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An essential part of any organizations activity is planning and decision-making. SWOT analysis is considered a convenient tool for these tasks, but it has limitations.
SWOT is a description of strengths, weaknesses, opportunities, and threats of the company to present a complete picture of its activities and discover aspects for improvement. However, according to some experts, the shortcomings and limitations of the tool make it inappropriate for planning and decision-making needs (Vlados and Chatzinikolaou, 2019). SWOT may seem easy and time-saving, but it is not enough for adequate business planning, and therefore such an analysis is only a stage (Frue, 2018). It specificity suggests subjective opinion when compiling research and the lack of distribution of studied factors by priority (Phadermrod, Crowder and Wills, 2019). Such a feature does not provide a sufficiently in-depth explanation of the forces affecting the organization, contributes to the oversimplification of the problems and absence of accents ( Limitations of SWOT analysis, 2021). At the same time, a large amount of biased information without a structure can lead to overload, confusion, and can stall decision-making. Thus, SWOT analysis cannot be called a reasonably accurate and professional tool.
The limitations of this method significantly affect its use and results that it provides. Serpa, Ferreira, and José Sá (2020) emphasize that the qualitative description on which the analysis is built also suggests the absence of predictive potential. The lack of quantitative data makes it impossible to perform the research more visible, use graphs, and track specific trends. Moreover, the categories considered within the SWOT framework are a limitation too, since some factors may belong to several ones (Gürel and Tat, 2017). For example, when conducting such an analysis for a restaurant, a place in the city center can be both an opportunity to attract customers and a threat due to expensive rentals. SWOT also takes time to analyze factors outside the business owners control, for example, changes in the legislation may pose a threat. As a result, this type of analysis may not meet analysts expectations as a tool for strategic decision-making.
Reference List
Frue, K. (2018). 5 Surprising disadvantages of SWOT analysis. Web.
Gürel, E. and Tat, M. (2017). SWOT analysis: a theoretical review, Journal of International Social Research, 10(51), pp. 994-1006.
Limitations of SWOT analysis. (2021). Web.
Phadermrod, B., Crowder, R.M. and Wills, G.B. (2019). Importance-performance analysis based SWOT analysis, International Journal of Information Management, 44, pp.194-203.
Serpa, S., Ferreira, C. M. and José Sá, M. (2020). The potential of organisations SWOT diagnostic assessment, Academic Journal of Interdisciplinary Studies, 9(4), pp. 93-104.
Vlados, C. and Chatzinikolaou, D. (2019). Towards a restructuration of the conventional SWOT analysis, Business and Management Studies, 5(2), pp.76-84.
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