Friday, September 19, 2014

The use and misuse of SWOT analysis and implications for HRD professionals

Summary:
In their research, Chermack and Kasshanna broke down the literature of 51 articles discussing SWOT in order to help human resource development (HRD) Professionals understand this strategy tool.  At the time, only 7 research studies on SWOT were found, the most recent being from Koch in 2000.

Early designs of the SWOT methodology started in the 1950's was developed by Learned et al.  While many variant frameworks have been proposed, most follow a six step process, 1) defining the objective of the SWOT 2) providing an explanation of a SWOT to participants 3) individuals identify companies strengths, weaknesses, opportunities, and threats 4) combining participants SWOTS 5) debate classification of each item 6) develop courses of action.

SWOT is seen as a piece of a larger strategy process.  Strategy should not be guided single highhandedly by a SWOT, but should include the Synthesis of SWOT, STEEP, and other strategy development tools.

In evaluating past research, Chermack and Kasshanna identified many of the misuses of SWOT.  Kock (2000) identified that many often use SWOT as a way of validating the companies current strategy.  SWOT was not designed to validate current strategy, but to identify areas to develop new opportunities.  In addition, Hill and Westbrook (1997) found that companies often rush through the opportunities and threats section as these are the hardest to identify as opposed to the internal strengths and weaknesses of the company.  Companies often perform their SWOT's with incomplete information, but act on them as if they are complete.

Chermack and Kasshanna conclude that SWOT, as an analytic technique, is lacking significant research and literature.  They define SWOT as being stuck in a loop of "research, development, and practice".  There is no empirical evidence to prove the effectiveness of the SWOT technique.  Chermack and Kasshanna suggest that future research be conducted, primarily focusing on answering the questions, "what are the outcomes of SWOT analysis (such as improved decision making), what is the relationship between SWOT analysis and firm financial performance, the effects of SWOT analysis on participant decision making, and the most effective way to engage in SWOT analysis"?

Critique:
As stated by the authors, there is a large lack of empirical research pertaining to SWOT analysis.  While this article was published in 2007, I found it near impossible to find research based articles pertaining to SWOT analysis today.  Due to that, Chermack and Kasshanna offer nothing more than a summary of what has already been written about SWOT.  They offer very little of their own analysis.  Their call for future research, and their suggestions, does warrant mention as they still appear unanswered.  With most companies using SWOT, at some level, the lack of research into its effectiveness is baffling and is in dire need.

Source:
Chermach, T. and Kasshanna, B. 2007.  The use and misuse of SWOT analysis and implications for HRD professionals.  Human resource Development International.




4 comments:

  1. John, STEEP is an analysis tool that examines many of the external trends that may affect the company. STEEP stands for social, technology, economic, ecological, and political. PESTEL is another version of STEEP that adds political trends. STEEP/PESTEL analysis is a good way to identify or confirming many of the external threats and opportunities within your SWOT.

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  2. Harrison-
    Since the authors offer very little on their opinion of SWOT, have you found SWOT to be valuable in your competitive intel experience?

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  3. Kyle, I believe SWOT to be a helpful tool as a beginning step towards developing strategy. SWOT should never be conducted by one individual, such as my experience at my summer internship, but by a group with different backgrounds such as marketing, sales, etc. Also, SWOT cannot be used in isolation. Other analysis must be completed and added to the SWOT to create effective strategy.

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