Limits of SWOT Analysis and Their Impact on
Decisions in Early Warning Systems
Summary
In this evaluation of SWOT, conducted for the
Romanian Foundation for Business Intelligence's scholarly publication "SEA
- Practical Application of Science", the authors tested the efficacy of
SWOT by comparing its general results with its intended use for strategic
planning. Popescu and Scarlat reviewed
available literature to find a more efficient way to utilize the method of
analysis with other methods. The authors
specifically evaluated SWOT as an effective analytical technique for early
warning systems intended for business use.
The
article opens with an explanation and background on SWOT and its various uses
in the business world. The authors explain that they wish to evaluate the
methodology in order to improve existing business practices for strategic
planning. The evaluation of the
technique is validated by the authors' argument that SWOT is the only external
analysis many businesses will do when planning.
The
article breaks down the benefits in the factors in which a typical SWOT
analysis will address and bring attention for strategists. Opportunities and Threats are the key
sections beneficial for strategic planning.
The
authors then look at what early warning systems are used for and what kinds of
information is necessary in order for the system to be effective. This is done
by evaluating existing literature on early warning systems and key ideas that
experts have found to be essential. Key
questions that competitive intelligence products need to identify are also
raised.
Conclusion
The authors compared the needs for an
effective early warning system against what kind of information can be found
from a SWOT analysis and found that the method is limited in flexibility and
scope. SWOT cannot adequately create
links between internal and external factors of business operations. The
methodology should be used in conjunction with more complete methods of analysis
in order to better inform strategists.
Critique:
The authors do provide a unique and easily
understandable logical test for the methodology but do not utilize enough
resources and literature in order to ensure an accurate result. The authors could have been more effective by
utilizing more nuance in their analysis. In addition the visuals used for
analysis are not easily interpreted to understand the analysis better.
Source:
Popescu, F., & Scarlat, C. (2015). Limits of
SWOT Analysis and Their Impact on Decisions in Early Warning Systems. SEA - Practical Application of Science, 3 (1),
7th ser., 467-472. Retrieved September 2, 2016, from http://sea.bxb.ro/Article/SEA_7_67.pdf
Posts
It makes sense that the authors found Opportunities and Threats to be the key sections beneficial for strategic planning, as they are the only two that really seem to deal with the external environment.
ReplyDeleteDid you find any mention in the literature about how often businesses typically conduct a SWOT analysis?
Unfortunately the authors did not specify any hard number for the use of SWOT in business, they just made mention of the fact that it was generally the only analytical technique used by business managers for strategic planning
DeleteSam, nice post! I take particular interest in the third paragraph. Could you go into further detail on what the benefiting factors were for a typical SWOT analyses and how it applies to key overall strategy decision making processes?
ReplyDeleteThe authors emphasized the value of opportunities and threats when generating an early warning system
DeleteIt is interesting how the researchers broke down SWOT to find which aspects of it are the most beneficial in strategic planning. Did the researchers specify which other methods should be used with SWOT to make it a more useful method of analysis?
ReplyDeleteIt makes sense that they found SWOT to be limited and rigid. It does only measure 4 things. If they suggest using other methods, how much value does SWOT add in the first place?
ReplyDeleteSounds like an interesting article Sam. In the research I've done in preparation for the SWOT exercise, I found multiple sources that discuss the internal nature of the Strengths and Weaknesses sections compared to the more external nature of the Opportunities and Threats. This seems to jive with what the authors of your article were getting at. It begs the question of just how important the strengths and weaknesses sections even are in terms of intelligence purposes which deal almost exclusively with external factors? My first impulse is to say something along the lines of the value of knowing oneself (or one's business) before looking outward.
ReplyDeleteEric S.
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ReplyDelete