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25 May 2021 
Claude 
Originally the SOFT analysis and later on the SWOT analysis, the origin of the management tool can be traced through the 1960s and 1970s, when according to Albert S. Humphrey, the fortune 500 companies funded a research undertaken by the Stanford Research Institute, which then proposed the SWOT model in order to improve and make the planning process more accountable. Various criteria used for the process products, administration, finance etc. (Emet, 2017). This essay will focus on giving a detailed account on SWOT analysis in relation to its benefits as well as its drawbacks on a management decision.
It analyses the internal characteristics of an organisation in the form of strengths and weaknesses while opportunities and threats contribute to the external ones present in the business environment. Strengths and weaknesses refer to the positive and negative attributes that an organization can exploit or be inhibited by respectively in achieving its strategic performance goals. Similarly, opportunities and threats are the external attributes which help the organization to exceed its organizational goals due to the former or be prevented to do so by the latter (Samson, 2017). For an in-depth understanding of the essence and application of this management tool, this essay will first analyse the advantages of implementing it by exploring various cases where it proved to be a major help.
The benefits of the analysis include, recognising and taking advantage of the organisation’s strengths to capitalise on opportunities. For instance, Swiggy recently decided to venture into grocery delivery alongside its well-established food delivery in India. The decision involved recognising its own strengths of having an existing physical as well as online infrastructure in the delivery business. Also, being a local brand, giving it a competitive advantage, along with its brand loyalty among the customers helped Swiggy grab the opportunity of entering into a $600 billion market with a potential to reach $700 billion in 2022,
A swot analysis also help to better understand the business and effectively address its weaknesses and threats so that plans can be formulated to overcome them to stimulate a faster growth of the organisation. This can be better understood by Amazon’s example, when it introduced Amazon Prime. With a Prime subscription, members can avail several benefits like free 2-day delivery, streaming services etc. Amazon did this when it recognised direct threats in the form of Netflix and Flipkart. This also exhibited to the customers its commitment towards them and its business which is a message every organisation wants to communicate in the market. Today, Amazon Prime has thirty million subscribers and is the biggest e-commerce company with a net worth of $134.5 billion. The SWOT analysis can also be linked to the achievement culture as productivity is increased when discussion around these attributes takes place and employee feedback is taken, advocating the involvement culture.
Along with some benefits, the analysis has some disadvantages as well, which will be explored in the essay through some useful examples. These limitations are actually driven by how organisation uses the management tool. A major limitation of the analysis is that it doesn’t prioritise the company’s needs and thus sometimes they often get too involved into increasing their own strengths without actually paying attention to its weaknesses or threats in the form of innovations done by competitors.
Similar was the case with Nokia which had huge downfall from being the number one phone company. This happened due its failure of coping up with its weakness, giving apple and android a chance to emerge as major threats. It made the mistake of overestimating its brand and thus even after the release of iPhone, Nokia kept on insisting how its superior hardware can’t be beaten which led to laying more importance on the hardware than the software which consequently led to the release of several disappointing models. In the world of constant innovation, inadequacy and incompetency proved fatal to Nokia as Microsoft bought it for $7.2 billion in 2013 (Sourowiecki, 2013).
It is adequately clear from the example that the crisis could have been avoided fairly easily if a PEST analysis too would have been conducted. It is based on the idea that organisations have to keep on analysing the external environment and then react accordingly. In this case Nokia didn’t react to the ‘T’ part of the analysis that is technology as it wasn’t able to cope up with these changes happening in its environment (Gupta, 2013).