«Evaluation of SWOT Model» - Free Essay Paper
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Businesses use a SWOT analysis to identify the strengths, weaknesses, opportunities and threats in the production process (Hay & Castilla 2006). For instance, location, patents, and reputation are internal issues of a business that are crucial in strategic planning. On the contrary, prices, competitors, and suppliers are external threats and opportunities, which are important factors to consider when developing a business strategy (Helms & Nixon 2010). In fact, existing businesses can positively counter the changing environment at any time using SWOT. When establishing a company, it is essential to know the organisation’s environs and the competition peculiarities. Talking about new businesses, they use SWOT as part of their planning method (Kraus, Harms & Schwarz 2006). For an organisation to understand the internal and external SWOT factors, it is essential to apply the SWOT framework analysis. Thus, business managers should be in a position to realise how weaknesses can slow the development, thereby increasing threats in the organisation (McDonald & Wilson 2011). In addition, perfect understanding of strengths can help the business recognise the latest opportunities. However, the SWOT analysis assists a business to devise ways to conquer future strategies, weaknesses, and threats. This essay will discuss the importance, drawbacks, ground rules, inquiry description and alternatives used instead or as a supplement to the SWOT analysis in a business.
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Using a SWOT analysis can benefit an organisation in different ways (Chermack & Kasshanna 2007). Organisational managers should think about internal strengths such as financial resources, capacity, efficiency, image, marketing, structure, operations and access to natural resources (Schoenig et al. 2005). On a SWOT grid, external issues are included below. Internally, a business weakness occurs because of critical problems such as little market recognition, large debts, insufficient flow of cash, lack of standard software use and a weak website. However, strengths such as copyright product, critical human resources, and marketing skills are unique organisational internal issues that competitors cannot imitate (Simeonov & Lambovska 2012). Externally, when a company faces threats such as advanced technology, unstable political environment, changing customers and a depressed economy, these threats could transform into opportunities if a company succeeds (Simeonov & Lambovska 2012). For a firm to be dependent on its strengths ideas such as following major new suppliers and expansion, international markets are the opportunities to assemble new businesses. A complete SWOT analysis helps the corporate personnel, including the company managers, consultants, customers, employees and other skilled members involved, to plan future strategies for the firm. Thus, managers learn through strategies how to become an external and internal match (Henry 2011).
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SWOT helps entrepreneurs assess alternatives in the process of decision-making in case of a difficult situation (Porter 2008). Usually internal and external issues are used in strategic planning, hence the application of a SWOT analysis. When there is a changing market, SWOT provides considerable marketing skills, which help the business management to maintain its position in environmental and viable ventures (Leigh 2006). Moreover, SWOT aids in identifying advantages and cultural barriers, internal organisational issues and external roles of government. As much as strengths, weaknesses, opportunities and threats are mostly used in an organisation and by an individual to prepare for potential strategies (Blumberg, Renery & Bundgaard 2006). In addition, SWOT is found in the subcategories of government, health care, education, and for-profit and not-for-profit business (Pahl & Richter 2009). Moreover, the SWOT analysis aids in focusing on entire industries in the country. Academically, research studies using SWOT include time management for builders, career counselling and assessing political accuracy. Students are always advised to use a SWOT analysis framework in defending strategic alternatives. Other than using SWOT in business, it can also be used in evaluating personal decisions and difficult situations (Pahl & Richter 2009).
However, a SWOT model has its limitations. A SWOT analysis does not offer a suitable environment for proper strategy optimisation, thereby making managers apply it in a wrong way due to simplicity (Helms & Nixon 2010; Kangas et al. 2001). According to entrepreneurs, SWOT serves well as a starting point, but it does not give proper guidance on how to devise new strategies and implement them. Moreover, the analysis simplifies the external and internal issues to a manageable list, thereby allowing consumers’ opinions that may not be suitable (Rudd et al. 2008). The effort to examine the information used in SWOT analysis preparation is considerably important, as different points of view involved. However, when interpreting the information provided, every expert must be included in assessing data reliability (Rudd et al. 2008). Moreover, financial strengths are analysed by top managers, whereas lower and middle managers focus on technical issues and offer suggestions that help to successfully conduct the analysis. Apparently, it is important to diversify the analysis by having stakeholders of different cultures of external and internal multilevel groups (Porter 2008; Kraus, Harms & Schwarz 2008). However, strengths that cannot give a long-lasting advantage to a company are much more significant, since the rapid changing environment decreases the life circle of services and products, thereby losing the focus. For credible external examination, sufficient benchmarking of competitors is essential. In addition, for clear and suitable SWOT evidence, it is vital to vet the findings to ensure the interpretation of information is appropriate (David 2007; Miller 2007). In fact, opportunities become threats if adopted by rivals. Hereby, it may become difficult to identify the internal and external issues (Chermack & Kasshanna 2007). In addition, quick operational actions on threats can transform into opportunities while advancing technologies are yet to be established as a weakness or strength (Schoenig et al. 2005). Talking about circularity, it is another hitch in the SWOT analysis because opportunities are identified by reflecting on the strengths of the organisation, while companies benefit from opportunities realised from strengths. According to a strategic nature, SWOT is a moving objective with certain dynamics but without the ability to pinpoint competence enhancements (David 2007). Owing to this fact, SWOT is one element of a strategy that after combining with other advanced techniques and innovations will help develop new services and products in upcoming markets for a longer period (Coman & Ronen 2009; Hollensen 2005).
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In order to improve SWOT, it is vital to apply alternatives, including repackaging and reorganisation of the lists of issues (Hay & Castilla 2006). Such issues include WOTSUP, meaning W-weaknesses, O-opportunities, T-threat, S-strength, U-underlying and P-planning. In addition, SOFT includes strengths, opportunity, faults and threats. In this situation, weaknesses have been reidentified as faults. Moreover, TOWS includes threats, opportunities, weaknesses and strengths. What is more, VRIO, comprising value, rarity, imitability and organisation, are characteristics aiding in identifying viable advantages (Shinno et al. 2006). Labelled groups such as eliminate, avoid, preserve and achieve are under Goals grid as a repackaged list of issues. Resource-based SWOT analysis aims for fundamental issues that give more actionable and reliable insights (Hill & Jones 2009; Hitt, Ireland & Hoskisson 2012). It categorises SWOT variables after a business is considered for both offensive and defensive goals. When there is no ranking, organisers assume that every SWOT variable is equally important. According to Chermack & Kasshanna (2007), using SWOT quantifiable technique, the adoption of the multi-criteria decision-making concept simplifies difficult problems. For instance, strategic mapping allows organisations to learn value generating components of core activities, whereas SWOT aids in analysing organisational environment.
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Below is an example of SWOT analysis performed by Apple computer. Apple manufactured the most creative personal computer, since the Apple Company is considered a trendsetter (Mittan 2010). In the category of internal environment, namely Apple strengths, it has an immense source of brand devotion, thereby increasing Macintosh computers sales. Moreover, innovation is among other Apple strengths. In fact, Apple is the first large company of personal computers to develop a graphical-based computer. In addition, Apple products are easy to use and have a wide market appeal. Moreover, Apple has absolute power over its products, for instance, it manufactures the products and operating systems in which they process (Datamonitor 2006). When Apple invented IPod, it has gained a wider market segments selection (Datamonitor 2006). In addition, Apple on-line store and ITunes has enabled the company to increase its profit. On the contrary, among Apple weaknesses is the fact that Apple IPods are difficult to maintain as well as it is easy to break their screens and damage batteries. Moreover, they demand to increase music download price, since many companies generate significant cash out of ITunes other than the sales of original CD. Talking about the external issue, they include opportunities. Thus, with the advancing technology, Apple has been able to update their software, including IpodNanos, iPod Touches, IPhone, and Macbooks (Mittan 2010). Moreover, the company has the opportunity to create technology such as music player and iTunes that support the mobile format. As a result, this will help the consumers to keep records of used and bought songs. In addition, consumers can listen to radio shows on their iPod since Apple offers free Podcasts to it subscribers. Threats are another external issue (Mittan 2010). The problem is that counterfeit products are cheap and, therefore, affect the Apple Company pricing. The demand for IPod and Apple Mac makes them popular, but they risk losing popularity, since when the economy weakens, their demand will also reduce. Furthermore, the advancing computer companies in terms of technology make Apple constantly update its technologies (Datamonitor 2006).
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It is evident that the Apple Company has more strengths than weaknesses, thereby having a stable position in computer industry. The company has earned loyalty of its consumers, since they frequently update and offer opportunities (Datamonitor 2006). Therefore, threats from other producers make Apple produce more advanced devices. In addition, educational establishments and businesses use computers, which were manufactured by Apple II. In addition, the entertainment sector can lawfully download music. The Apple Company builds its own promoting supply to market its manufactures (Datamonitor 2006).
It is evident that businesses use a SWOT analysis to identify their production strengths, weaknesses, opportunities and threats. The SWOT analysis benefits organisations in a number of ways, for instance in reporting research, marketing, competitor evaluation and methods of distributing sales. On the other hand, SWOT has its limitations, since it does not explain how organisations can recognise their own components, though it emphasises the importance of the four categories of the SWOT analysis. In order to improve the SWOT model, alternatives such as reorganisation and repackaging should be applied. The Apple Company has proved to have more strengths than weaknesses, which has earned them a stable position in the computer industry.