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The Harbert College is dedicated to producing research that advances the academy, extends business thought and shapes best practice.
How can top managers and students training to be top managers consider all the internal and external information they face when making complex strategic decisions? Is SWOT analysis, developed over a century ago, still an appropriate framework for making these decisions? Yes, if the analysis is done correctly.
Recently published research by Dr. Franz Lohrke, Lowder Eminent Scholar in Entrepreneurship at the Harbert College of Business, focuses on the process managers can use when making complex business decisions. His co-authored paper, “Should it stay, or should it go? Developing an enhanced SWOT framework for teaching strategy formulation,” in the Journal of Management Education, examines how traditional SWOT analysis can be improved, and, in turn, how it can help top managers make better strategic decisions.
Dr. Franz Lohrke, Lowder Eminent Scholar in Entrepreneurship, Harbert College
Managers have used SWOT analysis for decades to make strategic decisions, and professors have employed the framework as a means of teaching strategy formulation to students. Thus, many business students have used it when doing case analyses about companies in their classes.
Despite its well-established place in the curriculum, however, some scholars and practitioners have called for discontinuing SWOT analysis as a decision-making tool for several reasons. Some argue, for example, that traditional undergraduate students may lack the practical business experience to employ it correctly, the framework can present messy strategic problems as overly rational, or it can produce confusing guidance because it has vague classification categories.
Dr. Lohrke and his coauthors suggest possible remedies for these problems that may help improve SWOT’s usefulness. To do so, they first review the history of SWOT analysis as well as how current strategic management textbooks discuss it, noting that many leading texts provide an incomplete view for how to conduct a proper analysis. They then develop an enhanced SWOT framework to overcome the problems many have noted with using SWOT.
Lohrke and colleagues contend that their enhanced framework offers value both as a decision- making tool for managers and, in turn, a teaching method for students.
First, they show how SWOT provides managers with a way to make better strategic decisions by considering issues like business trends’ long-term impact on and potential competitors’ reactions to a company’s decision.
Second, they demonstrate how professors can use SWOT analysis to teach students how to apply well-established theories, developed through decades of organizational research, when making strategic decisions.
Third, they explain how the framework provides a way to better train students by assigning them pieces of the analysis before doing a full-blown SWOT analysis, a process known in learning theory as “scaffolding.”
The authors fundamental conclusion is that SWOT analysis, when properly used, continues to serve as a useful framework for training students and helping managers to make better strategic decisions.
Dr. Lohrke co-authored the study with Professor, and Auburn alumnus, Matt Mazzei and Professor Cynthia Frownfelter-Lohrke at Samford University.