Before discussing the limitations of a SWOT analysis, I believe it is best to firstly gain a clear and brief understanding of what a SWOT analysis actually is about. The term 'SWOT' is an acronym originally coined by Albert Humphrey and is usually applied to businesses and their corresponding commercial environment to assess both their relevant internal (Strengths & Weaknesses) and external (Opportunities & Threats) factors. Once such an analysis has been carried out, it can help aid a business in identifying a strategy to achieve future objectives from capitalizing on its strengths to minimizing the impacts of its threats.
1. Too Simple (Lacks the Detail) - Although what could potentially be argued as one of the advantages of 'SWOT analysis' in that it is clear and simple to understand -- it can also be dubbed as one of its major limitations. With a SWOT analysis there is a tendency for over simplification, where important elements can be left out of the analysis -- that perhaps should have been considered as they may play a vital factor in the 'future' success of a business or project.
2. Subjective - Given all else equal, if a hundred people were to carry out the same SWOT process for the same company it would be highly likely that there would be hundred different plans of strategy for the exact same company in the future. People will consider different levels of magnitude for the same factor, even perhaps placing it in an entirely different category e.g. one person who views the loyalty of staff as a strength, may not be deemed as a significant strength to another individual.
3. Research and Data – Potentially High Costs - The process of actually carrying out the SWOT analysis and listing factors in the 2x2 matrix -- from identifying and assessing your strengths and weaknesses to analysing opportunities and threats, is relatively easy when the data is in front of you. However, the difficulty lies in actually knowing the strengths and weaknesses etc. in the first place, which is where research is needed to be carried out in order to tell you -- from conducting and inferring from employee surveys to detailed industry reports. In order to do this, you need to have time and money -- which may both pose as limitations to carrying out the SWOT analysis.
4. Doesn't Provide the Strategy – 'Ideas People Do' - The process of the SWOT analysis doesn't actually provide you with a strategy to undertake -- all it gives you really is a list of aspects under four differing categories, it takes talented people to make use of them lists and formulate an effective strategy. The actual SWOT analysis itself offers little for the planning of future business activity, it is the people who use the information provided form the analysis that actually can be used for the benefit of the company.
Summary of SWOT Analysis
Although the SWOT analysis does present its limitations it does offer potential benefits and advantages t00, such as being a cheap and an efficient technique for a firm to undertake to form a strategy for the business in the future. If you have any further limitations of a SWOT analysis or any general remarks, then I encourage you to please share a comment below.