Appropriateness of a SWOT Analysis - Literature review Example

Appropriateness of a SWOT analysis: The case for individuals and organisations Introduction SWOT (strengths, weaknesses, opportunities and threats) analysis can be defined as a tool that is used by organisations, teams and even individuals in auditing their performance and determining how well their performance is in relation to both the external and internal environmental factors (Kaufman, et al. 2003, p. 262). When this tool is used, whole organisations, teams and individuals derive a number of different advantages. For instance, it helps different parties to identify specific barriers to achieving their strategic objectives. This helps them formulate the right approach to overcoming them. Also, by using this tool, all the parties are able to understand major issues about the mega-, macro- and micro-environment they are operating in. Against this backdrop, this essay will evaluate the importance of SWOT analysis as done for organisational or individual use. In general, SWOT analysis is an important tool that can be used to analyse the relative strengths, weaknesses, opportunities and threats that exist in relation to an individual or an organisation. When used for an organisation, it helps not only in understanding the internal strengths and weaknesses but also in evaluating the potential threats and opportunities that exist in the external environment. In this essay, the relative importance of SWOT analysis for individuals and organisations is evaluated. Why a SWOT analysis is more appropriate for an organisation than an individual There are several reasons that make a SWOT analysis more appropriate for an organisation than an individual. These are examined in the following sections. First, the importance of SWOT analysis for an organisation is seen in its usage in evaluating the marketing activities of the organisation. In general, SWOT analysis is one of the most important tools that organisations use in their marketing analysis. This happens in several ways. To start with, the analysis enables organisations to evaluate all the information derived from a marketing audit and condense it into a simple and easy to understand model (Beamish & Ashford 2007, p. 42). This way, organisations are able to fully comprehend their weaknesses, strengths, opportunities and threats from the marketing audit done. This is an important step in formulating the right marketing plans, strategies and objectives. Further, SWOT analysis is used by organisations to understand their marketing position in relation to competitors as well as other factors shaping the market (Wale 2009, p. 147). What this means is that the analysis is used as a tool of evaluating the internal marketing environment of an organisation by identifying unique capabilities and opportunities that exist. This way, an organisation is better placed to not only convert its weaknesses into strengths but also the existing threats into opportunities. The third use of SWOT analysis in relation to the marketing activities of an organisation regards the ability to fully understand the external environment. When an organisation carries out a marketing audit using the SWOT analysis, it is able to gain an understanding of both controllable and uncontrollable factors operating in its external environment (Beamish & Ashford 2007, p. 43). This knowledge, therefore, helps an organisation to focus only on the controllable factors when attempting to improve its position in the market. Apart from its use in the marketing activities, the importance of SWOT analysis as an appropriate tool for organisations than individuals is seen in its use in the process of organisational strategic planning. SWOT analysis is a very important tool that is used in the initial stages of formulating strategic objectives of an organisation. In general, organisations develop different types of strategies which involve the following: business-level, corporate-level and resource deployment strategies (Griffin 2011, p. 68). All these are differ from each other in several ways. For instance, resource deployment regards decisions that determine how the resources that are at the disposal of an organisation are distributed to the different areas in which the organisation competes. On the other hand, business-level strategy entails formulating specific objectives that will guide the operations of an organisation in a particular market or area of operation. This differs from the corporate-level strategy in which a business develops objectives that govern its operations across different markets (Griffin 2011, p. 69). When an organisation is developing any of the aforementioned strategic objectives, the use of SWOT analysis throughout the process is inevitable. This is because it is used as a tool that helps organisations to understand their overall characteristics in terms of strengths and weaknesses. According to Hung (2003, p. 7), many organisations rely on SWOT analysis as an essential step in the process of organisational strategic planning. This is because the process is used in the process of environmental scanning, which is an essential step for organisations that are involved in developing their strategic objectives to engage in. Further, since strategic planning is important in helping organisations make decisions about allocating resources, developing priorities and initiating particular processes, SWOT analysis is more important for organisations than individuals in that it is used as a fundamental tool by organisations to map out a comprehensive picture of their situations before the strategic objectives are developed. This situation covers actual internal characteristics as well as external opportunities, threats and future trends. Lastly, the appropriateness of SWOT analysis for organisations as opposed to individuals can be seen in the form of the many benefits that organisations derive from the process. In general, the use of SWOT analysis for different purposes within organisations is seen as a way of increasing the overall productivity of the organisation in the different processes (Ferrell & Hartline 2012, p. 87). This happens in several ways. For instance, using SWOT analysis within an organisation enables a higher level of integration and synthesis of information within the organisation. By integrating a wide range of information that is both qualitative and quantitative in nature, a SWOT analysis framework enhances collaboration within an organisation (Ferrell & Hartline 2012, p. 88). Also, when organisations resort to SWOT analysis in the course of their operations, the cost of doing other comprehensive analyses such as strategic planning is greatly reduced. This therefore enhances flexibility and leads to an improvement in their decision-making processes. Why a SWOT analysis is more appropriate for an individual than an organisation Although it has been seen that there are several ways in which SWOT analysis is an appropriate tool for an organisation as opposed to an individual, there are cases in which it is more appropriate for an individual rather than an organisation to use it. Several reasons as to why a personal SWOT analysis is important are presented in the sections that follow. One of the reasons why SWOT analysis may be important for an individual than organisation regards its usage in understanding the position of an individual within the context of overall long-term strategies. Since SWOT analysis is essentially used by organisations to identify their inherent strengths and weaknesses as well as potential threats and opportunities, the same process can be used to evaluate similar characteristics for an individual. When done this way, individuals are able to evaluate their inherent strengths in terms of things such as skills, knowledge and experience. Further, personal weaknesses can be evaluated quite easily using this method. With regard to threats and opportunities, individuals can use this method to outline a number of different opportunities that they are facing in their environments as well as all the threats that exist. The end result is that by using SWOT analysis, individuals are able to understand their internal environment in terms of strengths and weaknesses and the external environment in the form of threats and opportunities (Williams 2012, n.pag). SWOT analysis can be used in various aspects of individuals. One is in the area of evaluating the career potential of an individual. By understanding individual strengths, weaknesses and environmental threats and opportunities, individuals are able to understand their career prospects, plan carefully and minimise any potential threats that may damage their career prospects. In such instances, a SWOT analysis done for an individual becomes more important than that done for the entire organisation. The second area in which a comprehensive understanding of individual strengths, weaknesses, opportunities and threats arising from a SWOT analysis can be useful to an individual regards avoiding risks. According to Verma (2009, p. 49), the strengths and weaknesses that are identified in a SWOT analysis are actual and present facts that have the potential of causing future risks in terms of threats or potential in terms of opportunities. Therefore, when individuals understand their actual and present realities, they will be in a position to make the right choices to avoid future threats and risks. The third area in which the information that is derived from a comprehensive individual SWOT analysis can be useful to individuals is in the area of reviewing future personal goals. According to Thomas (2007, p. 46), SWOT analysis can be used by an individual to make a comprehensive review of future goals and targets. This is made possible by using a model of analysis that evaluates all the four aspects of personal strengths, weaknesses, opportunities and threats within the context of reviewing personal goals and aligning them with the different possibilities of the future. According to this model, individuals are able to review their future goals and objectives by considering each of the four aspects of the analysis in relation to the present realities and future possibilities (Thomas 2007, p. 47). For instance, individual strengths correspond to factors that determine the attractiveness of the individuals to others. On the other hand, opportunities correspond to the future progress of the individual while threats signify the potential impacts to the future of the individual if they are not addressed. Finally, weaknesses correspond to risks to the future opportunities of the individual if they are not addressed. Therefore, by using this information, individuals are able to use SWOT analysis to review their future goals and realign them with their strengths and opportunities while dealing with the weaknesses and threats. The fourth area that the information generated by a personal SWOT analysis can be useful to an individual as compared to the analysis being done for an organisation is in the area of developing a personal brand plan. According to Howarth (2012, n.pag), when individuals perform SWOT analysis, they are able to map their personal brand and develop it for their own benefit in the future. This means that from the information about strengths and weaknesses, individuals are able to understand what they have control over and what they can influence. Such information is important in several ways. For instance, SWOT analysis enables individuals to understand how they can use specific skills and situations to enhance their personal and professional lives. Also, by mapping out all their strengths and weaknesses, individuals will be better placed to develop a comprehensive personal development plan that will help them leverage on their potential and future opportunities. Therefore, through SWOT analysis, individuals are able to build their personal lives by understanding the present circumstances and preparing to take advantage of future opportunities while avoiding possible risks. Additionally, by getting the information produced by the analysis, individuals are able to prioritise their opportunities and threats (Howarth 2012, n.pag). This is done based on understanding the possibility of achieving particular objectives and the overall impact of achieving them. Conclusion From the discussion, it can be seen that SWOT analysis can be as much useful to an individual as it is to an organisation. When used for an organisation, the importance of SWOT analysis can be evaluated in terms of the different scenarios in which it is used. One common usage is in marketing analysis. When an organisation is performing an analysis of its marketing activities, it uses a SWOT analysis to evaluate the strengths, weaknesses, opportunities and threats that it needs to respond to. Secondly, organisations use SWOT analysis to evaluate their overall position in a market in relation to the external environment. This is an important practice that helps them understand their relative advantages to their competition. Lastly, SWOT analysis is important to organisations as a starting point in developing their overall strategies. On the other hand, SWOT analysis can be important to an individual than an organisation in different ways. For instance, when developing their personal brands, individuals use the analysis to get all the information and make the right decisions. Further, individuals use SWOT analysis to plan for the future and avoid possible risks. Lastly, by using SWOT analysis, individuals are able to prioritise the threats and opportunities they are facing and thus plan for the future of their careers. References Beamish K & Ashford R 2007, Marketing planning 2007-2008, Routledge, New York. Ferrell O C & Hartline M 2012, Marketing strategy, Cengage Learning, Mason. Griffin R 2011, Fundamentals of management, Cengage Learning, Mason. Hung L N Q 2006, ‘Using SWOT analysis to understand the institutional environments: a guide for the Can Tho University’, viewed 9 July 2014, Kaufman R, Browne H O, Watkins R & Leigh D 2003, Strategic planning for success: aligning, performance and payoffs, John Wiley & Sons, Hoboken. Thomas M 2007, Mastering people management, Throrogood Publishing, London. Verma D 2009, Decision making style: social and creative dimensions, Global India Publications, New Delhi. Wale D 2009, ‘Marketing’, in P Robinson (ed), Operations management in the travel industry, CABI, Wallingford, pp. 136-168. Williams C 2012, Management, Cengage Learning, Mason. Read More