Is SWOT Analysis Deeply Flawed and Should It Be Applied as a Modern Marketing Tool - Essay Example

SWOT analysis is deeply flawed and should not be applied as a modern marketing tool Executive Summary The SWOT analysis that has been extensively used for the analysis of the key strengths, weaknesses, opportunities and threats of businesses and also for the purpose of classroom analysis that segregate between facts and figures to bring in a concise overview of the strategic landscape. However, despite such huge popularity and global acceptance, the SWOT analysis largely falls short in effectiveness. The paper begins with a brief analysis of the scope and importance of SWOT tool and then goes forth to make a comparative and critical analysis of the SWOT framework and the analysis guidelines. The paper also analyses the relevance of SWOT analysis for the purpose of marketing analysis and concludes in dismissing the use of SWOT for strategic decision making process and establishes it as a mere information guideline for managers. Introduction The SWOT analysis method is not, by any means, a process that can carry forth any strategic analysis, competitive analysis or an opportunity analysis. The tool is used to represent a structure that calls for extensive brainstorming while making any strategic decisions. As a result of such structure of the SWOT tool, it is possible that the problem being analysed or identified is broken down into life stages and phases. Such brainstorming and breaking down of a problem into phases allows for gaining a huge collection of possible ideas that might have cause the problem or offer solutions to the issue at hand. Such SWOT tool can also be used multiple times (Symes, n.d.). The paper identifies that the SWOT tool is merely a step in the process of business plan or marketing initiative. For issues that need a deeper understanding an evaluation, the SWOT tool appears largely incapable and this is why it is considered to be a broad overview of all the possible factors that might affect a marketing decision. The paper begins with a discussion on the drawbacks of the SWOT analysis tool as a base for modern marketing decisions and discusses its applicability flaws in relation with the marketing objectives. It concludes in stating that the SWOT is a presentation of facts and not a decision making tool. For the purpose of deeper understanding of issues, the SWOT lacks largely and needs to be assisted by other marketing tools (Queensland Government, 2013). Drawbacks of the SWOT Analysis It has been argued that the theoretical base for SWOT analysis is very weak. The analysis has been accused of being very superficial and not running deep into the analysis of the context. For example, the SWOT analysis states the facts just like a tenet which bases the well being of a business of a living being on the achievement of a good fit between the business or individual and the organism in conjunction. Such conjectures might appear highly plausible but the SWOT analysis goes further to encompass the shaky suppositions which can be categorised largely as being favourable or unfavourable in a business context (Valentin, 2001). The SWOT lags behind in terms of conceptual underpinnings that shall explain why the particulars have been identified and how such strategic implications should be classified in the most correct manner. Such lack of theory and conceptual base also hampers the understanding of strategic implications of the particulars and need guidelines to be supplemented (Christiansen, 2002). SWOT analysis has been accused to be a superficial scanner and impromptu categorising tool that bases all its analysis on methodological assumptions. They create an impression which states that all important particulars can be viewed ion one glance and the implications of these are independent of the context while being easily understood (Rauch, 2007). Hence they misguide analysts to evaluate strict regulations that wait to be a possible threat while an opportunity for rapid market growth is seen as a looming opportunity. The circumstances that appear as threats might be possible opportunities for other people. The factors within the purview of the SWOT analysis are highly dependent on personal views and opinions of the analyst. In other cases, the opportunities that appear inviting in the present scenario might also get washed away in the competitive framework. Therefore, the SWOT analysis tools that analyse the business context from the internal and the external perspective base their views and opinions on individual thought process. These decisions and judgements get affected by the personal biases (Manteghi and Zohrabi, 2011). Additionally, the factors developed within the SWOT framework might not hold true in the real life application because they are purely based on judgement that is unrelated to the external environment and its possible impacts. Contrary to the intimations that are provided within the SWOT analysis are often misguiding in nature. It is often found that the threats highlighted within the analysis often get thwarted by the strengths identified. This does not offer any plausible strategic action and leads to a complete lack of focussed approach and initiative to work towards the threats. Again the weaknesses of the company get overshadowed by the potential opportunities and the analysis often goes forth to highlight the opportunities to lessen the analytical influence that the company weaknesses might have in decision making process. On certain occasion the weaknesses might also render the business to be highly vulnerable and inadequate in defining and creating value for the shareholders and customers. This might be a very strong opinion while the reality might be largely low. The SWOT framework lacks to incorporate the trade-off scene between two facts that might be entire opposite in impacts. For example, an airline’s policy of not providing in-flight meals can be interpreted as strength or a weakness. From the basic viewpoint, it might appear the non provision of food within airlines might be a business disaster and people would swiftly move to other airlines which provide meals. On the other hand, in the low cost airline industry, meal costs would diminish the competitive cost advantage that the airline enjoys over its competitors. This would also decrease significant costs associated with meal provisioning service and the airline staff can now concentrate on their airline services. Another benefit could be that the cost and time savings would be spent on servicing of flights or increased flight numbers (Coman and Ronen, 2009). Hence it is clear that no meals policy for the airline is too important to be ignored within the SWOT matrix. The problems arises in the decision over where or which part of the SWOT matrix would it fit. Therefore, the tradeoffs of each aspect of a particular strategy cannot be clearly put within the SWOT tool. It is also very difficult to demonstrate the strategic significance of a formula that is dynamic, complex and systematic. SWOT guidelines are extremely simple and static in nature. This often creates problems in segregating between accomplishments and key strengths of the analysis. For example, leadership in market share is an accomplishment for a company while it is often listed down as a key strength for the business. This reflection is also observed in Kotler, 2003 checklist. Such a listing might be seen correct from the viewpoint of a direct correlation between market share and the earnings potential of the company. Additionally, studies have also shown that advantages over externalities and economies in experience and scale often result from market leadership (Grant, 2002). Despite this, the relationship between volume production and competitive advantage might not exist at all and this is the reason why it is strength and why market leadership is seen as a competitive advantage. SWOT analysis also lacks largely in prioritising the criteria’s and the features mentioned within the matrix. This arguments puts forth the idea that if current and broad advantages are put together like cost leadership. Market share and early mover advantage, then in that case, the lower and more specific advantages must also be enumerated within strengths. These include scale economies and bargaining power owing to market conditions. Therefore the SWOT cannot differentiate between matters that need to score high on the importance scale with those which rank lower on it. Hence, all the items that are within the quadrant appear equally as important. SWOT Tools and Marketing Objectives The above analysis reflects that SWOT analysis only offers a tool to list down the possible strengths, weaknesses, opportunities and threats for a business form the personal perspective of the reviewer or the analyser. What is lacking within the entire system to offer itself as an effective and important tool for marketing is the absence of suggestive solutions. This means that despite offering a comprehensive analysis, the SWOT tool only helps to list down the possibilities. It fails to offer any solution to business weaknesses or any solutions to avoid possible threats. When such a tool is used for marketing purposes, the business can only get information from the SWOT. Decision making is again a result of the personal opinion and the perspective of the management which decides over the strategic moves after going through the SWOT points. The SWOT itself is unable to suggest a possible strategy which might help the management make more informed and directed decisions (Bernroider, 2002). This also highlights the fact that the SWOT is indeed very informative and presents facts in a very concise manner. This presentation helps to generate many ideas for achieving the desired goals and resolving weaknesses and threats (Panagiotou and Wijnen, 2005). Nevertheless, the SWOT fails to provide the best solution which shall be capable of resolving all or most issues. Hence, while making decisions in marketing, such ambiguity only raises confusion rather than providing clarity in thought and action. The SWOT tool can represent one idea only on one single quadrant to make the tool effective. However, if a single idea has numerous implications which might fall within both strength and a weakness, the SWOT analysis tool can give rise to ambiguity. This means that if a chain store is well established and located on the busiest streets of the city then such a marketing strategy offers increased sales due to higher visibility. This is company strength. The same fact can be interpreted as a weakness as well. Such prominent establishment of chain stores might raise company costs in operations and management which might decrease revenues by raising costs. Hence it is seen how SWOT can be quite ambiguous in representation of facts (Nikolaou and Evangelinos, 2010). The SWOT is a very comprehensive representation of all critical aspects to a business. It entails a very concise outlook of the future business opportunities and threats. Such an analysis might give a huge amount of information but it fails to rank and also present the ones which are most useful for decision making purposes (Valentin, 2005). The SWOT analysis tools present a lot of information that might not be useful for the stated marketing objectives at all. For example, if a company wants to enter a new market and promote its product there, then the company’s strength of having the largest franchise store pattern in USA offers no supporting strength or base for decision making to the marketing decision (Pahl and Ritcher, 2009). Conclusion The paper comes to a conclusion that SWOT analysis is an ineffective means for deployment in corporate strategy decisions and marketing decisions. It is not a means for analysis. The SWOT is merely a descriptive tool that does not add much value to decision making process. It simply puts forward a descriptive scenario of the prevailing situation. The biggest contribution that the SWOT can make to marketing decisions making process is initiating discussions that have to be centred on the different aspects presented within the matrix. The company officers can be familiarised with the scenario and the issues that the company faces in the present situation (Nordmeyer, n.d.). The SWOT analysis therefore lacks the rigour that might help in overcoming the weaknesses. This is because the tool does not have an inherent requirement to do so. In conclusion, it is suggested that SWOT is possibly one such academic product that needs a recall and this has become obsolete owing to the advent of better analytical models and techniques that can assist future use for the company (Sculley, 2009). Reference List Bernroider, E., 2002. Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: An Austrian Study. European Management Journal, 20(5), pp. 562-573. Christiansen, T., 2002. 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