ManagementDynamics16-2
ManagementDynamics16-2
SWOT analysis can help organizations develop an can seize opportunities and avoid threats when
early alarming system that take into considerations facing an uncontrollable external environment,
all necessary preparations before possible threats such as fluctuating prices, political destabilization,
rise, and implement capable strategies to face such social transition, change in the rule of law, etc.
threats and minimize their negative consequences. The purpose of the analysis of internal strengths
In this regard, Thompson (1990) suggests that and weaknesses is to evaluate how an enterprise
strategy makers should consider the following carries out its internal work, such as management,
scheme while implementing SWOT analysis: work efficiency, research and development, etc. If
used correctly, SWOT can provide a good basis
• Determining the most important factors and
for successful strategy formulation.
reasons for selecting such factors.
• Forecasting changes that might influence the No research was done to cover the issues on
mentioned factors. SWOT analysis of leather shoes markets in Nepal.
• Aligning of all forecasts. The research has tried to express the impact of
strength, weakness, opportunity, threat as well
• Undertaking reality and honesty in assessing as external factors and internal factors on leather
competitors' strengths and weaknesses as well as shoes markets in Nepal.
their own organization.
This study addresses the following research
Environmental diagnosis refers to the process questions:
of predicting the importance of information we
get out from SWOT analysis (Glueck & Jauch, - What are the areas of opportunities and threats
1988). This process is subject to the influence of in Nepalese leather shoes markets?
two factors. First, the characteristics of strategy - What are the areas of strengths and weakness
makers which include their experience, ambition, in Nepalese leather shoes markets?
perception style, and the psychological state
during the diagnosing operation. Second, the - Which external environmental factors or
nature of strategy makers' type of work which internal environmental factors are dominant
includes time pressure and work tension, in Nepalese leather shoes markets?
availability of organizational resources, the This study aims to achieve the following
importance of decision making, the abundance objectives:
of time allocated to this function, and whether
- To identify the area of opportunities and threats
managers are occupied with other activities or
in Nepalese leather shoes markets.
not.
- To analyze the strength and weakness in
2. Statement of the Problem and Nepalese leather shoes markets.
Literature Review - To measure the influence of external
Strategic management has been widely used by all environmental factors and internal
enterprises to withstand fierce market competition. environmental factors.
The strategic management process consists
of three stages: strategy formulation, strategy The origins of the SWOT analysis technique is
implementation, and strategy evaluation (David, credited by Albert Humphrey, who led a research
1998). SWOT analysis of external opportunities project at Stanford University in the 1960s and
and threats as well as the internal strengths and 1970s using data from many top companies. The
weaknesses of the enterprises is important for goal was to identify why corporate planning
strategy formulation and development. The failed. The resulting research identified a number
purpose of the analysis of external opportunities of key areas and the tool used to explore each
and threats is to evaluate whether an enterprise of the critical areas was called SOFT analysis.
64 / Management Dynamics
Humphrey and the original research team used Threats: A threat is defined as any improper
the categories “What is good in the present is event or force in the external environment
Satisfactory, good in the future is an Opportunity; that causes harm to the organization's strategy
bad in the present is a Fault and bad in the future (Rowe, 1994). It also can be viewed as a challenge
is a Threat.” This was called the SOFT analysis. In caused by a negative attitude inconsistent with
1964 Urick and Orr at a conference changed the the organization's common norms. It is also a
F to a W, and it has stuck as that, SOFT to SWOT set of conditions, resources and capabilities that
(SWOT Analysis Slovak Republic, 2009). organizations need or pressured to work with,
but can not influence or have control over it. The
SWOT is an acronym for Strengths, Weaknesses, above mentioned threats and opportunities can
Opportunities and Threats, and perhaps the most achieve the following results (Kotler, 1997):
well known approach for defining strategy (Zach, • Ideal activities tend to have high states of
1999). It is used to analyse these four factors that opportunities and low states of threats.
either apply to a business or to an organisation.
The technique is mainly used for a analysing a • Risk activities tend to relate to high states of
company’s internal capabilities (i.e. strengths threats and opportunities.
and weaknesses) in relation to the competitive • Mature businesses are low in risks and
environment (i.e. opportunities and threats) opportunities.
(Avison & Fitzgerald, 1996). This study basically
focuses on SWOT factors. • Turbulent environments are low in opportunities
and high in threats.
Opportunities and Threats
Strengths and Weaknesses
Literature definitions of threats and opportunities
are viewed in the following two sections. Strengths and weaknesses are viewed as results of
factors and variables that can be controlled within
Opportunities: Opportunities are defined as a organizations which may be good or bad. If results
set of conditions suitable for achieving goals at are satisfactory, then this will reflect the strength
the right time. We thus can define opportunity of one organizational factor or more; while if they
as a positive state that gives organizations some are poor and unsatisfactory, then this will prove
kind of relative advantages, or an environmental that some organizational factors are weak.
approach that positively influences firm's profits.
Strengths: It represents the internal power that an
According to Peter Drucker (cited in Rousan & organization possesses to compete against its rivals
Qawasmeh, 2009) opportunities can be divided (Sharplin, 1986). It also represents organizational
into three types: added opportunity where capabilities and internal positive attitudes that
investment in this type does not impact the enable organizations possess strategic power to
nature and characteristics of the organization achieve organizational goals. While others view
such as using the available resources to expand, organizational strengths as skills and abilities that
where revenues from this type of investment are enable organizations set out and implement their
limited. The second type is the supplementary strategies so as to outperform their rivals (Barney
opportunity where organizations have to & Griffin, 1992).
acquire new knowledge to take advantage of
this opportunity. The third type is the explosive Weaknesses: Weaknesses represent organizational
opportunity where organizations must own aspects that negatively impact product and/
huge capital to spend on R&D. By exploiting or service value with regards to customers
such opportunities organizations must carry out or competitive environment. Weakness also
tremendous changes in organizational standards represents shortages in internal capabilities that
and attributes.
SWOT Analysis of Leather Shoes Markets in Nepal / 65
make organizations unable to achieve their goals Maharjan investigated on measuring competitive
or loose their competitive advantage. position of insurance industry in Nepal through
SWIOT analysis. Maharjan (2012) found
Wizardry of SWOT that the non-life insurance group, the mean
score of strengths, threats, opportunities, and
The wizardry of SWOT is the matching of specific
weaknesses are ranked first, second, third, and
internal and external factors, which creates a
last respectively whereas the mean score of
strategic matrix, which makes sense. (Note:
strengths, opportunities, threats, and weaknesses
The internal factors are within the control of
are first, second, third, and last respectively in the
your organization, such as operations, finance,
life insurance industry. The study has found that
marketing, and in other areas. The external
both non-life and life insurance industry has high
factors are out of your organization's control, such
effect of strengths and low effect of weaknesses.
as political and economic factors, technology,
competition, and in other areas). The four
combinations are called the Maxi-Maxi (Strengths/
2. Research Methodology
Opportunities), Maxi-Mini (Strengths/Threats), This study investigates the SWOT analysis of
Mini-Maxi (Weakness/Opportunities) and Mini- leather shoes markets in Nepal. The research
Mini (Weaknesses/Threats) explained in Table 1. design of this study is descriptive as well as
analytical research. This study is based on
Maxi-Maxi (S/O): this combination shows the primary data only. Primary data were obtained
organization's strengths and opportunities. In from questionnaire administered for measuring
essence, an organization should strive to maximise strength, weakness, opportunity and threats
its strengths to capitalise on new opportunities and external environmental factors and internal
(Weihrich, 1982). environmental factors.
Maxi-Mini (S/T): this combination shows the
organization's strengths in consideration of Quantitative methods or survey research is
threats, e.g. from competitors. In essence, an applied for this study. Direct responses of the
organization should strive to use its strengths to respondents were taken. Data were generated
parry or minimise threats (Weihrich, 1982). in five point likert scale anchored by “Strongly
Disagree” = ‘1’ to “Strongly Agree” =‘5’.
Mini-Maxi (W/O): this combination shows
the organization's weaknesses in tandem with The population of the study is workshop
opportunities. It is an exertion to conquer the participants. The workshop program was
organization's weaknesses by making the most organized by Government of Nepal, Ministry
out of any new opportunities (Weihrich, 1982). of Industry and Leather Footwear and Goods
Manufacturers' Association of Nepal (LFGMN)
Mini-Mini (W/T): this combination shows the
on the topic 'Workshop on entrepreneurship
organization's weaknesses by comparison with
development management program for youth
the current external threats. This is most definitely
entrepreneurs' in Hotel Country Villa, Nagarkot,
defensive strategy, to minimise an organization's
Kavre on dated 19-20 April, 2012 (7-8 Baishakh,
internal weaknesses and avoid external threats
2069). All 25 to 30 proprietors, chairman, directors
(Weihrich, 1982).
and other officers of different leather shoes
companies were participated to the program. The
Table 1: SWOT Matrix
researcher has been invited as a resource person
Strength Weakness to give presentation on 'Brand Management'
Opportunities S/O S/T and 'Consumer Relationship Management'. The
Threats W/O W/T researcher has got an opportunity to interact
with these personalities. The researcher has
66 / Management Dynamics
distributed 30 questionnaires to them. But only the self administered questionnaire methods
12 questionnaires were returned successfully, among the respondents.
having 40 percent of response rate only.
- Convenience sampling is taking for
participation.
The final version of the questionnaire was made up
(i) evaluation of four SWOT variables (ii) external - Data are primary in nature.
environmental and internal environmental
variables and (iii) demographic questions. Table 2: Respondents from Leather Shoes
Companies
Reliability analysis was done to check the scale S.N. Companies
item's reliability (George & Mallery, 2009).
1 Dhananjay Footware
Descriptive statistics like mean and standard
2 Fitwell Shoes Industries Pvt. Ltd
deviation were used for summarising the data.
Ranking is used to categorize the scale items 3 Makalu Footware
and overall score of the variables. The result of 4 N J Footware
analysis has been properly tabulated, analyzed 5 New Lotus Footware
and interpreted. Databases such as SPSS 18.0, and 6 Prasamsha Footware
Excel 2002, were used for this research. 7 Shikhar Shoes Industries Pvt. Ltd
8 Sky Shoes Industries Pvt. Ltd.
This study was limited to establishing the SWOT 9 Subhalabh Footware
analysis of leather shoes markets in Nepal. 10 Typical Footware
- The study is based on the data available from 11 Utsav Footware Industry Pvt. Ltd
The study indicates that all the respondents are the seven scales items were accepted to increase
male. the value of the measurement. Four scale items
T1 (Number of new leather shoes companies
Majority of the respondents are 30-40yrs of age are increasing in the country), T2 (The company
with a steady percentage of 41.7 percent, 33.3 has to sustain in global competition market), T6
percent of the respondents fall between the age (Political instability has challenged the business),
of 40-50years old, whereby 16.7 percent are in the and T7 (Bargaining power of customers has been
range of 20-30years old. increasing) among seven items were eliminated
from Threats variables (T). Two scales items EE4
Most of the respondents are graduate level (Technology has greater impact on the firm) and
qualification with the percentage at 75 percent, EE5 (Legal has greater impact on the firm) among
post graduate level respondents at 16.7 percent five scale items were eliminated from impact of
and undergraduate level respondents at 8.3 external environmental factors on the firm (IEE).
percent. All the six items were accepted to increase the
value of the measurement in impact of internal
For designation, one chairman, two directors, environmental factors on the firm (IIE).
three proprietors and others officers are six
numbers participated in this study. 3.2 `Descriptive Statistics
Strength variable (S): Leather shoes companies
3. Results and Discussion have the highest mean score of strength variable
3.1 Reliability Analysis shown by S1(Brand name of this company is
popular in the market) is 4.17 with corresponding
The reliability of used measurement scales were standard deviation 0.84. The lowest mean score of
tested using Cronbach's alpha coefficient. strength variable shown by S5(The company has
working environment with computerized system)
Table 4 Reliability Analysis is 2.42 with corresponding deviation 1.51.
The lowest mean score of opportunities The lowest mean score of impact of external
variable shown by O1 (The company has been environmental factors on the firm (IEE) variable
doing business in global market) is 1.58 with shown by IEE1(Impact of political instability) is
corresponding deviation 1.38. 1.25 with corresponding deviation 0.45.
than 3 score (i.e., neutral). So, the leather shoes advantage in the business. But, economic
companies have also high weakness. recession creates challenges to the business.
Rival companies are making competing
The mean score of strength variable is 3.29 (i.e., marketing strategies.
3.29 > 3) which is ranked third. It is more than 3 • Leather shoes companies have high effect
score (i.e., neutral). So, leather shoes companies of threats, weakness as well as strength and
have also high strength. opportunities are also seen in these sectors.
This explains that there are threats in the leather
The mean score of opportunities variable is 3.04 shoes business but there is opportunities
(i.e., 3.04 < 3) which is ranked fourth and last. It is and strength also available. If we are able to
above than 3 score (i.e., neutral). So, leather shoes increase our strength strategically we are able
companies have also high opportunities. to capture the opportunities.
• Mean score of threats, weakness, strength and
3.5 Rank of Overall Mean of SWOT
opportunities are ranked first, second, third,
Factors
and last respectively. No matter whatever
Table 8: Rank of Overall Mean of SWOT the rank but we always have to think about
Factors opportunities and strengths that are above the
neutral value (i.e., 3) so good strategy should
Particulars Mean St. Rank
Deviation be made to skim the opportunities from the
Internal leather shoes markets.
Environment 3.05 1.15 1
• Internal environmental factors have highly
External 2.08 0.75 2
Environment affecting on performance of leather shoes
companies rather than external environmental
Table 6 expresses that the mean score of internal factors.
environmental variable is 3.05 (i.e., 3.05 < 3)
which is ranked first. It is above than 3 score 4. Conclusion
(i.e., neutral). So, leather shoes companies have The SWOT analysis is an extremely useful tool
been highly affected from internal environmental for understanding and reviewing the company’s
factors. position prior to making decisions about future
company direction or the implementation of a
The mean score of external environmental variable new business idea. In this study, SWOT analysis is
is 2.08 (i.e., 2.08 < 3) which is ranked second or used to analyze the impact of strength, weakness,
last. It is below than 3 score (i.e., neutral). So, opportunity and threat variables as well as external
leather shoes companies have been least affected and internal environmental factors contribution
from external environmental factors. to leather shoes companies are also considered.
This study has given contrast result from through SWOT Analysis. The Nepalese
Maharjan (2012) that all the strength, weakness, Management Review, 15(1), 95-108.
opportunities and threat variable has high impact
Narayanan, V.K., & Nath, R. (1993). Organization
on leather shoes companies' performance.
Theory: Strategic Approach. USA: Irwin
INC.
It is clearly advised that competitive strategy
should be formulated to capture the opportunities, Rousan, M., & Qawasmeh, F. (2009). The Impact
increase the strengths, and to reduce the weakness of SWOT Analysis on Achieving a
and lessen the threats. Competitive Advantage: Evidence from
Jordanian Banking Industry. International
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Position of Insurance Industry in Nepal