By Dr. Kandis Boyd Wyatt
Faculty Member, Transportation and Logistics, American Public University
Companies have had to pivot quickly during this pandemic to remain relevant and profitable. Some companies had a seamless transition, and others did not. While many factors contribute to a company’s success, it’s important to understand how analyzing both internal and external conditions is important to an organization’s longevity and survival.
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How SWOT Helps a Company to Pivot
According to Practical E-commerce writer Armando Roggio, a strengths, weaknesses, opportunities, and threats (SWOT) analysis can help a business to improve its marketing, find new ways to promote its brand, and avoid competitive threats. Many companies rely on data and statistics to identify trends, but that only provides a limited view of the big picture.
I remember my statistics professor once stating that you can manipulate numbers to tell you just about anything. This is why the use of SWOT is so appealing; it is a strategic company analysis without numbers.
Developing a Business Strategy with a SWOT Analysis
According to Seeking Alpha, SWOT does more than provide a company analysis. It analyzes the competition and develops a plan to improve an organization’s strategic advantage. SWOT analysis can help overcome subconscious blind spots and biases that an organization and its management may have but not recognize.
For example, SWOT may make a company focus on internal successes — the first to enter the market, the first to patent a product, or recognition by marketing statistics. However, blind spots may be several consecutive quarters of stagnant sales, a poor social media presence, or an inability to pivot.
Also, SWOT can provide a realistic assessment of the competition’s strengths. Understanding the competition is crucial to developing a competitive advantage.
The brand loyalty of customers depends on many factors including speed of service, quality vs. quantity, restructuring, profitability, litigation, marketability and company image. Understanding how to distinguish your company from its competitors using SWOT highlights the need to compete for market share, foster innovation, and keep overhead costs low.
An effective SWOT analysis does not have to be exhaustive. But to be effective, a SWOT analysis has to be timely, relevant, and essential to understanding the company as a business capable of competing in today’s highly competitive climate.
What Are the Drawbacks of a SWOT Analysis?
One of the biggest complaints about SWOT is not the time, nor the energy spent to analyze the company, but the lack of action. According to Searchlight, “conducting a SWOT analysis of your business and not using the result to gain competitive advantage, is like being diagnosed with a treatable illness and think by ignoring it, it will go away.” SWOT needs to be followed by actionable results, which is why many are rethinking the use of a SWOT analysis altogether.
Another drawback of SWOT is that strengths and weaknesses are identified first, which places an emphasis on internal organization. However, the ultimate success of a company depends on external factors, which makes opportunities and threats as important, if not more important, than identifying strengths and weaknesses.
Shifting from SWOT to TOWS
The acronym SWOT implies that an organization should analyze itself internally, then shift to external opportunities and threats. However, this situation can be problematic, because most companies need to focus on competitiveness and innovation, both which are directly related to external analyses. So instead of SWOT, a focus on external factors requires a reordering of the methodology to TOWS — Threats, Opportunities, Weaknesses and Strengths.
An article published by the Oxford College of Marketing, “Turning Your SWOT Analysis into Actionable Strategies,” shared some useful tips on how to move your organization’s strategy beyond the planning state. According to the Oxford College of Marketing, “a TOWS analysis is a variant of a SWOT analysis and is an acronym for Threats, Opportunities, Weaknesses and Strengths. A TOWS analysis enables an organisation to match its internal strengths, and external opportunities (SO) to develop ‘maxi-maxi’ strategies – those with the greatest potential for success.”
As a result, minimizing weaknesses and threats becomes a top-down initiative by leadership. Managers need to take action to foster practical change.
SWOT or TOWS Require Reliable Data and Effort
Regardless if you use SWOT or TOWS, an analysis is only as good as the time and effort put into generating results. Taking time to identify true competitors, identifying areas of growth and expansion, noting pivoting patterns in the market, and having an enterprise mindset to understand how each strength, weakness, opportunity, and threat overlaps is crucial for business success.
About the Author
Dr. Kandis Y. Boyd Wyatt, PMP, is a professor at American Public University and has over 25 years of experience managing projects that specialize in supply chain management. She holds a B.S. in meteorology and an M.S. in meteorology and water resources from Iowa State University, as well as a D.P.A. in public administration from Nova Southeastern University.
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