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DEVELOPING EFFECTIVE DECISION-MAKING SKILLS Exercise Overview Exercise Background Market Decision-making skills refer to the ability to recognize and define problems and opportunities correctly and then select an appropriate course of action to resolve problems or capitalize on opportunities. As noted in this chapter, many organizations use the SWOT analysis as part of the strategy formulation process. This exercise will help you better understand how managers get the information they need to perform this analysis and how they use it as a framework for making decisions. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. The idea behind SWOT is that a good strategy exploits an organization's opportunities and strengths while neutralizing threats and avoiding or correcting weaknesses. ge You have 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 company's financial performance has gradually declined, and your job is to turn things around. At the same time, the company was successful in part because it was able to charge premium prices for high-quality products. In recent years, however, management has tried to cut costs as a way to bring prices in line with those of new entrants to the market. Unfortunately, the strategy didn't work very well, with the cost-cutting effect being primarily a drop in product quality. Convinced that a new strategy is needed, you've decided to start with a SWOT analysis. 1. List the sources you will use to gather information about the company's strengths, weaknesses, opportunities, and threats.

2. Next, ask yourself: For what types of information is data readily available online? What categories of data are difficult or impossible to find online? (Note: When using online resources, be sure to provide specific websites or URLs.)

3. Next, rate each source consulted in terms of likely reliability.

4. Finally, ask yourself how confident you would be in basing decisions on the information you obtained.