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Implications for the Strategist: Using SWOT Analysis to Gain Strategic Insight

When used effectively, a SWOT analysis can help the strategist deeply consider different strategic initiatives managers might take. The SWOT juxtaposes the firms internal Strengths (S) and Weaknesses (W) identified through a rigorous internal analysis, such as the application of the VRIO framework, with the external Opportunities (O) and Threats (T) identified through a comprehensive external analysis, such as the application of industry analysis. This activity demonstrates how internal (S/W) and external (O/T) concepts are appropriately captured in the SWOT and how strategic initiatives managers might take can be created from the juxtaposition of these internal and the external concepts.

Review the information found in section 4.5 of your text before completing this activity which addresses Learning Objective 4-9 on conducting a SWOT analysis to generate insights from external and internal analysis and derive strategic implications. It also incorporates understanding of a firm's internal resources and capabilities (Learning Objective 4-1, 4-2 and 4-4).

Read the minicase on Beats Electronics and refer back to ChapterCase 4 to refresh your memory. Note that more SWOT items than are listed below are discussed in the case. This is a two-part activity. First, click and drag one of the four SWOT concepts to the appropriate SWOT box. Second, after assessing the juxtaposition of the internal and external concepts, click and drag the appropriate strategic initiative to the right location in the framework (one of the 4 boxes enclosed by the SWOT).

Minicase

Apples acquisition of Beats Electronics LLC for $3 billion is examined at the beginning and end of Chapter 4. From the discussion in the ChapterCase, we can create a SWOT analysis and use it to understand why Beats Electronics might have wanted Apple as a partner. The internal strengths and weaknesses for Beats Electronics as well as the environmental threats and opportunities are taken from the chapter. After completing the SWOT and placing the strategic alternatives, consider which strategic alternative you would have chosen.

Growth in streaming music Strong relationships with celebrities. Acquire a competing headphone maker to reduce competition, increase audio quality, diversify product lineup. Seek a partner who can: 1) leverage the brand and celebrity relationships into new product markets. 2) Strengthen ability to compete in music streaming and retail electronics Increasing competition in streaming music Use relationships in the music industry (especially Hip Hop) to obtain exclusive content for the streaming music service. Use celebrity endorsements and experience in fashion headphones to create products for similar markets (i.e., personal Bluetooth speakers) Limited products (just headphones) Opportunity Threats External Internal Growing market for personal electronics Growing market for wearable computers New competitors in fashion headphones. Firms in nearby markets (earbuds) may enter Strengths Visionary Leadership: Dre & lovine Market leader in fashion headphones High perceived fashion value. Strong brand: young, trendy, urban. Weaknesses Beats streaming, weak market share Complaints about audio quality Reset