What is the relationship between SWOT and Strategy?
Firstly, we will define Strategy and SWOT separately. The definition I found for strategy was “Strategy is different from vision, mission, goals, priorities, and plans. It is the result of choices executives make, on where to play and how to win, to maximize the long-term value” (Favaro, Rangan & Hirsh, 2012, para. 2). So, strategy is defined to 1) target market(s) where the customers and the needs are satisfied, 2) distinguish a company from other competitors and offer advantageous value and 3) select strategy that gives the greatest an increased value to the company's economic value in the long term.
As to SWOT, it stands out for Strengths, Weaknesses, Opportunities and Threats. It is defined as “SWOT analysis is one of the most important steps in formulating strategy. Using the company's mission as the context, managers assess internal strengths and weaknesses as well as external opportunities and threats. The goal is then to develop good strategies that exploit opportunities and strengths, neutralize threats and avoid/correct weaknesses” (Griffin, 2011, p. 69). Therefore, analyzing strengths and opportunities gives managers an idea of advantages they have over the competitors, while analyzing weaknesses and threats exposes possible obstacles that must be minimized or overcome to achieve desired goals.
Based on above information and definition, SWOT analysis is a business planning tool while a strategic plan is an overall business proposal for how the company will success in achieving its objectives. Additionally, SWOT analysis focuses on the company’s current position while a strategic plan focus on long term position of the company. Here, I would like to apply above-mentioned concepts by providing the real example about Starbucks plans to open its location in India. In 2006, Starbucks announced its plan to open its first location in Russia and India during 2007 (2006 Annual Report, 2006, p. 4)....
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