The world has undergone far-reaching changes in recent years in the geopolitical, economic and financial aspects.
These profound changes occur without a continuity solution, which is why we live in permanent change.
The demands consequent on the globalization of the markets, which define this era as an economy without borders (given that commercially, companies may be constituted in different countries), present as a sign of merciless competition.
As a consequence, the environment in which companies comfortably changed drastically and will continue to change continuously: technological changes impose cultural changes and these in turn new technological changes in a cycle of permanent feedback. But even achieving transformations, nothing guarantees business survival, as competition will be greater and greater, confirming that participating in the global market is not a pleasure, but only a survival necessity.
This time of permanent change promotes confusing, paradoxical situations. On the one hand, it is imperative that companies achieve the full participation of all its members, establishing participatory management systems. And, on the other, and sometimes simultaneously, reducing the structures that sometimes includes those who are the participants in the transformation.
It is that the effects of globalization are clearly manifested in the volatility of the markets and in the birth of new demands. This means that, sometimes, companies do not have people with the new skills, and have employees on their list who do not adapt to short-term needs.
The strategy
The strategy has the purpose of adjusting the activities of the organization, social or business, to its resource capacity, while the strategic analysis analyzes the understanding of the strategic position (competitiveness) of said organization by asking what changes occur in the environment? What effects will they have on the organization and its activities? What do managers, shareholders, executives, union, political and social entities aspire to?
For strategic analysis, various tools are used, with similar characteristics. Among them are the PEST, which establishes the importance of political, economic, social and technological influences. Another is the Life Cycle. One of the best known is the Boston Consulting Group's market growth / market share matrix. And another, which we deal with in this work, is the SWOT analysis, known as SWOT (strenghts-weaknesses-opportunities-threats) in English-speaking countries, and as SWOT in Spain.
After which strategic planning is reached, which consists of designing tactics to achieve the proposed ends.
It is then about analyzing the real and possible changes in the environment, the capacities or resources that the company has, the expectations of growth and development of its managers, and the objectives that are set within the cultural, economic and political framework that it defines. And according to these analyzes, define the changes and modifications necessary within the company to adjust to the new realities.
The life cycle
To illustrate the need for continuous development, consider the example of the so-called company life cycle that comprises five stages: 1) Foundational, 2) Development, 3) Maturity, 4) Declination and, in some cases, 5) Disappearance.
1. The foundational stage is when the commercial company is formed and it is decided which products or services will be presented on the market, how the commercialization will be carried out, what will be its organizational, legal structure, etc.
2. The development stage includes the insertion of the company and brands in the market, that is: when it begins to become known.
3. The maturity stage is when it is already consolidated and enjoys recognition and prestige, taking full advantage of its competitive advantages.
4. The decline stage occurs when it stops innovating, launching new products, in short: growing.
5. Failure to take concrete measures to reverse this state of affairs may lead to the disappearance of the company, the closure of its activities.
Something similar happens with the products or services of that company, comprising the stages: 1) design, defining that and how it will be carried out, 2) its inclusion in the market, 3) positioning, which is when it reaches a stable level of sales, 4) decline when those levels begin to fall as a result of the market swings and, finally, 5) discontinuation, when that product or service disappears from the market.
Human knowledge follows the same scheme. The early stage is that of primary schooling, the second includes studies at the secondary or higher level, the third is the application of this knowledge in work activity and the new ones that are acquired in the development of daily tasks, the fourth includes the dreaded obsolescence of knowledge due to advances produced by science and technology, and the fifth is unfortunately verified when they are no longer required by the labor market.
How to modify this state of affairs? Extending the third stage as a way to delay the next two.
- In the company: continuously launching new developments to the market, updating technology, organization and systems. Products and services: updating marketing plans, promotions, presentations of new products and services, among other options. Knowledge: Regarding employees, the only possibility of subsistence in the labor market is permanent training, constant updating, so as to have employability, which is when a person deserves the consideration of being entered into a company for his experience, knowledge, ability to adapt to new situations, development potential, and continue to be considered as such.
The environment
As an example, we provide the following concepts on the analysis of the business environment:
- Cultural
Historical background, ideologies, values and norms of the company. The vision of relationships with authority, leadership patterns, interpersonal relationships. Rationalism, science and technology are fundamental, since they influence the definition of what institutions are like.
- Technological
It is the level of scientific and technological advancement of the company, including its physical base: plants, equipment, infrastructure, and the base of conceptual knowledge (know how). It is the degree to which the company can develop new knowledge and apply it.
- Educational
It is the level of literacy. The degree of sophistication and specialization with which the educational system operates and is exceeded and the proportion of the population professionalized and with specialized training.
- Political
It is the political climate in which society lives. The degree of concentration of power, the political organization and the party system.
- Legal
The constitution, the characteristics of the system of laws, the jurisdiction of the different units of the government and the specific laws of formation, taxes and control of companies.
- Natural resources
The type, quantity and availability of resources and meteorological characteristics.
- Demographic
The type of human resources, their quantity, distribution, age, sex, concentration and urbanization.
- Sociological
The structure and mobility of society, its roles, its organization and its institutions.
- Economic
The general economic framework, the relationship between private and public property, the centralization or decentralization of economic planning, the financial system, fiscal policy, the level of investment in physical resources and the characteristics of consumption.
- Immediate environment
It is made up of all the organizations and individuals with whom the company maintains direct interaction.
- Relationship
The relationship between the company and the environment is perceptual. What really exists in the environment is not faced, what is faced is what is thought to exist.
Decisions are made after a process of interpretation of what happens outside, that is, of the scenario or perceptual map.
The swot analysis
It is an analytical tool that facilitates systematizing the information that the organization has on the market and its variables, in order to define its competitive capacity in a given period. It is generally used by management levels, gathering external and internal information in order to establish Strengths, Opportunities, Weaknesses and Threats (SWOT).
This analysis combines the interior of the company (strengths and weaknesses) with external forces (opportunities and threats).
- Strengths are those characteristics of the company that differentiate it in a positive way when compared with others and consequently enhance the possibilities of growth and development. The Weaknesses are its shortcomings, the aspects in which it will be necessary to act quickly to avoid being in a critical situation. One of its consequences may be the loss of market share. We must bear in mind that weaknesses are the gateway to threats. Opportunities are the possibilities that the market presents, which can only be exploited if the company has the strengths to do so. While Threats are made up of severe conditions that can affect the development of the company, reaching in its extreme case, its disappearance.For example, the performance of a new company with greater economic and financial power and the possibility of "stealing" clients, thus altering the way business is conducted.
As we can see in the graph, Strengths allow Opportunities to be exploited, while Weaknesses quickly become Threats that can leave the company out of competition.
There is no doubt, then, that it is necessary to take advantage of the Opportunities presented by the labor market, for which it is vital to strengthen the Strengths, and overcome them so that the Weaknesses (which must be converted into strengths) do not become a Threat that prevents the survival of the business. Fundamentally through conducting new business, updating technology, creating an efficient organization, and training Human Resources.
The systematic performance of this problem analysis technique (SWOT) allows exercises to be carried out to achieve the objectives set by the organization.
Furthermore, “it enables the development of mental processes that allow the management and transformation of information, through the exercise of analytical and creative thinking skills; since not only is it sought to understand through the construction and reconstruction of objects of knowledge, but it also requires expert, critical and creative thinking, manifested through originality, as well as comparison, relationship, formulation, evaluation and proposing both alternative and own options and models from a comprehensive perspective ”.
It is a good technique to answer the following questions:
- What situation is the organization in at the moment? Where is it currently heading? What situation does the organization intend to be in one, three or five years? How will this be achieved?
The information generated by the analysis of this series of questions will provide data that will allow defining concepts on aspects such as:
- What business are we in? What business should we be in? How is the main product or products defined? Who are the present and future competitors? Who are the main competitors? What customers do we serve? What customers should we to serve? What are the potential markets? Are nuclear markets served? What forces and environmental trends should be considered? What is the main difference we have with our present and future competitors?
Implementation of the methodology
Thus raised, it seems to be of simple instrumentation, but we must bear in mind that its implementation may generate resistance at some levels of the organization, fundamentally due to ignorance or lack of understanding of its importance and usefulness.
Consequently, planning to implement the SWOT involves following these steps:
- Integration of the work team, Design of a work agenda, Brainstorming session, Evaluation of resistance Selection, analysis, and ordering of problems, Strategic alternatives, Planning and permanent evaluation
And keep in mind that the next step is to create a matrix, in such a way as to eliminate subjectivities and make sound decisions. Only in this way the SWOT will be really useful for business decision making.
