SWOT (Strengths, Weaknesses, Opportunities, Threats) is a popular framework for developing a marketing strategy. A Google search for “SWOT” and “planning” returned almost 93,000 results (August 2004), most of which praise the use of SWOT. Some students have said that it is the most important thing they have learned at the Wharton School.
Although SWOT is touted as a useful technique in numerous marketing texts, it is not universally praised – one expert said he preferred to think of SWOT as a “significant waste of time.”
The problem with SWOT is more serious than the fact that you waste your time. Because you mix idea generation with evaluation, you are likely to narrow down the range of strategies that are considered. In addition, people who use SWOT can conclude that they have done an adequate job of planning and ignore such delicate aspects as defining the objectives of the company or calculating the ROI for alternative strategies. I have observed this when business school students use SWOT on cases.
What does the evidence say? Perhaps the most notable indication is that I have not been able to find any evidence to support the use of SWOT.
Two studies have examined SWOT. Menon et al. (1999) asked 212 managers of Fortune 1000 companies about the marketing strategies recently implemented in their companies. The findings showed that SWOT hurt performance. When Hill and Westbrook (1997) examined the use of SWOT by 20 companies in the UK in 1993-94, they concluded that the process was so flawed that it was time to ‘recall a product’.
One SWOT advocate asked: if it’s not SWOT, then what? Borrowing from corporate strategic planning literature, a better option for planners is to follow a formal written process to:
- Targets set
- Generate alternative strategies
- Evaluate alternative strategies
- Monitor results
- Get stakeholder engagement during every step of this process.
I describe this 5-step procedure in Armstrong (1982). Evidence on the value of this planning process, obtained from 28 validation studies (summarized in Armstrong 1990), showed that it led to better corporate performance:
- 20 studies found better performance with formal planning
- 5 found no difference
- 3 found formal planning to be detrimental
This support was obtained despite the fact that formal planning in the studies usually used only some of the steps. Furthermore, the steps were often poorly implemented and the conditions were not always ideal for formal planning.
Given the evidence, SWOT is not justified under any circumstances. Instead, use the comprehensive 5-step planning procedure.
References
Armstrong, JS (1982) “The value of formal planning for strategic decisions”, Strategic Management Journal, 3, 197-211.
Armstrong, JS (1990), “Review of corporate strategic planning,” Journal of Marketing, 54, 114-119.
Hill, T. and R. Westbrook (1997), “SWOT Analysis: Time to Recall a Product”, Long-Term Planning, 30, No. 1, 46-52.
Menon, A. et al. (1999), “Antecedents and consequences of the development of marketing strategies”, Journal of Marketing, 63, 18-40.