Melody Joy Austria, BSCE-2

SWOT ANALYSIS

What is SWOT ANALYSIS?

-SWOT ANALYSIS studies the financial resources, physical facilities, management capabilities, the market, production process, information system, sources of supply and social environment.

-SWOT ANALYSIS stands for STRENGTHS, WEAKNESSES, OPPORTUNITIES and THREAT.

INDICATORS OF SWOT:

STRENGTH of a product or services

-Cheap and abundant raw materials-Sufficient funds-Availability f technology-Presence of skilled workers-Management and technical expertise of the entrepreneur-Good quality/services-Ease of production-Small capital

WEAKNESSES of a product or services

-High price-poor quality/service-Weak management-Lack of skilled worker-Irregular supply-Unattractive design-High costs of production

OPPORTUNITIES of a product or service

-Big demand for the product/service-Favorable government policy/support-Scarcity of the product/services-Poor quality of existing product-Absence of product/service-Possibilities of god profits

THREATS of a product or services

-Shortage of raw materials at a given time-Entry of many competitors-Increasing costs f production-Expectation of unfavorable government laws, such as taxes-Deteriorating peace and order-Emergence of unfair demands of workers through labor union activities

LINKAGES OF RESOURCES

Backward and Forward Linkages

Enterprises which have established a strong growth future can increase their efficiency or profitability through backward and forward integration.

BACKWARD INTEGRATION – is the ownership or control of the inputs of production by the enterprise.

FORWARD INTEGRATION – is the ownership or control of the marketing system by the enterprise.

PRODUCT LIFE CYCLE

Introduction

Consumer awareness and acceptance of the product are low. However, sales gradually increase due to promotion and marketing activities. But at the start, costs of development and marketing are high. This makes profit low or even incurs loss. There are relatively few competitors, and the price is usually high. Buyers are individuals who want to be the first in the community to own the product.

Growth

Sales rise rapidly as the product becomes popular. Due to the competition and lower average cost of production prices fail. However, profits fo the firm and industry increase. To meet the growing demand, product distribution is expanded. Promotion still plays a vital role in the marketing of the product.

Maturity

Sales are still rising at the beginning of this stage. But the rate of increase has declined. At the later partner part, the sales curve reaches its peak while profits begin to fall. Price competition increases which forces inefficient competitions to get out from the industry.

Decline

There is a sharp fall in sales volume while profit curve becomes almost flat or horizontal. There is also a decline in the number of competitors. The only survivors are those who specialize in the marketing of the product. Once the product is no longer profitable, it is eliminated from the market.