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- Do a SWOT analysis
- For each of the line items in your analysis, give them a weighting as to their importance (ie some threats are going to be deal breakers, others, while real, you don't really need to worry about to much)
- Draw a bow and split it evenly into quarters. On the Y axis you will have your weakness (W) and strengths (S) in the X axis your opportunities and threats. Average your W & S and draw a line along the Y axis, and do the same for the O & T and draw this line on the X axis. The quadrant where the intersections occurs will give you some clues as to the type of strategy which will be appropriate.
- Quadrant 1: (Many internal Strengths, Many external Opportunities) - Calls for an aggressive strategy. could use market development, market penetration, product development, forward integration, backward integration, horizontal integration and conglomerate diversification.
- Quadrant 2: (Many internal Strengths, Grave external Threats) - Calls for a diversification strategy. could use market development, market penetration, product development, horizontal integration, divestiture and liquidation.
- Quadrant 3: (Critical internal Weakness, Grave external Threats) - Calls for a defensive strategy. Strategies include retrenchment, concentric diversification, horizontal diversification, conglomerate diversification, divestiture and liquidation.
- Quadrant 4: (Critical internal Weakness, Many external Opportunities) - Calls for a turn around style strategy. strategies may include concentric diversification, horizontal diversification, conglomerate diversification and joint ventures.
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