Swot analysis

internal factors competitors external factors core competencies

A SWOT analysis is used by management to analyze and estimate a company’s economic situation in order to reduce a risk of being acquired. SWOT stands for strengths, weaknesses, opportunities and threats. In formulating its strategy, a company should look at its strengths and weaknesses in relation to its 1) …, which characterise the current situation of the company. For example, a good sales team is a strength and poor internal communication is a weakness. The company should also look at future opportunities and threats in its environment: the strength of competitors, government regulation, the way that society is changing etc. These are 2) … . For example, a change in a country’s legislation on broadcasting might present an opportunity for a group that wants to buy a television company there. The change would probably also pose a threat to existing broadcasters. The way that a company organises and combines its human resources, know-how, equipment and other assets are 3) … .These are 4) … .

Concept Check

1. In what terms can takeovers be described? Why?

3. What is the difference between various defensive tactics?

5. What does SWOT stand for? What is its role in protecting a company against hostile acquisitions?

Key learning points M&As are concerned with investing money into new companies and refer to the aspect of corporate finance strategy and corporate management. In business and economics, a merger is a combination of two or more companies into a new single larger firm. Compared to a merger, an acquisition happens when a company (the acquirer) purchases another (the target). Such events resemble mergers but without the formation of a new company. A hostile takeover or takeover acquisition occurs when a company attempts to buy out another whether the management of the target company likes it or not and can be accomplished through a number of tactics. No one can know exactly what the best defence against a hostile takeover is in terms of efficiency. Obviously, the most efficient defence will vary from situation to situation. But some types of defences that managers can use seem to be more efficient than others.

Round-table session

1. Use the texts in Readings II-III to complete the cluster diagramme below. Add boxes if necessary.

2. Make a Power Point presentation on business integration taking into consideration the ideas reflected in the diagramme above.

3. Hold a round-table session to discuss the problems of business integration. Use the presentation to support your viewpoint. Do not forget to mention such things as

• possibilities of investing money, reasons for and against M&As;

• types of business integration;

• a merger and its consequences;

• kinds of takeovers;

• leveraged buyouts and management buyouts; and

• defences against a hostile takeover.