Strategic Management Decisions - Essay Example

             SWOT stands for strengths, weaknesses, opportunities, and threats. SWOT analysis is a tool used for auditing the organization and its environment (Marketingteacher.com, 2011.) It is a very popular and useful tool for developing strategic management decisions because it is simple and easy to use. In SWOT, strengths and weaknesses are considered internal factors while opportunities and threats are external. This also gives the reason why SWOT analysis is sometimes called the Internal-External analysis (Mindtools.com, 2011). This is done with the help of the SWOT matrix where the strengths, weaknesses, opportunities, and threats for the organization are considered. By looking at the strengths of the organization, the possible areas for comparison with the competitors may be discovered and this will also present the weaknesses that the organization possesses. Useful opportunities may come from looking at the strengths and trying to eliminate the weaknesses of the organization. Threats are the external factors that serve as obstacles that an organization may face. SWOT analysis may help the organization in its strategic management decisions as it uncovers opportunities where it is well placed to exploit and by understanding the weaknesses, threats can be managed and eliminated. By looking at the organization and its competitors through the SWOT matrix, management can start to craft a strategy to distinguish it from the competitors and compete successfully in the market.

            TOWS analysis is a variant of the business tool, SWOT analysis, and also stands for the strengths, weaknesses, opportunities, and threats but with a different arrangement (Mindtools.com, 2011). Like in the SWOT analysis, TOWS also produces options that can be pursued and may be realized after matching external opportunities and threats with internal strengths and weaknesses. The difference is that TOWS is usually focused on the external ones and additional combinations such as strengths and opportunities (SO), strengths and threats (ST), weaknesses and opportunities (WO), and weaknesses and threats (WT) are applied.    

            A stakeholder analysis is a technique used to identify and assess the importance of key people, groups of people, or institutions that may significantly influence the success of your activity or project (Erc.msh.org, 1998). This analysis is implemented in the early stage of strategic planning for an organization to account for and often incorporates the needs of those who have a ‘stake’ or an interest in the strategy under consideration. This is done by identifying first the people, groups, and possible institutions that will influence the organization’s initiative. After identifying them, the kind of influence that these groups may have on the organization’s initiative may be anticipated and the development of strategies to get the most effective support possible for the planned initiative can be done. This analysis can help reduce any possible obstacles for the program or strategy to be successfully implemented.

            External and internal factors can be analyzed and summarized in tabular form to assess the company’s position. It is done by completing both the External Factors Analysis Summary (EFAS) and Internal Factor Analysis Summary (IFAS) tables. EFAS assesses the opportunities and threats to the organization while IFAS assesses its strengths and weaknesses. These factors are then weighed based on that factor’s probable effect on the firm’s strategic position and rated based on the firm’s response to that factor. By multiplying the weight of the factor and its rating, the weighted score of each factor is determined. The weighted scores reflect how well the firm is responding to the factors in its external or internal environment. 

            As organizations and companies are affected either positively or negatively by both internal and external factors, it is very useful to apply tools in developing strategic management decisions. These tools will surely help managers to come up with quality strategic decisions for their organizations and companies.