The Most Frequent Failings in Creating a SWOT analysis

Since 2006 I have been looking into practical applications of the SWOT analysis. Doc. Vladimír Horáček and I have elaborated one form of the SWOT analysis that combines a few methods to detect the company´s factors of real importance. Factors that are, to the maximum possible extent, cleared of a subjective element. Our methodology has  been utilized already in a number of companies or organizations, such as Ontarion die International, Continental, GŘ Hasičského záchranného sboru, Inex Spedition and others. More of this to be found in the section of references.  

Over the years I have read dozens of SWOT analyses. I kept on searching for more and more recommendations on the Internet, yet invariably I would only find information of quite general nature and plenty of failings. That led me to alert people to the most frequent ones. In today´s chaotic environment, companies have increasingly been in need of using quality methods while making as few mistakes as possible.

Unclear and inaccurately defined task

Everything begins at the beginning. I have even experienced one task defined like this - “Do the SWOT analysis and the strategy and have them ready for me tomorrow afternoon.” This is indeed a hard one to fulfil with quality in mind. 

Let us take a look at these two tasks:   

1. Find a strategy for the company´s further development. 
2. Define a company´s strategy designed to reach that company´s vision in the course of the following 3 years, and aimed at winning a larger market share (by a minimum of 10%) with multinationals in the segment of special metalworking.  

By comparison, you can see right away that task no. 2 is much more accurate and defines the space in which the company needs help more clearly, leaving the team with something to focus on. With  task no.1 the management might as well see themselves produce shirts instead of steel components. These things do happen. The Yamaha corporation would earlier manufacture musical instruments rather than motorbikes. The task heavily predetermines the conclusions a SWOT analysis can make. Also, count on the need to perfect the task even more as the SWOT analysis is well under way.

Today´s SWOT analysis usage goes beyond creating the company´s strategy alone. There is an HR SWOT analysis, for instance, or it can be utilized for departments or processes.  

Team lacking experience

The task also predetermines who should take part in the SWOT analysis. It is largely up to the management to do the SWOT analysis and to create the company strategy. Depending on the particular task, the team might need to include specialists preferably those having experience of many years in their respective fields. It is also appropriate to invite consultants who have had experience in doing SWOT, creating strategy or, possibly, that relevant field of business.  

Sadly, we have seen instances in which the team assesses, for instance, the needs of customers in Romania, yet all of the assessors only know the Romanian market vicariously - from the reports they get on a monthly basis. Then the course of action that has been decided may easily go wrong. 

At this point you may think of a question  - Jesus, how many people are supposed to participate in the SWOT analysis? In order to determine this, you need to know the company´s current condition and the knowledge in the respective levels of management. The SWOT analysis is a long process. The management may begin in the I. round. Having clarified the mainstream views related to the company´s vision, they may include other specialists. If the management have been well concerted for many years, their communication being on a very high level, they may include specialists from the very beginning. Please respect the social rules of behaviour, in case someone is invited to participate in the strategy creation and someone is not.   

Note: mind the pessimists and workers who have not experienced professional success.  

Mixing up the factors

Very often they make the mistake of somehow mixing up the strengths with the opportunities and the weaknesses with the threats. In the course of the SWOT analysis, questions are raised to where the respective factors really belong? Here you need to have  a clear task and classification of what belongs to: 

• the internal environment - the company, or 
• the external environment - out of the company. 

Unless you do a clear classification at the very beginning, there will come to major failings and chaotic situations within the SWOT team. One example - a troubled telephone line. If it is classified as a threat, it is probably all wrong, as it is our weakness, for threats come from the external environment. Note: it is not meant to be a supplier´s telephone line. 

We give more examples of the mix-up in the table. Can you tell what they are?  

If you have other examples at hand, please feel free to send them in. 

Strengths	Weaknesses
delayed supplies from suppliers proficiency in foreign languages ...	delayed development projects a high interest rate  ...
Opportunities	Threats
the team´s experience  higher flexibility  ...	a high failure rate of telephone line low activity of businesses  unsystematic work

Importance of factors not determined

If brainwriting, for instance, is correctly engaged in the preparation of the SWOT analysis factors, the team will generate up to 20 factors for each segment. That makes up to 80 factors altogether. Then, to expedite the whole process, it will come to the situation in which the most experienced team members will establish the most important factors. The methodology to determine the priorities is utilized no more, and the SWOT is really just a matrix containing a list of factors. Sometimes this is done with a political context in mind, as some managers prefere playing policy games. 

Submitting a table with factors is not a SWOT analysis  

Also, count on the fact that there is no copying of the SWOT analysis. Let alone the task. The same factor means something else with another company. One company can take advantage of such a factor, the other might not. Any SWOT analysis is always closely related to the assessing team and the company. 

Factors the company cannot effect

There is another problem: the team is aware of plenty of problems that the company has to cope with. They will easily and readily include them in the SWOT matrix. Or, alternatively, they will specify those factors that they are proud of. When they begin the assessment process, they will discover there is no way they can directly effect those factors. Therefore, they can neither utilize nor eliminate them. Such factors include, for instance:  

• company history
• all-Czech business
• independence
• flexibility 
• unique expertise

Be mindful of the fact that the more general is the factor the less effect you can have over it.  

Such factors are best traceable if the company really utilizes the SWOT methodology and begins assessing the relation between  the strengths and the weaknesses against the opportunities and the threats. There you will clearly recognize which factors are relevant for the company. Putting it simply, all those things that I cannot effect or get hold of properly should not be used as the main factors of my implementation plan. I can, indeed, include them in the limiting conditions. Never they are to be deleted, unless they are regarded as meaningless.  

Unfinished SWOT methodology 

In many cases it only takes to fill in the matrix with the particular factors to complete the methodology. Or, as the case may be, they are put in the order of importance. It is not good enough. Methodology is designed to discover which factors need to be utilized by the company. It is searching for their specific uses for the benefit of the company´s development in the environment it does business in. At times it is necessary to use a brief assessment, for instance, and define the key factors of success, or go even further and determine the percentage with which a single factor effects an opportunity or a threat compared with the others.  

Unclear plan

When you have managed to bring the SWOT analysis to a successful end in practice, i.e. the factors of success are determined and the impact they have on opportunities and threats, it sometimes happens that there is no more energy to embody everything into a specific plan that states who will do what, how will they do it and until when.  

I would like to issue a warning at this point. Implementation of strategic decisions takes months if not years. The later the company begins implementing them, the later they may achieve their objectives. It might be they will never achieve them, as the competition gets ahead of them. Any long lingering also means that the participants in the analysis gradually lose the acquired knowledge from memory. No everything can be put down in great detail.  

Company has never analysed trends 

There is one more failing. Defining the company´s way forward in the long-term, i.e. where exactly should the entire company move to be successful, cannot be done without following of the trends. It is essential to know, for instance:  

• which products sell less and less
• is our market share growing or diminishing 
• what technologies are becoming popular with the customers 
• what are the latest trends in financing
• etc.

You may have a beautifully elaborated SWOT analysis, yet unless the environment around you needs it, it is bound to remain on the paper only. Naturally, not all of the failings can be included here. I have selected those that are the most fundamental and have the potential to subsequently decide that the strategy based on the SWOT analysis may not be successful.  

 

If you have your own practical experience with the SWOT analysis, please, share it with the other readers in the discussion. Thank you.