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160 Part 2 • Planning
against. Opportunities are positive trends in the external environment; threats are
negative trends.
Step 3: Doing an internal analysis. Now we move to the internal analysis, which
provides important information about an organization’s specific resources and
capabilities. An organization’s resources are its assets—financial, physical,
human, and intangible—that it uses to develop, manufacture, and deliver products
to its customers. They’re “what” the organization has. On the other hand, its
capabilities are the skills and abilities needed to do the work activities in its
business—“how” it does its work. The major value-creating capabilities of the
12
organization are known as its core competencies. Both resources and core
competencies determine the organization’s competitive weapons.
After completing an internal analysis, managers should be able to identify
organizational strengths and weaknesses. Any activities the organization does well
or any unique resources that it has are called strengths. Weaknesses are activities
the organization doesn’t do well or resources it needs but doesn’t possess.
S The combined external and internal analyses are called the SWOT
W analysis because it’s an analysis of the organization’s strengths, weaknesses,
opportunities, and threats. After completing the SWOT analysis, managers are
O ready to formulate appropriate strategies—that is, strategies that (1) exploit an
T organization’s strengths and external opportunities, (2) buffer or protect the
organization from external threats, or (3) correct critical weaknesses.

Write It 2!
If your professor has assigned this, go to the Assignments section of mymanagementlab.com to
complete MKTG 2: SWOT Analysis.

Step 4: Formulating strategies. As managers formulate strategies, they should consider
the realities of the external environment and their available resources and
capabilities and design strategies that will help an organization achieve its goals.
Managers typically formulate three main types of strategies: corporate, business,
and functional. We’ll describe each shortly.
Step 5: Implementing strategies. Once strategies are formulated, they must be
implemented. No matter how effectively an organization has planned its strategies,
performance will suffer if the strategies aren’t implemented properly.
opportunities
Positive trends in the external environment Step 6: evaluating results. The final step in the strategic management process is evalu-
ating results. How effective have the strategies been at helping the organization
threats reach its goals? What adjustments are necessary: Do assets need to be acquired or
Negative trends in the external environment
sold? Does the organization need to be reorganized? and so forth.
resources
An organization’s assets that it uses to develop,
manufacture, and deliver products to its customers
Write It 3!
capabilities
An organization’s skills and abilities in doing the If your professor has assigned this, go to the Assignments section of mymanagementlab.com
work activities needed in its business and complete MGMT 7: Planning (Business Plan Research).
core competencies
The major value-creating capabilities
What Strategic Weapons Do Managers Have?
of an organization
strengths ESPN Digital Media gets some 75.7 million unique users a month on its digital media platforms.
Any activities the organization does well or any Just think of that—75.7 million! That’s almost nine times the population of New York City. And its
unique resources that it has
popular online platforms are just one component of ESPN’s many businesses. Company president
weaknesses John Skipper “runs one of the most successful and envied franchises in entertainment” and obvi-
Activities the organization doesn’t do well or ously understands how to successfully manage its various strategies in today’s environment. 13
resources it needs but doesn’t possess
In today’s intensely competitive and chaotic marketplace, organizations are looking for
SWOT analysis whatever “weapons” they can use to do what they’re in business to do and to achieve their goals.
The combined external and internal analyses
We think six strategic “weapons” are important in today’s environment: ❶ customer service,