A Suggestion about Potentialities for the SWOT Analysis' Development concerning Threats
Economics and Management, Vol. 2, p. 94-103, 2012
10 Pages Posted: 18 Apr 2017
Date Written: 2012
Since its elaboration during sixties of the last century till now, the SWOT analysis has always had the reputation of one of the most popular managerial instruments. Philosophy, underlain in the analysis’s model, has the major contribution to this image. It (the philosophy) requires that the organization’s future should be subjected to two types of evaluations – internal evaluation, comprising strengths and weaknesses of the organization, and external one, comprising opportunities and threats of the organization’s environment. “The idea of correspondence between that whatever the organization could do and quite the thing the outer world asks for” is emphasized as the most important merit of the model. At the same time it is pointed out its simplicity that converts the model into the working one in the sense that it could be easily understood and used.
However, the level of methodical development of the SWOT analysis model gives way before the ambition of the philosophy, underlain in the model, to a great extent. Sometimes this leads to extremely negative deductions about its practical usefulness. “The most serious disadvantage of the model lies in the thing that it is quite empty of matter. There are methods, but the model contains too few useful recommendations how strengths and weaknesses, opportunities and threats to be evaluated. Attending to many meetings where managers tried to make guesses concerning elements of the SWOT analysis without further assistance, I would say the only thing that on principle they gave wrong answers. Thoughts and self-diagnostics are insufficient” (КОХ, 2003, с. 203-204).
During the initial years after its elaboration this problematic situation with the SWOT analysis application, evolving from its methodological insufficiency in the field of measurement and of evaluation, demanded its complementation by other well-known at that time managerial instruments. It is speaking mostly of instruments, elaborated within the framework of the schools, which consider strategy as “great model”, “position” and “plan” and which are related in the first place to the name of Igor Ansoff and to the elaborations of various strategic matrices. The contemporary revolution in measurement in the beginning of nineties (see ECCLES, 1991), and especially the Balanced Scorecard application, raised the possibilities of measurement and of evaluation in the SWOT analysis utilization.
However, both classical instruments of measurement and evaluation and more up-to-date ones are focused on strengths, weaknesses and opportunities, while they hardly touch on threats or concern them slightly. Regarding threats, following of the SWOT analysis usually refers to the Michael Porter’s model. Particularly, it is speaking of the first one of the triad models “model of fifth powers – model of generic strategies – model of value chain”. This is an extremely useful reference because it suggests a structured approach to the evaluation of threats to the organization, where threats evolves from the market power of both buyers and suppliers as well as from the emergence of new businesses and of substitutes of basic (actual) commodities and services and from the rivalry of active competitors. However, the model of fifth powers, like the SWOT analysis model, doesn't offer instruments for making that evaluation at the methodical level again. It is once again focused exceptionally on the philosophic-methodological basis of the approach to the identification of threats and to their evaluation.
Realizing the necessity of developing methodical instruments of the SWOT analysis, which necessity is the biggest one regarding threats, the authors of the article are aimed at suggesting a new managerial instrument that to support this problem solving. It is speaking of instrument, called license board, by which implementation of the threats identification, the threats measurement and counteraction to threats to be realized. This instrument is worked out by the authors within the framework of project “Theoretical fundamentals of an internal standard of measurement and evaluation of threats to organizations”, financed by the National Science Fund to the Bulgarian Ministry of Education and Science, which realization started in 2006. The article is illustrated by examples from the license board approbation accomplished for the University of National and World Economy (UNWE) in the city of Sofia.
Keywords: SWOT Analysis, Threats, Licensе Board
JEL Classification: M10, C65, B16
Suggested Citation: Suggested Citation