Strategic Management and Business Policy

The SWOT analysis is used to describe the Strength, Weaknesses, Opportunities and Threats that face a corporation. The purpose of this analysis is to identify the particular competencies that the corporation has as well as to identify the opportunities that they are facing but unable to take advantage of due to the lack of the necessary resources. This analysis allows managers to decide if they should invest their resources to better their strengths or on their "weaknesses to at least make them competitive" (Hunger & Wheelen, 2002, p. 109).

The two main advantages of the SWOT analysis are that it recognizes the impact the external environment can have on any firm and also when compared to other models, this analysis can be relatively simpler. Some disadvantages of this analysis include the fact that this analysis does not "suggest how the firm should go about identifying and assessing its specific strengths and weaknesses and specific environmental opportunities and threats" (Self, Weiner & Dunlop, n.d., n.p.). Criticisms of this analysis also includes the fact that it creates lengthy lists, does not use any weights to illustrate priorities and uses vague words and phrases. Also, some factors end up as such that they could fit in two categories at the same time. This analysis also poses no obligations for the opinions to be supported with any data or analysis and therefore requires only a single level of analysis. Also, it is said that this mode of analysis has no logical link to strategy implementation.