Wells Fargo

SWOT Analysis: Its Uses for Wells Fargo
As noted by Giesen (et al., 2010), one of the most difficult things for any business to know is when and how to alter its core business model. Technology businesses such as IBM have been forced to do this, as the physical product lines on which they based their successes have become obsolete. The consequences of failing to innovate are dire, as seen when the physical video rental company Blockbuster failed to enter the digital age. One popular tool to use in reconfiguring a business model or simply improving a business is that of SWOT, or the strengths, weaknesses, opportunities and threats model.
SWOT is a method of analyzing both internal and external threats. Strengths and weaknesses are particular to the organization, while opportunities and threats refer to the external environment. SWOT can be useful to help a business understand what it does well, and what benefits it offers customers. For example, strengths might include a dominant market position, a lean supply chain, a positive organizational culture, and high levels of customer satisfaction. Weaknesses might include the opposite of all of these things, such as struggling to make projected financial goals, a poor organizational culture riddled with tensions, and an outmoded business model.
Opportunities refer to potential areas in which the business can explore to capitalize upon its current model. “Every organization needs to review carefully whether the time is right to revisit its business model, either to pursue new opportunities in its industry or to respond to competitive or technology threats posed to its existing model” (Giesen, et al., 2019, p.19). For example, the business may find ways to use technology to reduce costs, new product lines into which to expand, or new customers to reach. The Internet, for example, has made it possible for many companies to explore new markets which would formerly not be feasible for smaller domestic organizations. Finally, threats refer to potential new encroachments into the marketplace by competitors, the strengths of competitors which may be difficult for the organization to challenge, or larger external threats posed by the economic or political environment, such as an increase in interest rates that may make it difficult for the business or customers to borrow money.
The problem with the SWOT model is that it does not necessarily offer solutions to the problems suggested by the weaknesses and threats component of the model. It does not necessarily provide guidance how to exploit opportunities in a meaningful fashion, such as the demand to balance the costs of exploring expanding internationally versus the potential benefits of doing so. It may even encourage businesses to be complacent about strengths and lack of threats, despite the fluidity of any business situation.
Recently, the banking chain Wells Fargo was facing a number of weaknesses within its own organization, most notably an ethical scandal regarding its banking practices, including the generation of fraudulent customer accounts by its employees (Streeter, 2019). This caused many customers to doubt the bank. As well as a lack of ethics, the scandal also highlighted the degree to which employees felt pressured by a highly competitive sales culture that made them feel as if their jobs were on the line if they did not open new accounts and credit cards for customers (Streeter, 2019).
This was a clue not only of internal weaknesses, but a sense that the goals the business had set for itself, in terms of real, ethical opportunities, could not be sustained. Still, the fact that Wells Fargo did not become embroiled in the 2008 banking scandal and has remained the 4th largest banking chain has enabled it to capitalize upon its strengths to weather the scandal (Streeter, 2019). A number of industry analysts have attributed this to the fact that its digital banking is so strong, and it “has 30 million digitally active customers — about 43% of its total customer base” (Streeter, 2019, par.1). This is an example of how using SWOT analysis can help even a struggling company identify its strengths (and vice versa) and offer guidelines about how to move forward, even during challenging times.
References
Giesen, E., Riddleberger, E., Christener, R., & Bell, R. (2010). When and how to innovate your business model. Strategy & Leadership, 38(4), 17-26.
Streeter, B. (2019). What banking’s future looks like to Wells Fargo’s innovation chief. The Financial Brand. Retrieved from: https://thefinancialbrand.com/89994/banking-future-wells-fargo-innovation-digital-ai-platform-blockchain/