SDA Professor of Strategic and Entrepreneurial Management
In a strategy process, the current situation is often depicted as a SWOT (strengths, weaknesses, opportunities, threats) analysis. A SWOT analysis is not much more than a simple listing of the factors falling under the four categories. It highlights the interaction among the company’s strengths and weaknesses, and the opportunities and threats in the marketplace. Strengths and weaknesses are judged by comparing the company’s own resources and capabilities with those of (potential) competitors. Opportunities and threats are determined through market analysis.
Surveys have revealed that the SWOT analysis ranks very high in the list of the most often used management tools. Maybe because the methodology is apparently simple to understand and to use. In a brainstorming session, it is relatively easy to come up with a list of internal and external factors that potentially shape the future of the firm.
However, I have seen too many flawed SWOT analysis’ in my professional life. The purpose of the article is therefore to discuss the most common mistakes made while using the tool and to contribute to a more sophisticated application of the SWOT methodology.