Drawbacks of a SWOT Analysis
A SWOT analysis is a common strategic planning method that involves identifying a company's strengths, weaknesses, opportunities and threats to inform business decisions. A SWOT analysis can help managers think critically about the various factors that affect a business and take steps to capitalize on strengths and opportunities, while limiting weaknesses and threats. Despite the potential benefits, SWOT analyses have several notable limitations.
A SWOT analysis relies entirely upon ideas generated by the managers participating the in the analysis. As a result, the effectiveness of a SWOT analysis is dependent upon the information and creativity of the managers conducting the analysis. If managers fail to account for certain strengths, weaknesses, opportunities or threats during the brainstorming process, the analysis could ignore important sources of growth or potential sources of harm.
When conducting a SWOT analysis, managers categorize various factors that affect a business as strengths, weaknesses, opportunities or threats. The categorization of factors that affect a company is subjective, which can lead to inaccurate categorization. For example, an entrepreneur who is passionate about his own product might be biased in his evaluation the product and overestimate its strengths, while underestimating weaknesses.
SWOT analyses don't provide a useful framework for finding solutions to problems. A SWOT analysis might generate lists of strengths, weaknesses, opportunities and threats, but it is up to managers to figure out how to capitalize on strengths and opportunities and deal with weaknesses and threats. In other words, a SWOT analysis generates information and identifies problems, rather than actually finding solutions to problems.
A SWOT analysis does not provide a way to objectively compare and prioritize the factors that affect a business. Managers may have to rely on other planning tools, such as cost-benefit analyses, to judge which strengths, weaknesses, opportunities and threats are most important for a business to address. Consequently, a SWOT analysis may not be particularly useful by itself, but it can become more useful when combined with other strategic planning methods.