Strategic management is a crucial step in organizational development and in enhancing the performance of organizations as a whole. Strategic management is defined as the process of creating, implementing, and evaluating decisions that are crucial for organizations to meet its goals and objectives (David, 2003). Strategic management could be effectively executed if it focuses sequentially on the vision, mission, and objectives of the organization, followed by the SWOT analysis (Gurel, 2017). The SWOT analysis provides a broad analysis of the economic and social factors that influences the effective performance of an organization (Rehor, 2007). The SWOT analysis is an effective tool for analysis with profound impact on strategic planning and human resource development.
Strategic management is defined as the process of creating, implementing, and evaluating decisions that are crucial for organizations to meet its goals and objectives (David, 2003).
As it is aware from the term, SWOT analysis includes assessment of strengths, weaknesses, opportunities, and threats related to an organization. The strengths and opportunities are the positive factors attributable to the organization, strengths being internal and opportunities being the external factors. Likewise, weaknesses and threats are the challenges that an organization faces, weaknesses being internal and threats being external. Identification of various elements under each of these factors is crucial for the enhancement of organizational effectiveness. Gurel (2017) provided a framework for SWOT analysis in which he categorized the major internal and external elements of an organization conceptualized by Wright et al., (1992), that could have a significant impact on the four core areas of the analysis.
The potential strengths and weaknesses (internal) he identified are advertising, brand names, channel management, company reputation, computer information system, control systems, costs, customer loyalty, decision-making, distribution, economics of scale, environmental scanning, financial resources, forecasting, government lobbying, human resources, inventory management, labor relations, leadership, location, management, manufacturing and operations, market share, organizational structure, physical facilities or equipment, product or service differentiation and quality, promotion, public relations, purchasing, quality control, research and development, selling, and technology (Wright et al., 1992).
The researchers further classified opportunities and threats (external) as economic, industry, political-legal, social, and technological forces (Wright et al., 1992). Bonnici and Galea (2015) investigated about the conceptual framework of SWOT analysis. The researchers recognized that internal determinants that need to measure include resources, skills and abilities, core competency areas, and potential competitive elements that influences finance, management, infrastructure, acquisitions, production, distribution, marketing, prominence of organization, as well as innovation that could be a crucial factor for transformation.
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External analysis is carried out by assessing market opportunities (from the positive side) and threats posed by competing organizations and general environment (from the negative side). Internal analysis is termed as the assessment of micro environment and external analysis as the investigation of macro environment. The SWOT analysis template conceptualized by the researchers includes separate analysis of micro and macro environment.
The internal analysis includes measurement of potential strengths and weaknesses within the organization and planning of strategic actions necessary to enhance the strengths and to rectify the weaknesses. Similarly, template for external analysis includes identification of opportunities and threats from the competitor environment, industry environment, and general environment. Strategic actions have to be accordingly designed for the external analysis as well (Bonnici and Galea, 2015).
As mentioned in the beginning, the SWOT analysis is a highly effective tool for accurate strategic planning and human resource development. It could also be effectively used for decision making purpose and quality analysis. It is also useful to appropriately manage organizations and enterprises as well as to measure the quality and strength of team work (Jenco and Lysa, 2018). Rihan in his paper on SWOT analysis mentioned that the tool could be used for matching (to associate between strengths and opportunities) and conversion (converting weaknesses and threats into strengths and opportunities) strategies as well.
It could also be used in marketing and corporate planning. Furthermore, the paper by Rihan also addresses that the SWOT analysis is an effective medium for brainstorming, problem-solving, revision of existing processes and plans, identification of barriers that are not in alignment with the organization’s objectives and goals, enhancement of credibility, as well as improvement of communication effectiveness. As an alternative version of the SWOT analysis, the TOWS analysis could also be used in which the external analysis is given more emphasis and the external opportunities and threats are associated with the internal strengths and weaknesses.
For instance, the TOWS analysis could be executed by identifying diverse strategies that could be adopted to utilize opportunities with the help of existing strengths, overcome threats using the strengths, rectify weaknesses using the opportunities available, and reduce threats by tackling existing weaknesses. The TOWS analysis could also have a wide application in strategic management.
However, the SWOT analysis is descriptive in nature and can only be regarded as the initial step of strategic planning. Bonnici and Galea (2015) outlined that the SWOT analysis should be coupled with the Balanced Score Card (BSC) and the Quality Function Deployment (QFD) in order to make the analysis more accurate and effective. The Balanced Score Card (BSC) strategy was conceptualized by Kaplan and Norton (1992, 1996).
According to the official terminology of the Chartered Institute of Management Accountants (CIMA, 2005), the BSC technique attempts to provide an integrated analysis of financial constituents as well as non-financial elements such as profitability, customer satisfaction, internal efficacy, and innovation.
The BSC includes mainly four core areas of analysis; learning and growth, internal processes, finance, and customers. The four areas are analyzed from an internal and external perspective, as well as by focusing on current activities of the organization and future developmental goals (CIMA, 2006). The Quality Function Deployment (QFD), on the other hand, was developed by Yoji Akao (1966) and attempts to design products by quantifying the subjective desires and expectations of customers regarding the end products so that customer satisfaction could be enhanced.
The four major phases of QFD include product planning, product design, process planning, and process control. Ip and Koo (2004) conceptualized a framework, labeled as the BSQ framework, by combining the three techniques of BSC, SWOT analysis, and QFD. The framework could be more effective in strategic management rather than using any of the technique alone.
