S.W.O.T. Analysis

　In modern strategic management and planning, SWOT analysisis a widely known diagnostic tool. SWOT analysis refers to understanding the strength and weakness of the competitors relative to oneself, and realising the opportunities and threats that the environment may impact on one's business. Interestingly, SWOT analysis was already advocated by Sun Tzu more than 2,000 years ago when he said :　"Know your enemy, know yourself, and your victory will notbe threatened. 

   Know the weather, know the terrain, and your victory willbe complete.

　In fact, "know your enemy, know yourself" is probably the most well-known phrase in Sun Tzu's Art of War. It is also the most cited phrase. Even Mao Tse-tung was known to say, " Know your enemy, know yourself; hundred battles, hundred won". Similarly, many Japanese samurai warriors in the pasthad quoted aspects of this particular famous phrase by Sun Tzu. In my lectures to executives around the world, I have often used this phrase to argue that what we now commonly called SWOT analysis is not a modern "invention" from the Western world. Rather, it originated in China more than 2,000 years ago. It is a pity that the Chinese have not been able to exploit the wisdom that underlies this saying by Sun Tzu. Let me explain.

　"Know your enemy, know yourself" is tantamount to knowing one's strengths and weaknesses relative to those whom we arefighting against (e.g. the competitors, in the case of business). Similarly, "Know the weather, know the terrain" is tantamount to knowing the opportunities and threats posed by the environment. They are the external or uncontrollablefactors. Interestingly, in business we also have such external factors that affect the way we do things. For example, we often talk about the business climate (the weather) and the physical or infrastructural factors (the terrain), and how they can impact on the conduct of business. Thus, while it is very apparent that while the infrastructural factors are in Asia's favour right now (two new world class international airports have just been openedin Malaysia and Hongkong), the business climate has been dampened by the financial crisis that began in July 1997. Ironically, many of these external factors are beyond the control of any single country.

　Besides understanding the direct application to SWOT analysis, what is interesting to note is that Sun Tzu apparently placed more emphasis on understanding the enemy and oneself first. This is not only evident in the quotation cited earlier, but is also supported by another of Sun Tzu's saying: 

　"He who has a thorough knowledge of the enemy and himself is bound to win in all battles.

　He who knows himself but not the enemy has only an even chance of winning.　He who knows not the enemy and himself is bound to perish in all battles."　The need to place greater emphasis on understanding the enemy and oneself may not be very apparent to many readers. However, on closer reflection and analysis, there is profound logic in Sun Tzu's arguments. In war, and businessis no different, the probability of winning or losing depends a lot on whom you are fighting against. You may be very strong, but if your competitor is much stronger than you, you become weaker by comparison. The chances of winning are then greatly diminished. In other words, absolute strengths alone do not determine the outcome of a competition. Rather, winning or losing is based more on relative strengths. What is important to recognise is that your strengths or your weaknesses do not change overnight. In other words, they remain relatively constant or static. In contrast, in any competitive situation, whether you are weaker or stronger will be determined by your competitors (or enemies in the case of war). If your competitors are weaker today, you are stronger. However, you will become weaker in the face of a stronger competitor! In essence, competitive forces are dynamic and changing all the time. By focusing on the competitive forces, you will be "forced" to be more responsive, adaptive and flexible. In the process, the management of change and learning how to overcome changes will become an intrinsic part of your behaviour and strategy development. This is what generals in war and senior executives are trained to do! Unfortunately, in actual operations or competitive situations, many generals and senior executives fall short of their training!

　There are other reasons to focus on the competitors first rather than oneself. Through detailed analysis of the competitors, it is possible to win even if you are weak! This can be done by avoiding the strengths of the competitors. In fact, this was exactly what the Japanese manufacturers did in the 1950s and 1960s.