning “on the job” (not documented)

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 Values and Norms

• Character, or company “personality”

• Can be espoused, embodied, or implicit
• Can be broad and philisophical
– e.g. the “HP Way”
• Can be narrow and related to direct behaviour
– e.g. choice in purchasing technology

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 Core Capabilities: A System

Values and Norms

Physical Technical Systems Managerial Systems

Skills and Knowledge

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 Competencies:
Strengths or Weaknesses?
• Core capabilities and/or rigidities can be thought
of in terms of a firm’s strengths or weaknesses
• Another perspective is that a company is a
collection or “portfolio of competencies”, rather
than a portfolio of businesses or products
– (Hamel & Prahalad, 1990)
• In producing a product, a company can be better
at some processes than others

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 SWOT Analysis
• A SWOT analysis is a method Strengths Weaknesses
for describing your business
(or your business proposition)
in terms of those factors that
have the most impact.
• The typical SWOT analysis is
done on a four-cell grid Opportunities Threats
• 3rd party perspective
important

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 SWOT (contd.)

• Strengths and weaknesses

– These tend to be internal resources and capabilities.
Examples:
• Skills and competencies of management
• Quality of the product
• Opportunities and threats
– These tend to be external factors. Examples:
• Development of new market
• Government legislation
• New competitors arriving on the scene

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 Strengths
• “A resource advantage relative to competitors
and the needs of markets the firm serves”
• In the first box list all the strengths of the
company.
– Why should it succeed?
– What can the company do well?
– Why would customers prefer doing business?
– What distinct advantages does the company offer?
• Veracity
– Just like the CV for a person
– Less on modesty, more on realism.

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 Weaknesses
• “A limitation or deficiency in one or more resources or
competencies relative to competitors”
• Seriously impedes a firm’s effective performance
– a limitation or deficiency in resource, skills, or capabilities
• What could be improved about the business?
– markets, staffing, management, control?
– stumbling blocks to be avoided?
• What do competitors do better?
• Important not to disguise weaknesses.
• Could be a core competence becoming a core rigidity

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 Opportunities

• “A major favourable situation in a firm’s

environment”
• Where are the openings for the business?
• What customer needs are not being met by
competitors?
• Market trends in that business sector
• Also consider technology changes, the
legislative and regulatory environment, and
social patterns

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 Threats

• “Impediments to the firm’s current or

desired position.”
– A major unfavourable situation in a firm’s
environment
– What are the more obvious obstacles in the
way?
• Obvious
– sudden rush of bad debts or a slack sales
period leading to cashflow problems.

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 Threats (cont.)
• Not so obvious
– Competition “creeping up”
– Technological obsolescence
• Include worst-case scenarios
– Weighing threats against opportunities is not
a reason to indulge in pessimism, rather it’s a
question of considering how possible damage
may be overcome, bypassed or restricted.

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 Exercise: SWOT Analysis
• Analyse Eircom’s land line phone service business
Strengths Weaknesses
Strong cashflow Monolithic/not agile
Market leader Slow to innovate
Control network Poor customer relations
Expertise Aging infrastructure
Brand/loyal customer base

Opportunities Threats
New housing Lose business to mobile nets
Market to large customer base Wireless broadband for VoIP
Provide DSL Other phone service suppliers
Security services
Convert to VoIP

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