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ADVANTAGES AND DISADVANTAGES

The small business owner's challenge is to create products and services the customer values
and the means to produce and deliver those products and services in ways that are exceptional
compared to the competition. To address these challenges, a company must define business
objectives and address operational issues based on its current situation and the factors that
impact its financial and operational goals. Such decision-making processes are frequently
supported by structured brainstorming, which, in turn, can be supported by a Strengths,
Weaknesses, Opportunities and Threats (SWOT) analysis. The advantages of the SWOT
methodology, such as its appropriateness to address a variety of business issues, make it a
desirable tool to support some brainstorming sessions. However, the tool's disadvantages,
such as the subjective analysis of an issue, make it less desirable for others.

SWOT Analysis Application
The SWOT method is not a process in itself, such as strategic planning, opportunity analysis
or competitive analysis. Instead it's a tool used to structure a particular brainstorming session.
As a result, a problem or process that's addressed using the SWOT tool may itself be thought
of in terms of phases or a life cycle. For example, strategic planning is a process consisting of
multiple steps or phases. However, the SWOT analysis, like a brainstorming session, is
simply a tool that may be used one or more times to gain a collection of ideas regarding a
particular issue or problem. For example, a business determines on each occasion, if a
brainstorming session is appropriate to address a strategic plan or competitive analysis. If so,
the business then decides if it will use the SWOT method or an alternative tool to facilitate
the session.
Advantage: Problem Domain
SWOT analysis can be applied to an organization, organizational unit, individual or team. In
addition, the analysis can support a number of project objectives. For example, the SWOT
method can be used to evaluate a product or brand, an acquisition or partnership, or the
outsourcing of a business function. In addition, SWOT analysis can be beneficial in
evaluating a particular supply source, a business process, a product market or the
implementation of a particular technology.
Advantage: Application Neutrality
SWOT analysis is conducted by specifying an objective and conducting a brainstorming
session to identify internal and external factors that are favorable and unfavorable to the
objective's achievement. This approach remains the same whether the analysis is used to
support strategic planning, opportunity analysis, competitive analysis, business development
or product development processes.

weaknesses. opportunities such as the availability of low-interest loans for startups might encourage the entrepreneur to pursue the development of a new product to meet a rising customer demand. However. any one factor's true impact on the objective can't be determined. In addition.Advantage: Multi-Level Analysis Valuable information about your objective's chances can be gained by viewing each of the four elements of the SWOT analysis -. might suggest the need to partner with foreign companies. Instead. As a result. opportunities and threats -independently or in combination. SWOT is a somewhat simple method that can be performed in a fairly short time. Disadvantage: No Weighting Factors SWOT analysis leads to four individual lists of strengths. such as new government regulations regarding a product design or the introduction of competing products. Advantage: Data Integration SWOT analysis requires that quantitative and qualitative information from a number of sources be combined. The process involves a facilitated brainstorming session during which the four dimensions of the SWOT analysis are discussed.strengths. the tool provides no mechanism to rank the significance of one factor versus another within any list. As a result. it can be performed by anyone with knowledge about the business in question and the industry in which it operates. an awareness of a company weakness such as a lack of qualified employees might suggest a need to consider outsourcing particular functions. identified strengths. In addition. Advantage: Cost Because SWOT analysis requires neither technical skills nor training. In contrast. the knowledge of each individual becomes the knowledge of the group. a company can select a staff member to conduct the analysis rather than hire an external consultant. In turn. improves communication and helps to coordinate operations. opportunities and threats. In this way. weaknesses. For example. such as extensive experience in an industry experiencing rapid international growth. . might alert the business owner that a proposed investment in a new manufacturing production line should be more carefully evaluated. identified threats in the business environment. Advantage: Simplicity SWOT analysis requires neither technical skills nor training. individual participants’ beliefs and judgments are aggregated into collective judgments endorsed by the group as a whole. enhances decision-making. Access to a range of data from multiple sources improves enterpriselevel planning and policy-making.

each attribute is seen to have only one influence on the problem being analyzed. relevant and comparable data. While these lists provide items to consider. Large or Heterogeneous Groups This type of analysis requires a considerable amount of time and energy when used in a large organization. the data input to the SWOT analysis can become outdated fairly quickly. business decisions must be based on reliable. Weighting Items SWOT analysis generates lists of strengths. or in a small business that is heterogeneous. SWOT data collection and analysis entail a subjective process that reflects the bias of the individuals who collect the data and participate in the brainstorming session. However. instead of ending any other planning efforts. For example. opportunity or threat. to only rely on the analysis for planning. However. SWOT analysis will not provide any results if the members cannot agree. whether conscious or not. While identifying a common mission helps give direction to its activities. However. While it may generate some useful information. The items do not carry certain weight or points that represent how significant each item is to . focus groups or even employing a test-market strategy for a new product or service. Disadvantage: Subjective Analysis To significantly impact company performance. opportunities and threats facing the organization. weakness. Other Planning Methods Perhaps one of the biggest disadvantages of using a SWOT analysis comes when the organization makes the decision. SWOT analysis should help management begin to think about the organization and its future. weaknesses. The list of items generated by this analysis provides information or items it needs to look into deeper using other tools such as statistical surveys. the list may get used incorrectly. one factor might be both a strength and a weakness. the costs of operating high-visibility facilities can make it difficult to compete on price without a large sales volume. As a result. locating a chain of stores on well-traveled streets that grant easy access to customers might be reflected in increased sales. other planning methods and tools are useful in helping an organization achieve its mission. In addition. since an attempt at just agreeing on the common mission may result in fighting among the different members of the group.Disadvantage: Ambiguity SWOT analysis creates a one-dimensional model in which each problem attribute is viewed as a strength.

but the lists alone do not help it realize its goals. . Some organizations. List Blindness This analysis allows an organization to generate lists of items concerning the group. however. when in fact the threats are more significant than its strengths. The organization needs to move beyond the SWOT analysis lists and discuss what activities would help it achieve its objectives. thinking the planning process has been completed.the organization. The lists may help in identifying activities that manage risks and take advantage of the organization's assets. Members may conclude that a shorter list of threats versus a longer list of strengths means the organization is doing well. stop after making the lists.