Swot Contribution to Porter's Model

Topics: Strategic management, Management, SWOT analysis Pages: 8 (2615 words) Published: May 11, 2011
Discuss how Porter’s 5 forces model might contribute to a SWOT analysis

Created in 1994 and launched in 1995, Amazon.com today is a group which count several websites and search engine such as Alexa or A9, mobipocket.com, the Internet Movie Database (imdb.com) or even the group Abebooks, specialized in ancient and rare books. In 2007, Jeff Besos, Amazon's CEO, launched the Kindle, made to compete with a whole new range of pads like the Apple Ipad. Over the years Amazon has diversified its activities and is today competing on a product entirely different from their original service. This is due to the business experience developed over the years which has create opportunities for Amazon. Nevertheless some onlooker are still suspicious on the ability of the company to compete with long-term high technological companies and become a sustainable payer. Although future cannot be predicted, this imply that before engaging the company in such a campaign, the management has surely analysed the business environment.

Investigating the business environment is a crucial step in the decision making process. It has to be updated frequently since a company's environment is always evolving. A company is affected by many factors and influences which are part of the environment, and the work of the management is to understand and give effect to this environment.

The easiest part is to determine all the environmental factors. The tricky part is then to settle a representation that allows to understand which influences have a true impact on the firm. There are many ways to analyse a business environment but the more used and famous tools are Porter's five forces model and the SWOT analysis. Besides this is what we will discuss through this paper.

As a first part, we will see what are the features, advantages and drawbacks of the SWOT analysis, and for a second part we will introduce the Porter's model. This in order to discern in what way does the Porter's model could assist the SWOT analysis. As well we will show how the two tools can act in conjunction to get valuable outcomes.

Let's start with the SWOT analysis which is often described as an image of the company at a certain time and is an inevitable step in the strategic-decision making for a company that allows to have a digest of the resources and condition in order to have a picture of its position and potential strategies to come (Mintzberg 1994). This model has been credited to Alfred Humphrey but there is not an establish as a theory so it remains still a lot of different appraisal and point of views on it, and since the structure has no real basis there is no clear steps to follow when building a SWOT analysis (Valentin, 2005).

The SWOT model analyse the internal and external factors of a company or a project. The internal environment comprehend the weaknesses and strengths that the firm will bequeath on the project, as the external forces comprehend the opportunities and threats of the project itself. The aim is then to include the internal and external factors into the strategy, meaning to work on decreasing the effects of the threats and weaknesses and the meantime improving their strengths and opportunities.

A company should create competitive edges through its internal situation. A firm has at first to evaluate the different elements of its marketing mix (Product, Position, Price and as well the brand equity). The analysis should then focus on the location and the performance of a product. Then the market shares, the distribution channels, the sale force and the presence on the market, which constitute the position of the company on a certain market. As well as the relative and absolute value of its product. As for the brand equity the company should consider elements related to their customers, such as its sales department, the marketing strategy and practice, its logistic and its communication. On the other hand elements like the financial situation,...
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