Question Eyrún Anna Business & Management
Limitations of a SWOT analysis and Positioning.
Are there things that the theory doesn't show/tell/illustrate ? Theories such as SWOT analysis and Positioning ?
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Answer Internal Staff
Whilst a SWOT (strengths, weaknesses, opportunities and threats) matrix is a useful tool for management to assess the company’s environment, a SWOT analysis does not prioritise issues in the sense that it gives equal weight to every point. Certain, specific points might be more important to a company in a given period. For example, the decision to outsource an IT department might look good, but for a software company the risks of intellectual property violations alone have a huge (business ending) impact.
Furthermore, a SWOT does not provide solutions or alternative decisions and can generate too many ideas but not help you choose which one is the best.
Another limitation is that, because a SWOT analysis should be concise and to the point, it can oversimplify a problem. In turn, there will be no depth of explanation or a detailed analysis of multiple factors. To conclude, the simplicity of a SWOT analysis does not provide a mechanism for solving any disagreements that arise from the discussion. Because this technique is often used in a brainstorming or blue-sky thinking environment there is usually little opportunity to verify the statements with hard data or assess the practicalities of implementation.
Whilst positioning is a useful conceptual model, care has to be taken when using it in market decision making. Positioning maps are not a guarantee of success. Moreover, if a positioning map identifies a gap, it should be noted that this does not imply that there is an actual demand for that product. It also does not consider the size of the market segment.