This article examines the inadequacies in SWOT analysis in examining a company’s strengths and weaknesses. Weaknesses within SWOT analysis include:
- No straightforward methodology for identifying strengths and weaknesses
- Companies list an excessive number of strengths and weaknesses when completing SWOT
- The causes for the strengths and weaknesses are not examined
- Strengths and weaknesses are not listed in a hierarchy
- SWOT examines a company at the moment the analysis is completed and does not monitor changes over time
A focused SWOT is performed using the following three step process:
1. Event-factor Review (EFR) – A company analyzes 6 to 9 events that impacted the value of the company. The company determines if the event was a success or failure, and then derive the strengths and weaknesses from the event.
2. Create a Core-Competency/Problem Tree (CCT) – Of the 8-12 strengths and weaknesses generated from the EFR, companies first must reduce the list to 2-3 core competencies and problems. This is done by:
a. Eliminate redundant , vague, and irrelevant responses
b. Link strengths and weaknesses together using cause-effect logic
c. Discover 2-3 core competencies
3. Create a focused Current Reality Tree (fCRT) – Create a tree by listing the core competencies at the base, and then list strengths caused by the competency. Then continue to list additional strengths caused by the previous list of strengths (i.e. Competency 1 à Strength 1 à Strength 2).
By implementing the focused SWOT, a company is able to create a concise actionable list. Too often, companies generate lists of strengths and weaknesses that are too large to address. By performing a SWOT that assesses the competency and problem level, a company will generate a more useful analysis.
This article adequately points out the inherent flaw in SWOT analysis: its simplicity. Not accurately diagnosing one’s strengths and weaknesses limits the usefulness of the SWOT. By discovering the core competencies and problems that result in the observed strengths a weaknesses, a company can develop an actionable product.
Coman, A. and Ronen, B. 2009. Focused SWOT: diagnosing critical strengths and weaknesses. International Journal of Production Research. 47(20). 5677-5689.