Fundamentals of Management 6th Edition by Ricky Griffin

Exercise 15

Exercise Overview
Decision-making skills refer to the ability to recognize and define problems and opportunities correctly and then to select an appropriate course of action for solving problems or capitalizing on opportunities. As we noted in this chapter, many organizations use SWOT analysis as part of the strategy formulation process. This exercise will help you better understand both how managers obtain the information they need to perform such an analysis and how they use it as a framework for making decisions.
Exercise Background
The idea behind SWOT is that a good strategy exploits an organization's opportunities and strengths while neutralizing threats and avoiding or correcting weaknesses. You've just been hired to run a medium-sized company that manufactures electric motors, circuit breakers, and similar electronic components for industrial use. In recent years, the firm's financial performance has gradually eroded, and your job is to turn things around. At one time, the firm was successful in part because it was able to charge premium prices for top-quality products. In recent years, however, management has tried cutting costs as a means of bringing prices in line with those of new competitors in the market. Unfortunately, the strategy hasn't worked very well, with the effect of cost cutting being primarily a fall-off in product quality. Convinced that a new strategy is called for, you've decided to begin with a SWOT analysis.
Exercise Task
Reviewing the situation, you take the following steps:
Finally, ask yourself how confident you would be in basing decisions on the information that you've obtained.