Business Strategy Review, 2003, Volume 14 Issue 2 pp 8-10UpfrontbestpracticeBringing SWOT into focusGeorge Panagiotou sugg...
Bringing SWOT into focus 9    Table 1    The TELESCOPIC OBSERVATIONS strategic framework                               ?  ...
10 George Panagiotou                 Table 2                       T            E             L             E             ...
Bringing Swot Into Focus
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Bringing Swot Into Focus


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Bringing Swot Into Focus

  1. 1. Business Strategy Review, 2003, Volume 14 Issue 2 pp 8-10UpfrontbestpracticeBringing SWOT into focusGeorge Panagiotou suggests an improvement on a long-standing strategic planning tool.In a rapidly changing and highly requirements of their business analysis was widely discussed anddiversified world characterised by environments. These include seen as a major advance instrong domestic and global strengths, weaknesses, opportunities strategic thinking.competition, organisations struggle and threats (SWOT) analysis, whichto survive. Political and economic may well be used more than any Deficiencies of SWOT analysisupheavals, expanding industry other management technique in the Despite its catchy acronym, a longboundaries, competitive activities, process of decision making. history of service and continuingco-operative engagements and usage, SWOT remains rooted invaried philosophies impose a SWOT analysis is concerned with the vagueness, relies on an over-multitude of constraints that firms analysis of an organisation’s internal simplified process and hashave to cope with. and external environment with the aim numerous limitations. of identifying internal strengths inContinuously transforming order to take advantage of its external When SWOT analysis was firsttechnologies, deregulation, ever- opportunities and avoid external (and introduced, the field of businessincreasing consumer demands and possible internal) threats, while strategy was in its infancy and suchexpectations cause pressure and addressing its weaknesses. a simplistic analysis may have beenplace companies under continuous perceived to be adequate to satisfyrisk and uncertainty when SWOT analysis originated from business appraisal requirements. Butformulating strategies. Complex efforts at Harvard Business School since then strategic planning andorganisational internal issues, to analyse case studies. In the early strategy formulation have evolved toeffective application, 1950s, two Harvard business policy more sophisticated levels to facilitatecomplementarity and co-ordination professors, George Albert Smith Jr complex requirements in decisionof resource requirements, paired and C Roland Christensen, started making. Given the complexity ofwith internal politics and the need to to investigate organisational business environments and theaccomplish levels of excellence, strategies in relation to their need to satisfy numerous “keycreate tension. environment. In the late 1950s, factors for success” (KFS), SWOT another HBS business policy analysis no longer provides theConsequently, organisations do not professor, Kenneth Andrews, support needed to achieve a moreexist in a vacuum but rather they expanded on this thinking by advanced level of analysis.exist, co-exist, compete and co- stating that all organisations mustoperate in a multi-dimensional and have clearly defined objectives and There is no doubt that SWOTinterrelated environment keep up with them. analysis is a valuable tool in the fieldcharacterised by ambiguity and of business strategy because it invitescomplexity. Understanding this In the early 1960s, classroom decision makers to considerenvironment is fundamental to discussions in business schools important aspects of theirformulating strategy, decision were focusing on organisational organisation’s environment andmaking and strategic planning. strengths and weaknesses in helps them organise their thoughts. relation to the opportunities and The idea that managers should beAs a result, there is a proliferation of threats (or risks) in their business thinking about their organisation’sstrategic planning tools to enable environments. In 1963, a SWOT-based variables is verymanagers to formulate competitive business policy conference was important in the process ofstrategies in line with the held at Harvard, where SWOT decision making.Business Strategy Review
  2. 2. Bringing SWOT into focus 9 Table 1 The TELESCOPIC OBSERVATIONS strategic framework ? T E L E S C O P I C ? O B S E R V A T I O N S ? Strengths InternalEnvironment Weaknesses Oppor tunities ExternalEnvironment Threats However, the open nature and internal strengths and weaknesses to closer to the user for a more effective unstructured method of SWOT external opportunities and threats. analysis and evaluation. offers little help to users. Planners are left without indication as to More recently another model has been The TO strategic framework invites where to search for such variables, developed with four steps (surveying, decision makers to be more systematic or what to do after finding them in categorising, investigating and and coherent in their organisational terms of how best to incorporate evaluating) to identify organisational environmental appraisal, in relation to them in strategy formulation. strengths and weaknesses in relation to current available methods, by being its business environment, and assess more inclusive and directing focus Consequently, a number of relevant resources and capabilities on the important areas that need to academics have tried to devise with the aim of identifying be addressed. various modified frameworks to competitive advantages. focus SWOT in order to improve its The framework consists of two outcome and enhance the planning All of these models are relatively matrices and works like a funnel, process. For example, there are a limited in their application and eclectic where information is gathered and number of alternative models in in nature and thus address some areas filtered out by the user according to place – such as WOTSUP where UP with strategic importance to the needs and requirements. Framework stands for “underlying planning” organisation while, others equally 1 is the entire TO as shown in Table and SOFT where F stands for important, are missed or overlooked. 1. (Tables 2, 3 and illustrate specific “fault” – that are an effort to areas.) The framework could also be identify more significant information The “TELESCOPIC thought of, as a “grand strategic and achieve a more meaningful OBSERVATIONS” strategic matrix” where information is appraisal of an organisation’s framework aggregating and culminating while strategic issues. What is needed is a new providing a structured context for framework that is more focused strategy formulation and optimisation. Others have incorporated current and inclusive in its structure to available models such as Kaplan and enable users to make better sense TO is not intended to replace other Norton’s Balanced Score Card with of their business environments, and environmental analysis techniques SWOT, or Cross Impact Analysis more systematic in its but rather to consolidate on them in with SWOT in order to identify and methodology, to enable such a systematic method. To that end, incorporate relevant KFS in their relevant information to be such environmental analyses should assessment of organisational obtained and meaningfully used for first be carried out using established strengths and weaknesses. strategy formulation. methods. TO should be the last in the series of the planning process Some have introduced completely The TELESCOPIC OBSERVATIONS and should “carry” the information new frameworks, such as the “value, (TO) framework was developed in generated by such diverse sources. rareness, imitability and mid-1999 to provide a more organisation” (VRIO) model, in structured framework. Since then it When all relevant business order to identify relative has been tested out in different environmental variables have been organisational competitive organisational settings. As its name identified through the use of advantages and barriers to imitation. suggests, the framework scans and appropriate analytical models, such Equally, the TOWS matrix seeks to observes distance objects, focuses findings and observations should be formulate strategies by combining and zooms in them, and brings them entered at the upper segment of the Summer 2003
  3. 3. 10 George Panagiotou Table 2 T E L E S C O P I C Technological Economic Legal and Ecological and Sociological Competition Organisational Portfolio International Cost Advancements considerations regulatory environmental trends culture analysis issues efficiencies requirements issues and cost structures Strengths Internal Environment Weaknesses Oppor tunities External Environment Threats TO strategic framework in order to made on the weaknesses or threats. strategies to overcome weaknesses, gather all the information in one place. take advantage of opportunities and Subsequent entries should then be When all TO strategic framework avoid threats. made on the lower (SWOT) segment SWOT-based factors have been of the framework according to the entered in the lower segment, they In other words, the entire TO understanding of what is a company should then be prioritised and strategic framework process begins strength or weakness or what makes ranked according to organisational by being broad in scope, becomes an opportunity or a threat. Careful requirements and as such be more specific and ends up by being consideration and reflection should transferred to the second framework, precise in a consistent manner. be given to these variables based on the SWOT strategic framework, their importance. where ranked SWOT-based variables George Panagiotou is a senior are used to formulate strategies. lecturer at London For example, if, based on the Metropolitan University and identified factors, organisational The SWOT strategic framework is a acknowledges colleagues at the responsiveness has created modified version of TOWS analysis, business studies department for advantages, an entry should be made where weaknesses to opportunities their contribution to this article, on the strengths or opportunities. If, strategies and weaknesses to threats especially John Lipczynski and in contrast, there are relevant strategies have been eliminated. It Riette van Wijnen for their organisational limitations or has been restructured to use constructive comments. inadequacies an entry should be organisational strengths to formulate O E S E R V A T I O N S Table 3 Organisat- Buyers Suppliers Electronic Resource Value chain Alliances Total Industry Organisa- New Substitute ional core commerce audit (including Quality Key tional entrants products com- partnerships, Management Factors for structure and petencies networks & Success ser vices and joint capabilities ventures) Strengths InternalEnvironment Weaknesses Oppor tunities ExternalEnvironment Threats Table 4 Weaknesses Opportunities Threats (W) (O) (T) 1. 1. 1. 2. 2. 2. 3. 3. 3. 4. 4. 4. 5. 5. 5. Strengths (S) Strengths to Weaknesses Strategies Strengths to Opportunities Strategies Strengths to Threats Strategies (S/W) (S/O) (S/T) 1. 2. 3. 4. 5. Business Strategy Review