Content area
Full text
Introduction
SWOT analysis is widely taught and seemingly intuitive, but it is has come under serious criticism on theoretical grounds. Critics maintain that it relies on subjective intuitions, is unsystematic, eschews quantification, and lacks predictive power. Its use as a stand-alone tool instead of a model for situational analysis as part of a more comprehensive toolset for strategy development has also been criticized ([10] Fehringer, 2007). In a comparative evaluation of 24 techniques used for strategic analysis, SWOT does not rank highly ([12] Fleisher and Bensoussan, 2002). Not surprisingly, there is evidence that managers make little use of it as a planning tool in business practice. A survey of more than 100 managers reveals significant distrust of the method ([11] Finnegan, 2010). According to a study based on 212 interviews with executives of Fortune 1000 companies, SWOT analysis actually harms performance ([17] Menon et al. , 1999). Some scholars deny that SWOT analysis serves any useful purpose at all ([15] Hill and Westbrook, 1997; [2] Armstrong, 1984). Another study regards the process as so flawed that it required a "product recall" ([15] Hill and Westbrook, 1997).
Yet the basic intuition behind SWOT analysis appears to be sound. It assumes that successful strategies are based on a good fit between internal resources and external possibilities. Distinctive capabilities and competencies of organizations must "hook onto" factors in the political, economic, social, technological, and regulatory environments that require and support such competencies. There is much evidence that a strong fit between context and resources positively impacts performance ([9] Drazin and Van de Ven, 1985; [16] Lukas et al. , 2001; [22] Venkatraman and Prescott, 1990; [24] Zajac et al. , 2000; [14] Garlichs, 2011). Reactions by strategic planning experts to the limitations of SWOT analysis have therefore been of two types: some simply ignore it as a useful tool in favor of other approaches whereas others have attempted to make it more "rigid" and increase its validity and usefulness for organizational purposes.
This paper takes the second approach and seeks to develop the basic model of SWOT into a decision-support tool. The criterion of strategic fit will be preserved but embedded into a new model of planning. What must be discarded is the rigid classification of external factors...