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A PROPOSED
SOWT MODEL FOR TEACHING
STRATEGIC
ANALYSIS AND DEVELOPMENT
Grandmont-Gariboldi Nicole
St. Thomas
University
nicolegi@nova.edu
ABSTRACT
This paper proposes a SOWT model for teaching strategic analysis and
development. It offers an improvement over the traditional narrative
form of SWOT analysis often found in current literature. It could be
used at least in the strategic assessment stage of strategy formation.
In addition to this model, this paper includes a number of suggested
frameworks, which also represent workable tools that could be used on
their own or in combination with other models.
INTRODUCTION
The SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats)
characterized early prescriptive models on strategy formation developed
in the 1960s. More recently, Mintzberg (1994) distinguishes between
strategic planning and strategic thinking. According to the author,
planning is about analysis, about breaking down a goal or set of
intentions into steps, formalizing those steps so that they can be
implemented almost automatically, and articulating the anticipated
results or consequences of each step. Strategic thinking is about
synthesis. It involves intuition and creativity. The outcome is an
integrated perspective of the enterprise, a not-too-precisely
articulated vision of direction. Such strategies should be free to
appear at any time and at any place in the organization, typically
through messy processes of informal learning that can be carried out by
people who are involved with the specific issues at hand at various
levels. In line with Mintzberg¡¯s view, in this paper we consider
learning as a key role in strategic development.
THE
PROPOSED MODEL
Often
threats to a firm¡¯s survival come from slow, gradual processes rather
than from sudden events. Seeing the structures that influence behavior
and events should enhance one¡¯s ability to influence reality. Senge
(1990) introduces the concept of ¡°metaiona¡± (i.e. shift of mind), and
offers a number of mental models that could help avoid the fallacy of
relying mainly on symptomatic signals for problem solving. Building on
the author¡¯s idea of ¡°systems thinking¡±, this paper proposes a number of
frameworks for teaching strategic decision making. They could be used as
interactive tools for analyzing the strategic posture of a firm and for
identifying areas of leverage for added stakeholders¡¯ value. They could
also help in the search of the fundamental causes of problems. We use
the notion of ¡°metaiona¡± as the mindset for strategy development in a
focused, adaptive, innovative, and managerial relatedness fashion.
Particularly, we provide an improvement over the narrative form of the
SWOT analysis often found in the current literature.
Annex 1
presents the SOWT wheel model, which involves five wheels
representing respectively the strengths and opportunities on the left
side [SO], the weaknesses and threats [WT] on the right side, and in the
middle, the strategic actions that can be used to maximize the SO
circles and minimize the WT circles. The critical part at the center of
the SO wheels is the firm¡¯s area(s) of leverage. In normal
circumstances, focusing on the strengths and opportunities should allow
to minimize weaknesses and threats. This is why the small circle is
adjacent to the SO circles. The likely shrinking effect on the threats
and weaknesses is reflected in the decrease of the size of the WT
circles. The initial dimension of each circle and the firm¡¯s main area(s)
of leverage can be determined based on quantitative and qualitative
analyses of the firm¡¯s strategic posture. Adjustments in the relative
size of each circle can be estimated for instance using percentage
changes in performance measures such as market share, return on assets,
unit cost, etc. The idea is to avoid a defensive approach, which focuses
on threats and weaknesses and bears the risks of developing vicious
circles of actions-reactions involving the firm and its competitors.
However, some weaknesses and threats may never be eliminated because, as
side effects, they may have to be included as inherent part of the
process as a whole. Also, the model allows shifting the small circle to
the right in particular cases, such as crisis situations.
Annex 2 shows the strategic posture of Bombardier Inc. as an example. We
identify the Bombardier Manufacturing System [BMS] as the main area of
leverage and the virtual corporation and expert systems as some major
tools for maximizing the SO side.
Bombardier
Inc. is one of the largest manufacturing companies in Canada. It
exercises its activities of conception, development, fabrication, and
commercialization in the fields of transportation equipment, civil and
military aerospace, defense, and motorized consumer products. The
company also offers financial and real estate services as well as
support, maintenance and training, and operations management services.
Annex 3 presents a historical outline of the company. Based on
Galbraith¡¯s (2001) ¡°center of gravity theory¡±, Bombardier¡¯s success
would result mainly from its ability to remain close to its center of
gravity while diversifying and evolving in various segments. According
to the theory, the firm¡¯s success in implementing and managing
diversification will depend on the degree to which it operates at the
same center of gravity in a new industry. Annex 4 presents two
frameworks, one summarizing the basics of the theory, the second showing
a number of test results suggesting practical implications. Following
are the basic assumptions underlying the theory: 1] firms learn
different and important lessons at the initial stage (the center of
gravity) of the vertical chain in which they began their operations; 2]
lessons learned at this stage influence a firm¡¯s values, business
lessons, management systems, succession path, organization, and
mindsets; 3] different stages in the vertical chain represent different
centers of gravity because they face different managerial problems and
tasks. Laurent Beaudoin, Chairman and former CEO, says: ¡°What does
Bombardier do, essentially? It assembles metal parts. It welds. It
uses professionals and trades that revolve around this key activity. If
you look at it from this angle, you see that there isn¡¯t such a big
difference between a rail car and an aircraft fuselage¡± (Bellavance
,1992). At the core of Bombardier¡¯s strategic posture is the Bombardier
Manufacturing System [BMS]: ¡°Engineering takes the aircraft and breaks
it down into parts. Manufacturing takes the parts and assembles the
aircraft. Engineering only knows the sequence in which the aircraft is
assembled when it has all the drawings, but manufacturing can start with
the parts and then get the sequence. They can start early, meet in the
middle, and cut cycle time by half¡±. (Bellavance ,1992). Bombardier
succeeded in diversifying in various businesses while remaining close to
its center of gravity without compromising its relentless metamorphosis.
As a learning enterprise in a changing market environment, last year the
firm even spun off its original core business, ski-doo manufacturing.
The essence of its center of gravity still lies in the firm¡¯s BMS, but
the form has evolved.
In Annex 5
we propose a framework suggesting the use of the Virtual Corporation
[VC] for strategic alliances. We include a functional definition of a
virtual corporation: a network of companies stripped to their core
competencies using leadership, information technology, human resources,
and the synergy from strategic alliances, partnerships, and teams, to
create a Value Chain for customers and other stakeholders Added-Value.
Using the VC is in line with one of the company's objective: a
concomitant management of complexity and flexibility. However the
caveats and risks of such an approach include: the difficulty of
controlling the quality of partners-contractors; access control is
difficult because of close-coupling of business partners that involves
shared access to resources; conflict of interest among business
partners; it is difficult for people to adjust; revolving door of
personnel, which would not fit in the company's resource management
philosophy. Annex 6 shows a summarized tasking document in the context
of a VC.
Expert
Systems [ES] could also be used as a main vehicle to exploit the
company's technical know-how through the Bombardier Service Group [Annex
7]. This approach appears as a natural evolution in the company's move
towards the downstream side of the value chain, getting closer to the
customer by creating not only a Service Group but a Knowledge- and
Service-Based Group with more explicit emphasis on the "Knowledge"
content. Annex 8 shows a perspective of "Information-Knowledge as an
Asset". The idea is using ES to capture and disseminate knowledge to
assist in the company's decision making process in providing its support
and maintenance services.
Following
are some cost-benefits of expert systems: customers: enhanced
satisfaction; product: lower cost [by capturing scarce and expensive
expertise], quality [by consistent advice and reduction of error rate],
responsiveness, reliability [includes important information that may
otherwise be overlooked], conformance; participants: skills
[accessibility to knowledge, personnel training], involvement, job
satisfaction, security. But ES present some risks such as the
following: Even for highly skilled experts, it is difficult to abstract
good situational assessments; they may not be able to explain the line
of reasoning. Users of ES have natural cognitive limits. The vocabulary
used by experts for expressing facts or relations may not be understood
by others. Knowledge transferred is subject to perceptual and
judgmental biases. ES may not be able to arrive at a conclusion in some
cases. Sometimes ES produce incorrect recommendations; some conclusions
may be valid according to inference rules, but false in reality [ex.
birds can fly, ostrich is a bird, therefore it can fly]. Except for
problems that can be treated totally by ES, the user is ultimately
responsible for the decision based on common sense and other sources of
information. ES do not understand the data and the knowledge they are
manipulating; this is why it is risky to trust ES to make decisions
independently.
Finally,
the Annexes 9 and 10 show respectively some perspectives about Corporate
Effectiveness and Operational Efficiency.
The models
and frameworks we propose in this paper can be easily adapted to
particular situations. They allow interactive inputs from students in
the traditional or virtual classroom. They also provide a basis for team
learning. Their possible combination with other models, such as the GE
and the REAL models, and their flexibility make them potential workable
tools for creative thinking in strategic analysis and formation. The
REAL model proposed by Hollander & al. (2000) uses the resources,
events, agents and location as the main pillars of information system
analysis and development. However, the models and frameworks imply the
users¡¯ inputs and therefore a degree of involvement. Particularly, the
SOWT wheel model requires that students prescribe real actions to make
the wheels move in an effective manner, which is often a difficult task.
Conclusion
This paper
proposes a number of models and frameworks for teaching strategic
decision making. The SOWT wheel model particularly offers an improvement
over the narrative form of SWOT analysis often found in the current
literature. The SOWT framework focuses on the strengths and
opportunities and builds on the firm¡¯s main areas of leverage for
strategic positioning. We also propose additional frameworks that could
be used as interactive tools for teaching strategic decision making.
We use the
example of Bombardier, a Canadian firm which succeeded in diversifying
in a managerial relatedness fashion, evolving from the snowmobile
manufacturing sector to transportation, and to the aerospace, while
remaining close to its center of gravity. Bombardier¡¯s manufacturing
system [BMS] is the main area of leverage for the firm¡¯s strategic
positioning as it allows maximizing the transfer of technologies within
its operating units.
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REFERENCES
Bombardier Inc. Annual Report 1998 & 2003
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A.S., Denna E.L., & Cherrington J.O. (2000), Accounting Information
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Business
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A. & Zeithaml C.P. (1995), Operationalizing and Testing Galbraith¡¯s
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Doubleday/currency New York, N.Y.
Note:
In this paper we use the example of Bombardier with data mainly from the
Annual Report of 1998. More recent data could alter the content of the
suggested frameworks.
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