Swot Analysis Applications.

Introduction.

This paper takes a literature review format to explore the applications of the SWOT analysis framework. A literature review is an academic approach to writing that surveys scholarly sources on a topic or particular topic. The main purpose of conducting a literature review is often to identify current information on a particular topic by synthesizing different works done. In addition, a literature review can also help in identifying gaps in current research, allowing for future studies on the topic. By conducting a literature review, researchers also hope to identify connections between the different sources under consideration.

In this paper, the literature review will seek to examine and evaluate the different academic sources that have explored the applications of SWOT analysis. The SWOT analysis framework is used by entities to identify and analyze their strengths, weaknesses, opportunities, and threats. One of the major goals of the SWOT analysis is to increase awareness of factors that influence decision-making (Teoli, 2023). It achieves its primary objective through assessing internal and external environmental conditions that are relatable to the viability of a decision (Gurl, 2017). Businesses, in particular that use SWOT analysis have highlighted that it contributes to their strategic planning, allowing them to remain competitive. Thus, exploring its different applications should add to existing knowledge on how entities can maximize the framework.

The literature review should reveal the evolution of the SWOT analysis application since its innovation. Through examining background research on SWOT analysis, this paper will strive to highlight how the SWOT analysis application has changed over the years. In addition, conducting a literature review on the SWOT analysis application should reveal the various areas that researchers have yet to explore. Since literature reviews identify the information on a topic that is widely accepted, identifying the research gaps should be easy through the under-researched factors associated with the SWOT analysis application.

Overview of SWOT analysis.

SWOT analysis is widely considered one of the oldest planning tools dedicated to helping companies brainstorm and make decisions. In the United States, its history dates back to the early 1960s, when many believe that Albert Humphrey, a Stanford professor, led the invention (Puyt et al., 2020). In Europe, records indicate that the term SWOT analysis was first heard in Zurich during a Seminar (Teoli, 2023). Puyt et al. (2020) state that Professor Humphrey developed the planning tool in an effort to understand why companies, at the time, were repeatedly failing in their corporate plans and methods. Fortune 500 companies at that time had already expressed the need for the innovation of a planning tool that supports long-term objectives (Vlados and Chatzinikolaou, 2019). Humphrey originally invented the technique of SOFT analysis. S in SOFT analysis stood for aspects that were considered satisfactory at the time. O denoted the opportunities that can be explored for future growth. F was intended to identify the present faults of a company. T was aimed at identifying potential threats that could emerge in the present and in the future.

As the analysis continued to gain popularity among strategic planners and management consultants, a new interpretation of SWOT emerged. The new interpretation meant that S stood for strengths that give businesses a competitive edge over others. W, on the other hand, referred to the weaknesses that businesses had in comparison to their competitors. O in the new interpretation remained to opportunities, as in the SOFT, which analysis can be explored to support a company’s growth. T also maintained its denotation of threats that can cause present or future problems to a business.

Over the years, a wide range of industries have grown to incorporate the SWOT analysis into their strategic planning. Companies in the manufacturing, technology and retail industries, for instance, have used the planning tool to reduce the overreliance on marketing trends. Companies that have adopted SWOT analysis acknowledge that market trends may not always repeat themselves (Namugenyi et al., 2019). In addition, as market trends rely on historical data, they can lead to inaccurate forecasts that cause poor decision-making as historical data may, at times, be biased. Using SWOT analysis helps eliminate the reliance on market trends as it is a tool designed for long-term success planning.

Benefits and Limitations of SWOT Analysis.

The most compelling reason for adopting SWOT analysis is that it enables better planning. Effective planning is often a challenging task for most entities due to various reasons. One of these reasons is that planning efforts are often subject to inaccuracies due to human bias or data flaws (Namugenyi et al., 2019). Performing a SWOT analysis enhances the effectiveness of planning efforts by looking at the strengths and weaknesses of an approach. It can enable businesses to make necessary adjustments earlier in a planning initiative to reduce the consequences of inaccuracies.

In addition, another major strength of SWOT analysis is that it simplifies the business analysis process. Most analysis tools may require technical skills and training, which are costly. Analysts who use SWOT analysis do not need any particular technical skills or training to guide a planning approach. SWOT analysis only necessitates strategic planners to possess knowledge of an entity’s internal and external environment (Benzaghta et al., 2021). Obtaining the information necessary for SWOT analysis is also fairly easy, as company data, brainstorming sessions, and basic market research can come in handy. Due to its simplified nature, companies find it a cost-friendly approach as they do not have to hire a specialized consultant to conduct the analysis.

The ability of SWOT analysis to discover opportunities and threats also presents a significant strength to businesses that adopt it. Data used for SWOT analysis should reveal areas that offer the company growth potential. For instance, companies can identify niches in their markets due to the advancement in new technologies such as artificial intelligence. Identifying growth opportunities allows companies to remain ahead of their competitors as they are quick to make the most out of them. Similarly, by identifying potential threats, SWOT analysis allows companies to prevent looming issues from becoming dangerous threats (Phadermrod et al., 2019). For instance, SWOT analysis can highlight the risks of adopting a certain technology, allowing companies to adequately prepare in case issues emerge.

However, despite its obvious strengths, SWOT analysis is associated with weaknesses that companies should always be wary of. One of these weaknesses is that it oversimplifies the analysis process (Namugenyi et al., 2019). The planning tool only allows companies to group certain factors into four elements. This simple process presents high risks to a business as it can miss out on certain key aspects. The consequences of missing out on certain vital factors can be significant to a company, leading to huge financial repercussions.

In addition, using SWOT analysis as a planning tool also limits the ability of a company to determine impact. For instance, when identifying the strengths of a company, this analysis tools group different factors into a list. However, it does not specifically demand for the arrangement of the factors depending on their significance (Vlados, 2019). For instance, if a company has a suitable location and strong financial capabilities as its main strengths, one of these may be more impactful than the other. The inability of the planning tool to determine impact limits its effectiveness as companies are not able to accurately determine the most impactful factors.

The fact that SWOT analysis does not require any specialized skills also contributes to its limitation. With no specific technical skills required, SWOT analysis can be prone to bias depending on the analysts’ perspective. Like any other human being, the perspectives of analysts may be distorted by their own values, beliefs, or attitudes (Madsen, 2016). For instance, an analyst is likely to overlook the threats associated with a certain technological tool because they enjoy using it. Similarly, another analyst is likely to consider a helpful technological tool a threat just because they find it difficult to adopt. Therefore, not including any technicality decreases the reliability of the analysis tool.

As a result of its limitations, some companies have considered the adoption of other strategic planning tools. An example of such tools is SOAR analysis, which is highly regarded for its emphasis on engaging different stakeholders. By engaging different stakeholders, SOAR analysis limits the likelihood of human bias during the analysis process (Namugenyi et al., 2019). The main limitation of SOAR analysis compared to SWOT analysis is that it fails to identify the potential threats to an organization.

Aside from SOAR analysis, PESTLE analysis is also another strategic tool that can be used. This analysis tool looks to understand six macroeconomic factors and their relationship to a firm. However, instead of being used as an alternative to SWOT analysis, evidence suggests that PESTLE analysis is most effective when used in conjunction with SWOT analysis (Teoli, 2023). This analysis tool can help limit the negative aspects associated with the simplified nature of SWOT analysis as it looks to explore a business’ macro-economic landscape more in-depth (Nazarko et al., 2017). Thus, using SWOT analysis together with PESTLE analysis allows for better planning and adaptability by businesses.

Five Forces Analysis, on the other hand, was specifically invented to replace the popular SWOT analysis. According to Harvard professor Michael Porter, the Five Forces analysis is more rigorous and thorough when compared to the SWOT analysis. However, evidence suggests that SWOT analysis is a more effective planning tool as it offers a more general assessment (Gurl, 2017). The Five Forces analysis tool is best used when analyzing a single growth opportunity. Thus, it cannot perform the role of painting a company’s market position in relation to its competitors.

Literature Review Methodology.

This literature review adopts a qualitative design where data is analyzed through thematic analysis. Data collection is achieved through secondary means whereby existing information published by other experts is analyzed.Theses secondary data sources are selected based on specific inclusion criteria. One of the aspectsofn the inclusion criteria is that the sources must be relevant tothe SWOT analysis application. Relevance is a vital inclusion criterion as it ensures the review gathers consistent and reliable information. In addition, another key aspect in the inclusion criteria is that the sources must be peer-reviewed. Peer-reviewed sources offer the most reliable and trusted information as they are analyzed by experts in the field. The sources must also be published not more than ten years ago. Timeliness ensures that the review uses sources that contain update information based on contemporary aspects.

The exclusion criteria, on the other hand, includes studies that are not relevant to SWOT analysis application. Studies presented as SWOT analysis of a specific company are included in the exclusion criteria. In addition, studies published more than 10 years ago are also included in the exclusion criteria. These studies are excluded from the review as they may lack the recent updates made on SWOT analysis application. The exclusion criteria also includes studies presented as non-scholarly. These sources are excluded from the analysis as they are likely to present unreliable information that is not backed by experts in the topic.

Google Scholar is the primary source of the works literature that will be analyzed in the review. The main reason for using Google Scholar as a database is the ease of its accessibility. The database is easily accessible by anyone with an internet connection. In addition, another reason for using the database is its broad coverage. Through Google Scholar, the review is able to access a wide range of peer-reviewed articles that have been published by experts from different fields. Various key words are used to access the relevant sources to the topic. Examples of key words used include “application,” “evolution,” and “trends.” These key words are primarily used to represent the main concepts of the research topic.

Key Findings from the Literature Review.

Implications and Recommendations.

The literature review highlights insightful findings that can enhance the application of SWOT analysis across different settings. A major overarching theme in the literature review is that SWOT analysis is not effective on its own. Researcher agree that the effectiveness of SWOT analysis can be enhanced through adding another complementary method. Using analysis tools such as PESTLE and Five Forces can help in broadening the narrow scope of SWOT analysis (Teoli, 2023). In addition, another major theme from the literature review is the importance of integrating technology in SWOT analysis. Technology promises to improve the effectiveness of SWOT analysis by introducing quantitative SWOT factors and enhancing predictability (Puyt et al., 2020). Quantitative SWOT factors have the potential to improve the effectiveness of SWOT analysis as they are measurable. One of the biggest weaknesses of conventional SWOT analysis is that it does not allow analysts to measure impact. Technology can address the weakness, allowing for effectiveness.

Therefore, organizations should consider incorporating technology into SWOT analysis. By incorporating technology, they stand to experience enhanced accuracy of the SWOT analysis approach and also reduce the potential for human error (Vlados, 2019).. As earlier mentioned, the lack of technicality in the conventional SWOT approach poses the threat of increased human error as individual’s decisions may be influenced by their own attitudes or beliefs (Namugenyi et al., 2019). In addition, companies should consider using other methods of analysis to complement SWOT. Using methods such Importance-Performance Analysis (IPA) allows for companies to measure impact of their SWOT approach thereby guiding the application of necessary changes.

Based on existing studies, there is still limited knowledge on the specific dimensions that should be added to SWOT analysis to enhance its effectiveness. While it is widely agreed that the conventional SWOT approach is not applicable in some industries, there is yet to be definitive suggestions on the appropriate dimensions that should be added to enhance its applicability. Therefore, future research should seek to propose the most ideal dimensions to be added to the SWOT framework.

Conclusion.

In summary, SWOT analysis stands as one of the most effective strategic planning tools despite its drawbacks. Its potential to identify the strengths, weaknesses, opportunities and threats of a company allow it to help guide planning across different sectors. Studies have been conducted in order to help minimize the drawbacks of SWOT analysis, so that it is applicable across various sectors. Conducting a literature review on the studies helps identify the various approaches that can be adopted to enhance the effectiveness of SWOT analysis. These studies recommend approaches such as using SWOT analysis in conjunction with other analysis tools such as PESTLE to enhance its effectiveness. With the advancements in technology, various experts and researchers also recommend the integration of technology in SWOT analysis. These individuals believe that technology can enhance the accuracy of SWOT analysis by limiting the vulnerability to human error. Therefore, strategic managers should consider implementing the stated recommendations in their SWOT analysis to achieve desired results. Adopting the recommendations promises to improve decision making, which is increasingly difficult considering the constantly changing global forces.

Bibliography.

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