Two well-known models in use for strategic planning have their roots from the Harvard Business School. The analysis of strengths, weaknesses, opportunities and threats (SWOT) was a popular Harvard model from the early 1980’s and Michael Porter’s Five Forces is another model by which institutions can analyze their market position. The Five Forces model goes beyond the typical Strengths, Weaknesses, Opportunities and Threats analysis. It forces institutions to predict or explore substitutes for their product or service. Porter’s thesis with Five Forces is that the level of competitive rivalry is paramount to how to best strategically plan.
With the Michael Porter’s Five Forces model, outside influences such as buyer’s power (in higher education it might be student options/choice to obtain an MBA instead of continuing to be underemployed), are considered along with other key questions not included in a SWOT analysis. Porter, from the Harvard Business School, first developed the Five Forces Theory as part of his strategy treatise, “The Competitive Advantages of Nations (1986). Porter’s Five Forces theory provided an alternative framework to analyze markets beyond the strengths, weaknesses, opportunities and threats paradigm.
Since there are so many competing theories on strategy and competitive analysis many entrepreneurs legitimately ask if this analysis is applicable to their specific market. Questions such as: “Why use business analysis tools if we already have a strategic plan or few competitors? Or What tools are essential for my challenges?” . It takes time, skill, and practice to use business tools like SWOT, Five Forces, Blue Ocean, BSG Product Mix, Value Chain for competitive analysis. It requires agonizing discussions on priorities, and creates potential winners and losers in your current product mix. Despite that, there were few entrepreneurs that did not at least acknowledge the value of managing their venture with employees that can analyze their data, market, and use these business tools.
It is one reason I am here at Monmouth College. To help would be entrepreneurs apply these tools.
