BEWARE THE LIMIT OF SWOT ANALYSIS

Name: Bhavani Singh Rathore

Roll No:
141206

ARTICLE SUMMARY BEWARE THE LIMIT OF SWOT

ANALYSIS
(http://www.inc.com/paul-j-h-schoemaker/five-traps-swot-analysis.html)

Strategies are formulated after a careful audit of internal and

external factors that will affect an organizations ability of
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BEWARE THE LIMIT OF SWOT ANALYSIS

achieving its objective. SWOT Analysis is a useful technique for

understanding your companys internal Strengths and
Weaknesses, as well as external opportunities and threats. Based
on the SWOT analysis many companies decide their future
strategies and action plans. But SWOT analysis has some inherent
limitations. Sometimes, it can even do more harm than good.
Limitations of SWOT Analysis in:
Internal Analysis - SWOT analysis makes the company
self-absorbed which leads to focusing more on internal
factors. Focusing all the attention on the internal
strength and weakness from the beginning would not be
favorable for an organization, it should first understand
its external opportunities and threats so that it will be in
a better position to understand its real strength and
weaknesses. Also companies tend to put a list of
strength and weaknesses without focusing much on
interrelations between them and also their relevance to
the changing external environment. This also leads to
mixing of core competencies of a company with
common issues, thus core competencies receiving equal
attention as the mundane issues in future strategies.
As SWOT gives only an inside
perspective of how an organization thinks of itself and
plans are based on the same perspective. This leads to
organizations focusing more on the internal factors and
ask questions such as "How can we serve our
customers better?" or "How should we improve our
products?" But questions such as "Why aren't more
customers buying from us?" or "In which ways do our
competitors offer superior products?" force organization
to look at your company from the outside, which would
lead to better understanding of external environment
and to better strategies

BEWARE THE LIMIT OF SWOT ANALYSIS

External Analysis When SWOT is used for analyzing

the external environment, it inherently divides the
external environment in to opportunities and threats.
Due to which manager often prejudge whether an
external change is positive or negative, with the current
strategy as a reference point. Rather they should first
find out the changes that could impact their business
and then create a strategy that could make the
company capable to adapt and succeed in the changing
environment. The changes can be good, bad or neutral
depending on their response on them. There may be
times when organizations have to change their entire
strategy depending on the changing external
environment, rather than analyzing the external
environment based on their current strategy.
Relating internal environment & external
environment After the analysis of our internal and
external environment SWOT analysis should be used to
understand what factors of the external environment
can have an impact on the business. But SWOT analysis
gives us only a list of internal strength and weaknesses
and external opportunities and threats. It reduces
complex strategy question to lists of items, when this
are used in isolation organizations cannot determine
how they are affecting the organization.
The
external environment is very complex and
understanding how external trends and uncertainties
may have an effect on us requires systems thinking.
Systems thinking help find connection between
different internal and external factors. Apart from
system thinking that help strategic planning by
connecting the external and internal factors. Strategic
leaders also need to be guided by strong futureoriented visions. By reimagining how the entire market
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BEWARE THE LIMIT OF SWOT ANALYSIS

can be served better, and developing multiple

scenarios about how the future might unfold, strategic
leaders discern which actions today will create new
options for tomorrow.
CONCLUSION
SWOT analysis should have a
standard framework, where in there should be a system to the
find how different trends and changes have effect on the
internal factors of the firm. Newer strategy tools, including
scenario planning, options thinking, dynamic capabilities
analysis, and exploratory strategic leadership can be used
along with SWOT analysis for better decision making and
strategies.
Even after including different tools along with SWOT analysis, it
will only help the strategy makers to understand how the
external and internal environment are inter related. It is the
vision and capability of the strategic leader to understand how
the major factors of the environment interact that will
differentiate the companys performance from other in the
same industry.