Advantages and Disadvantages of SWOT Analysis
There are numerous advantages and disadvantages of SWOT analysis. SWOT analysis can be defined as a tool for identifying the strengths, weaknesses, opportunities as well as threats of a company or organization. In basic terms, SWOT analysis is a straightforward model for assessing what a company or organization is capable of and incapable of as well as the potential threats and opportunities of that particular organization. This analysis entails taking information from environmental analysis and separating it into external and internal issues. External issues are the threats and opportunities while internal issues are the weaknesses and strengths of an organization. SWOT analysis is used to determine what can help a company in achieving its goals and determining the obstacles that have to be minimized or overcome for the desired results to be achieved.
What are the major advantages and disadvantages of SWOT analysis?
While brainstorming, the leadership of an organization defines objectives and analyzes the strengths of the organization using SWOT analysis. The organization leadership also states conditions or opportunities that will make the achievement of the stated objectives possible. If this analysis indicates that the organization can achieve the objectives, the goals are included in the organizational strategy. If it indicates that they cannot be achieved, the leadership selects another objective and repeats a SWOT analysis process.
SWOT analysis is used in structuring strategic planning during brainstorming sessions. This analysis facilitates business alternatives’ evaluation. For instance, SWOT analysis can be used effectively in analyzing new products or services’ introduction, business expansion, new business processes and functions implementation as well as engaging in a joint venture. This analysis can also be used in assessing product markets, technologies and vendors.
- Application neutrality
This analysis is used in identifying both external and internal factors that are unfavorable and favorable to the achievement of the set objectives. The analysis remains the same when used in supporting opportunity analysis, strategic planning, business development, product development and competitive analysis.
- Multi-level analysis
By viewing different elements of this analysis, valuable information regarding the chances of an objective can be obtained. These elements are strengths, weaknesses, opportunities and threats that can be used in combination or independently. For instance, strengths like extensive experience within an industry with rapid growth internationally can indicate that a company needs to partner with a foreign firm.
No training is required to perform a SWOT analysis. Anyone who knows the business under analysis can perform this analysis.
This analysis entails a one-dimensional model where every problem is seen as a weakness, strength, threat or opportunity. Consequently, every attribute is seen as having a single influence on a problem that is being analyzed whereas a factor can act as a weakness and strength.
- No adequate weighing of factors
This analysis does not prioritize issues. It simply provides a list of weaknesses, strengths, threats and opportunities without a mechanism for ranking the importance of each factor against each other. Consequently, any true impact of a factor on the stated objective is not stated.
- Subjective analysis
To impact on the performance of a company, the decisions of a business should be based on relevant, comparable and reliable data. Nevertheless, the collection as well as analysis of SWOT data involves subjective analysis that indicates bias of the persons that are involved in collecting data as well as those who engage in brainstorming. Additionally, data input is likely to become outdated very quickly.
Why it is important to know the advantages and disadvantages of SWOT analysis
SWOT analysis can be used in identifying and understanding the key issues that affect a business. However, it does not provide solutions. It is important to know the advantages and disadvantages of this analysis before making the decision to perform one. This will enable you to determine what you can expect to accomplish with this analysis and how it can be more useful to your organization. It will also save time when performing the analysis.
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