Threats as opportunities

The SWOT analysis is an old, but still relevant and very much in use decision making and planning tool in both work and personal life situations.

There are those who credit the tool to a team method for planning called SOFT analysis developed by American business and management consultant Albert Humphrey in the 1960s. Some say credit should instead go to two Harvard Business School Policy Unit professors George Albert Smith Jr. and C Roland Christensen during the early 1950s, and then to another HBS professor Kenneth Andrews, who developed its usage and application. All these professors specialized in organizational strategy and not marketing.

SWOT stands for strengths, weaknesses, opportunities, and threats and the SWOT analysis calls for listing in an organized manner all these four as a way of improving on a company’s business strategy, or forcing it to rethink the business in a whole new way. Strengths and weaknesses are internal to the company like business processes, manpower, brand name, and location, while opportunities and threats are external. Examples of the latter would include competitors, pricing, government regulations, and other factors out there in the market.

Then came Michael Porter’s five forces of competitive position analysis developed in 1979 as a framework for assessing and evaluating a business organization’s competitive strength and position. Based on this theory, there are five forces that determine the competitive intensity and attractiveness of a market and these five help an organization understand the strength of its current competitive position. By understanding the latter, a company or an organization can be used to improve weaknesses and move into a stronger position.

These five are supplier power, buyer power, competitive rivalry, threat of substitution, and threat of new entry. Some opine that there should be a sixth, and that is government policies in terms of regulation, taxation and trade.

I believe though that with the relaxation of world trade restrictions and globalization, the international environment should be another important force that greatly impacts businesses nowadays.

Experts say that while the SWOT analysis is macro and serves more as a basic and overall assessment, Porter’s five forces is more of a micro tool, so that both should be employed to understand the business better before undertaking any future strategic decision.

But then, the negatives in both theories and forms of analysis, like weaknesses and threats in SWOT analysis, and all five in the case of Porter’s can be viewed as opportunities. Threats can become opportunities not only for business organizations, but also in viewing life situations.

In an article for EastWest Bank’s publication Reach Further, it has been recommended that the current pandemic is a good time to do a SWOT analysis, identify things in the business that are causing issues, and reimagine a business with smoother operations to help pivot and improve the business model. Completing the analysis now, it said, would help a business face its fears head on and balance them out with optimism, adding that a SWOT analysis is not something that is done just once a year, but must be done when situations change.

For instance, if the weaknesses include lack of online presence, then take that step and create a website or build a social media presence. Or one can use its identified strengths to leverage industry opportunities, or to counter external threats.

Also in another article, this time for forbes.com, it has been pointed out that free time, which is the most valuable and spare thing that we have, has seemingly become more abundant. Instead of enjoying the free time, why not fill it with other activities, reflect on things, rethink habits and routines, and reconsider what we have been doing all along?

The article also noted that for many organizations that have been suffering from slow procedures, complex bureaucracies, and rigid hierarchies, the coronavirus pandemic has forced many of them to break through these rigid systems and act instantly. Suddenly, it said, procedures can be skipped or accelerated, rules can be side-tracked, decisions can be made more autonomously without formal approval, and employees are allowed to work from home without direct supervision. Meetings, which used to take many hours – excluding the time it takes to get to the office due to traffic, have become virtual and shorter.

While it is true that for some businesses and individuals, the pandemic has resulted in lower revenues, closures or layoffs, we have to accept the fact that the threat posed by the virus is still very much real and that all that is left is to view the future with optimism and to find the silver lining. What is good to know is that the pandemic is something that is not going to be here forever (with a vaccine being developed somewhere), but any possible opportunity presented by the pandemic should not be viewed as short-term, but something that can be part of the business or our daily lives even when the situation normalizes.

For comments, e-mail at mareyes@philstarmedia.com