Proceedings of the 41st International Conference on Computers & Industrial Engineering

FORMULATING AND CHOOSING STRATEGIES USING SWOT ANALYSIS AND

QSPM MATRIX: A CASE STUDY OF HAMADAN GLASS COMPANY

Nima Fakhim Hashemi, Mohammad Mahdavi Mazdeh, Amirali Razeghi, Ashkan Rahimian
Head of Industrial Engineering Dept. and R&D Manager, Industrial Engineering and R&D Dept.,
Hamadan Glass Company, +9809123175605, [email protected]
Assistant Professor, Department of Industrial Engineering, Iran University of Science and Technology,
+98(21)73225002, [email protected]
Chief Information Officer, IT Branch, Industrial Engineering and R&D Dept., Hamadan Glass
Company,+989127197947, [email protected]
Consultant, Hamadan Glass Company, +989122225333, [email protected]

Abstract
Glass industry is one of the largest and most important industries of the country. This industry is divided
to several different groups which differ from each other in terms of production process and raw-material
combinations. One of these groups is bottles and jars industry and Hamadan Glass Company is placed in
this group. This research is a case study of this company and investigates its position in Iran’s glass
industry. In this paper, the process of formulating strategic planning is presented for this company and
the way the proposed strategies are provided and organized is explained by applying strategic planning
paradigms and evaluating internal and external environments. In this regard, SWOT (Strengths,
Weaknesses, Opportunities and Threats) analysis and QSPM (Quantitative Strategic Planning Matrix)
were used for producing strategies and their evaluation. At last, the proposed strategies were presented
in the order of priority.

Keywords
Strategic planning, SWOT analysis, TOWS matrix, QSPM, Glass container (Bottles & Jars)

Introduction
Strategic management can be defined as the art and science of formulating, executing and evaluating
function decisions which enable organizations to reach their long-term objectives [1].
In fact, strategic management is a process through which organizations can recognize themselves and
their surrounding environments and plan, implement and monitor their strategies. Strategic planning is
considered as one of the most important duties of organization managers and, at present, because of the
extent and speed of social and economic development and the increase in competitiveness, its importance
is increasingly growing and all the organizations are compelled to consider it for their survival sooner or
later. In this paper, first, Hamadan Glass Company is briefly introduced. Then, research methodology and
the strategic planning process for the company are presented; the way the proposed strategies could be
achieved for the company using strategic planning paradigms is explained and internal and external
environments are evaluated.

An Overview of the Company

Hamadan Glass Company (PLC) was established in 1975 by a donor from Hamadan and in cooperation
with the former Industrial Credit Bank (currently, Bank of Industry and Mines) and was inaugurated in
1982. The intention was to create employment in the deprived Hamadan Province and to satisfy the
packaging requirements of food and beverage industries. The plant was constructed on a land of 40 acres
and on the 12th km of Hamadan-Tehran road. The company products include different types of bottles for
packaging soda, juice, lime juice and vinegar and different types of jars for packaging pickles, sauce,
olives and so on. The company products hold a share of about 33% of Iran’s market. Moreover, a part of
products are exported to Iraq, Azerbaijan and Turkmenistan. Unit I of this plant includes a melting
furnace with the capacity of 170 Tons and four production lines equipped with I.S. (Individual Section)

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machines. The annual production of this unit is 40000 Tons. This unit was reconstructed and renewed in
2004 and has modern machinery and is able to produce light and half-light glasses. Unit II of the plant
was established in 1999 as the development plan with the capacity of 130 Tons and three production lines
equipped with I.S. machines; the annual production of this unit is 30000 Tons. All the required raw
materials are available in Iran and there is no dependence on imports from foreign countries. Also, since
the company’s products are voluminous, their import from other countries is not cost-effective, which can
be an advantage against foreign competitors if Iran joins the World Trade.

Methodology
The following stages are followed for strategic planning. At first, the organization’s vision and mission
statement are determined. Internal and external environments of the organization are analyzed and the
obtained information specifies opportunities and threats (external factors) and strengths and weaknesses
(internal factors). Then, using SWOT (TOWS matrix), the organizations’ strengths, weaknesses,
opportunities and threats are evaluated. In fact, this is used as an instrument for the systematic analysis of
internal and external environments of an organization; Terrados et al. (2007) considered it as an effective
instrument for identifying the problems and drawing lines of future actions [2]. Finally, QSPM matrix is
used, which was considered in David et al. (2009) as an excellent and useful instrument for formulating
the strategies based on internal and external evaluations and SWOT analysis. Among strategic
alternatives, the relative importance of different facts, roles, tendencies and data may be determined in
order to provide the advantages of an important competition for the company. QSPM provides a
transparent framework for this prioritization process [3].
In this regard, after initial conversations were made and company managers asked the strategic advisory
team to plan for the company, team members, chosen by consultation with the company director, started
their activities. It is worth mentioning that no strategic planning has been conducted in this company so
far. At first, it was essential to obtain the required information and an awareness of the industry which
were accomplished by receiving different related resources from the company and doing research by team
members. Then, the team developed the required questionnaires according to the obtained information.
These questionnaires were mainly organized considering the company’s conditions and following the
strategic pattern model designed by Fred R. David. After that, the company’s vision and mission
statement were formulated by conducting supplementary interviews, distributing and gathering the
organized questionnaires and holding different sessions with the members of board of directors, company
director and experts. Mission statement has been considered the main factor of business success [4].
Strategy selection and evaluation were conducted in three session of: 1) input stage, 2) coordination and
comparison stage and 3) decision-making stage and using different types of matrix including external
factor evaluation matrix (EFE), internal factor evaluation matrix (IFE), competitive profile matrix (CPM),
SWOT matrix, strategic position and action evaluation matrix (SPACE) and quantitative strategic
planning matrix (QSPM) [1].

Mission & Vision statements

At first, the company’s vision and mission statements were determined, which is available at
www.hamadanglass.com. Then, external and internal factors were identified and investigated.

External Factors Evaluation

The objective of analyzing industries and examining environmental factors is to exploit opportunities and
avoid threats. The forces which should be considered in this regard include: 1- economic forces, 2-
environmental, ecological, cultural and social forces, 3- legal, governmental and political forces, 4-
technological forces, and 5- competitive forces. It should be considered that external factors can influence
various organization’s activity process in different ways; that is, some factors which may be considered
opportunities for an organization may be regarded as a threat for another organization and vice versa [1].
Table (1) shows the list of competing companies for Hamadan Glass Company and the comparative status

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of this company. To observe ethics (observe the companies’ legal rights), the names of these companies
are demonstrated by alphabetic letters (A, B, C, D, E & F).

Table 1
List of competitors and the company’s comparative status
From 1992 To 1997 From 1998 To 2003 From 2004 To 2008
Average Average Average
Company
production Market production Market production Market
name
capacity share capacity share capacity share
(ton) (ton) (ton)
HGC* 34500 24% 37402 24.8% 75000 33%
Company A 55200 38% 49205 32.7% 60000 26.4%
Company B 11400 8% 14067 9.4% 10000 4.4%
Company C 9000 6% 11959 8% 6000 2.7%
Company D 24500 17% 21325 14.1% 25000 11%
Company E 10800 7% 16478 11% 15000 6.6%
Company F - - - - 36000 15.9%
Total 145400 100% 150436 100% 227000 100%
(*HGC: Hamadan Glass Company)

Also, Table (2) shows the list of the company’s opportunities and threats which were collected after
summarizing the questionnaires and then weighted during the discussions in the meetings. As can be seen,
the company’s important opportunities include the possibility of providing all the raw material from
inside the country, changing trend of food consumption culture within the country, high shipping costs
from overseas (which is a competitive advantage for the internal companies) and, at last, population
growth. Also, the most important threats include replacing PET containers with glass containers in food
and beverage industries, ongoing developments in competing companies and entry of new competitors,
excessive annual increase of shipping fare inside the company for transporting raw materials and products
and, finally, lack of access to refractory bricks and accessories, components and equipment, in case of
sanctions by European countries (influenced by the political situation).

Table 2
EFE matrix for Hamadan Glass Co.
External Factors Weight Rating Score
Opportunities:
Changing the culture of food consumption from traditional to industrial
products 0.1 3 0.3
Population growth 0.1 3 0.3
Export to neighboring countries 0.05 3 0.15
Possibility of supplying all the raw materials from inside the country 0.15 4 0.6
Cost-ineffectiveness of glass import because of high shipping cost due to
0.1 3 0.3
the products’ bulkiness
Threats:
Replacing PET containers with glass containers in food and beverage
industries 0.15 2 0.3
The ongoing developments of competing companies and entry of new
0.1 2 0.2
competitors
Excessive annual increase of shipping fare for transporting raw materials
0.05 2 0.1
and products
Lack of access to refractory bricks and accessories, components and 0.15 1 0.15

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equipment in case of sanctions

Being affected (being influenced) by economic conditions of food
0.05 1 0.05
industries in terms of packaging glass industry as an intermediate good
Total 1 - 2.45

Internal Factor Evaluation

The objective of recognizing the industry’s inside environment is to recognize an organization’s internal
strengths and weaknesses. The factors which should be considered in this regard include: 1- management
and its structure, 2- sales and marketing, 3- finance and accounting, 4- research and development, 5-
competitive forces, and 6- manpower. Table (3) demonstrates the company’s strengths and weaknesses
for evaluation. They were obtained after summarizing the questionnaires and then weighted during
discussion sessions. As can be seen, the company’s appropriate research and development unit and its
modern and advanced machinery in Unit 1 are considered the most important strengths and, on the other
hand, poor liquidity and lack of production experts who are at the level of European experts are the main
weaknesses.

Table 3
IFE matrix for Hamadan Glass Co.
Internal Factors Weight Rating Score
Strengths:
Research and development unit 0.2 4 0.8
Experienced managers 0.05 4 0.2
Modern, up-to-date and advanced machinery in the plant’s Unit 1 0.15 4 0.6
The plant’s large area of land (40 acres) 0.05 2 0.1
Enjoyment from the silica mine in the city of Abhar 0.05 3 0.15
Weaknesses:
Problem of liquidity (lack of sufficient working capital) 0.15 3 0.45
Lack of production experts who are at the level of experts in the European
0.15 2 0.3
and advanced countries
Old and surplus manpower 0.1 2 0.2
Old support equipment and facilities 0.05 1 0.05
Impossibility for the full settlement of maturity debt of the received
0.05 2 0.1
facilities from the banking system
Total 1 - 2.95

SWOT analysis
In this matrix, as its name reveals, first, the weaknesses and strengths and the factors identified as
opportunities and threats are placed in a three-by-three matrix in a special order. Then, by combining
weaknesses, strengths, opportunities and threats, new strategies are invented and placed in the blanks
corresponding with these combinations [1], [5]. In the following table (Table 4), SWOT matrix is shown
for Hamadan Glass Company using the investigations of internal and external factors (Tables 2 and 3).
Below, all the strategies which are implementable for the company can be observed.

Table 4
The TOWS matrix for Hamadan Glass Co.
Strengths: Weaknessess:
- Research and development unit - Problem of liquidity (lack of sufficient
- Experienced managers working capital)

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- Modern, up-to-date and advanced - Lack of production experts who are at

machinery in the plant’s Unit 1 the level of experts in the European and
- The plant’s large area of land (40 advanced countries
acres) - Old and surplus manpower
- Enjoyment from the silica mine in the - Old support equipment and facilities
city of Abhar - Impossibility for the full settlement of
maturity debt of the received facilities
from the banking system
Opportunities: SO Strategy: WO Strategies:
- Changing the culture of food -Establishing Unit 3 for producing - Creating a unit of crushing and
consumption from traditional to colored bottles (S1, S4, S5, O1, O2, arranging silica (W3, O4)
industrial products O3, O4, O5) - Renewing support equipment and
- Population growth facilities (W4, O3)
- Export to neighboring countries
- Possibility of supplying all the raw
materials from inside the country
- Cost-ineffectiveness of glass import
because of high shipping cost due to the
products’ bulkiness

Threats: ST Strategies: WT Strategies:

- Replacing PET containers with glass - Cooperating with a transportation - Increasing the capital through the
containers in food and beverage company (S2, T3) shareholders’ cash and paid interests
industries - Creating the culture of using glass for the shares (W1, W5, T2, T3)
- The ongoing developments of bottles instead of PET for packaging
competing companies and entry of new
- Using legal benefits and early
competitors
through Consumers Awareness and retirement regulations of the staff
- Excessive annual increase of shipping Environmental Protection (W3, T5)
fare for transporting raw materials and Organization (S1, S5, T1)
products
- Lack of access to refractory bricks and
accessories, components and equipment
in case of sanctions
- Impossibility for the full settlement of
maturity debt of the received facilities
from the banking system

Evaluating and Prioritizing the Strategies

In this stage, it is required to select the best possible strategies from among the strategies that are
implementable in the company, which are obtained using TOWS matrix analysis. This evaluation can be
done using QSPM matrix [3]. The results of this examination about Hamadan Glass Company are given
in Table (5).

Table 5
QSPM for Hamadan Glass Co.
WO-1 WO-2 SO-1 WT-1 WT-2 ST-1 ST-2
Factors Weight AS FAS AS FAS AS FAS AS FAS AS FAS AS FAS AS FAS
Op.1 0.1 1 0.1 1 0.1 4 0.4 - - - - - - 1 0.1
Op.2 0.1 1 0.1 1 0.1 4 0.4 - - - - - - - -
Op.3 0.05 1 0.05 2 0.1 3 0.15 - - - - 2 0.1 - -
Op.4 0.15 4 0.6 - - 3 0.45 - - - - - - - -
Op.5 0.1 1 0.1 - - 3 0.3 - - - - - - - -
Th.1 0.15 - - - - 3 0.45 - - - - - - 4 0.6
Th.2 0.1 2 0.2 - - 4 0.4 2 0.2 2 0.2 3 0.3 3 0.3
Th.3 0.05 2 0.1 - - - - 1 0.05 - - 4 0.2 - 0.05
Th.4 0.15 - - 3 0.45 4 0.6 2 0.3 - - - - - -
Th.5 0.05 - - - - - - 2 0.1 - - 1 0.5 - -

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St.1 0.2 1 0.2 1 0.2 3 0.6 - - - - - - 2 0.4

St.2 0.05 1 0.05 1 0.05 2 0.1 4 0.2 2 0.1 2 0.1 - -
St.3 0.15 - - - - 2 0.3 - - 2 0.3 - - 1 0.15
St.4 0.05 - - - - 3 0.15 - - - - 1 0.05 1 0.05
St.5 0.05 4 0.2 - - 4 0.2 - - - - - - 4 0.2
We.1 0.15 2 0.3 2 0.3 2 0.3 4 0.6 3 0.45 2 0.3 2 0.3
We.2 0.15 1 0.15 - - 4 0.6 - - 1 0.15 - - - -
We.3 0.1 3 0.3 - - 2 0.2 - - 4 0.4 - - - -
We.4 0.05 - - 4 0.2 - - 3 0.15 - - - - 1 0.05
We.5 0.05 2 0.1 4 0.2 4 0.2 4 0.2 2 0.1 - - 3 0.15
Total 2.55 1.7 5.8 1.8 1.7 1.1 2.35
(AS: Attractiveness Score; FAS: Final Attractiveness Score)

Considering the results of QSPM matrix , the priority of strategies are as follows:
1: Establishing Unit 3 for producing colored bottles,
2: Establishing a unit for crushing and arranging silica,
3: Creating the culture of using glass bottles instead of disposable plastic PET (Poly Ethylene
Terephthalate) containers,
4: Increasing the capital through the shareholders’ cash and paid interests,
5.1: Reconstructing and developing equipment and facilities,
5.2: Using benefits of the early retirement regulations for the old staff and employing new and
experienced forces, and
6: Cooperating with a transportation company.

Conclusion
Considering that strategic planning has not been done in the Hamadan Glass Company so far, such kind
of plan was essential for the company. The results show that this industry is in an optimum condition and
the company is in a good competitive situation; however, its financial situation is not desirable.
The strategies and their priorities were identified as follows:
The company’s strategic advisory team identified “establishing a third unit for producing colored bottles”
as the first and most important priority among other strategies.

Acknowledgments
We want to thank the respected authorities, experts and managers of Hamadan Glass Company for their
sincere cooperation.

References
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(QSPM) applied to retail computer store, The Coastal Business Journal, Vol. 8, Number 1, (2009), pp. 42-
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[4] Bartkus, B., Glassman, M., McAfee, B., (February 2006), Mission statement quality and financial
performance, European Management Journal, Vol. 24, Issue 1, (2006), pp. 86-94.
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