Student ID:11350076

Essay on SWOT
Importance and Issues related to the use of SWOT as a Strategic Planning Tool
Elsab Kotz 10/7/2011

Introduction to Management Wednesdays 17:00 to 20:00

It can be said that the worth of an organisation, is the sum of its employees and their ability to execute the strategies and visions of the organisations leaders (Digicape, 2011). Organisations need a vision to set goals, followed by forming strategic plans on how best to achieve these goals. This essay, will consider the importance of planning to organisations in obtaining its goals effectively and efficiently. It will explain the history, meaning and use of analysing the strengths, weaknesses, opportunities and threads (SWOT) of organisations. In the investigation on advantages and limitations accompanying the use of SWOT, Apple Inc. was selected as a company to perform a SWOT analysis on. The result of this analysis is reported on in this essay and a conclusion in relation to the use of SWOT as a planning tool, is drawn. In a book review on Etzionis Modern Organisations, Jangla defines organizations as social units that pursue specific goals, which they are structured to serve, under some social circumstances. This definition, point out three areas of importance to an organisation. An organisation, pursue specific goals, it is a social unit and the organisational structure is influenced by its environment. The first step in setting goals would be to plan the vision and mission of the organisation. The organisations mission and/or vision, often set out in a mission statement, is its reason for existence (purpose) and set long-term goals to be reached. To reach an organisations goals in an effective and efficient manner, a relevant planning process is vital. While Goals are desired ends, plans are the means to achieve them (Bartol et al, 2008, p. 144). Crucial to the long-term survival and successes of organisations, would be to plan on how best to react to the effect changes in its environment may bring forth. According to Cummings (2009, p.96) organizations must perceive the environment accurately and respond to it appropriately. Organisations today operate in constantly changing environments. Some of these changes would be driven by the needs of society. According to Covey (2004, p.12) a condition standing out in the current era would be the increasing choices, rapidly growing populations can make. The major external factors that can affect an

organisations success is, the political, economic, social, technological, physical and competitive (PEST-PC) macro environment it operates in. Planning in relation to appropriate reaction to changes in the internal environments of an organisation, like its staff, culture and leaders, is equally important in obtaining organisational goals. Different types of goals require different planning processes with different time horizons. Planning is a hierarchical process with strategic planning at the starting point of all planning processes. Strategic planning determines how the organisation intends to respond to its environment in the long term [italics added] (Inkson & Kolb, 2002). Strategic planning requires the management of organisations to analyse opportunities and threads in relation to external, and strength and weaknesses in relation to internal environmental trends. SWOT is a powerful management tool, used to conduct competitive analysis. SWOT is described as a summarising analysis that point out issues in organisations, relating to its environment and its capabilities (Johnson et al, 2008, cited in The British Journal of Administrative Management, 2009, p.10.). The origin of SWOT is unknown. Its existence can be dated back to the 1960s. It is however the most popular and widely used tool in strategic planning for businesses. One reason for this could be its simplicity and ease of use in investigating complex situations. SWOT as a planning tool, have limitations. Given the age of SWOT and its simplistic approach, it might not be sufficient to the information needs of strategists. The SWOT framework is oversimplified and vague. This can lead to bias and/or incorrect usage. Its dependence on available information and the skilled knowledge of the analyst has major influence on the results. Strategic management and market changes are constant throughout the years and SWOT did not evolve with these changes. The method can be out-dated in relation to the current, complex business environments. In addition, SWOT is time-limited. An analysis is performed on current trends that can change at any point thereafter.

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The issues related to SWOT call for additional methods in assisting optimal strategizing. One of these additional methods that can be used in conjunction with SWOT is Porters 5-Forces analysis. Porters 5-Forces apply more specifically to the competitive environment and break this environment down into five forces (Bartol et al, 2008, p. 156). To illustrate the outcome of a Swot analysis, Apple Inc. was used as a Case study. Apple is a market leading IT related company that was incorporated in the state of California on January 3, 1977. A mission statement for Apple, described in the Top 10 Company Mission Statements (2011) reads, Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings. This mission statement, points out Apples commitment to be innovative and the best at what it does. It provides products globally and to all kinds of people of all ages. Apple aims to satisfy all consumers technological needs. It describes a long-term vision with endless possibilities and markets in this mission statement. The following strengths were pointed out by this SWOT analysis on Apple. It has a strong liquidity position. Apple won legal battles in preventing rivals like Samsung selling selected Galaxy products in some European countries. Achievement of high revenues provides a good availability of resources to manoeuvre in staying competitive. Apple occupies the top in the American Customer Satisfaction Index for the last eight years. The innovative and patented software and hardware development of desirable products ensure a strong brand loyalty. According to an article in MarketWatch, Apple has a leading share of the huge, fast-growing market of tablets and smartphones and its share of the PC market is also growing. Accessibility of its Software on Windows platforms assists in market control. The production of great products due to highly innovative, professional and expert human resources form part of Apples successes. Apples standing in society assist in a loyalty between its organisational members. Strong visionary, skilled, expert and innovative leadership with articles bordering on heroism relating to the recently passed CEO Steve Jobs, create an outstanding organisational

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culture. Its long vision will assist Apple trough trying times. Partnerships with the IT giants Microsoft and Intel Computers give Apple a stronghold in the IT market. Weaknesses was emphasised by this SWOT analysis. Apple has shaky relationships and with other IT giants like Samsung. A dependence on network providers is problematic. The need to use rival technologies like 3G from Samsung, results in costly legal proceedings that can have negative outcomes. Steve Jobs recent passing and the perception that Steve Jobs is Apple, could harm the trust consumers have in Apples continuous successful operations. Insecurity about future and new leadership may result in key staff signing up with competitors. Control issues surfaced with a recent incident relating to a product left behind in a bar. The line between peoples perceptions of value for money and overpriced products is fine. This SWOT analysis has led to the discovery of many opportunities. Strong revenues create more resources for investing in product development. International legislations regarding protection of patented innovations help ensure market control. Possible incorporations with leading network providers can be investigated. The lower value of USD makes the purchase of Apple products more affordable to importers. Prices could be reduced to compensate for the global recession and make entry level into Apples market more accessible. Advertising of products in the making long before it is launched, create excitement and expectations providing in turn market responses that can be investigated. The launch of free technology like iCloud is vital in todays technological markets in attracting customers. The growing global interaction provides endless opportunities for growth. Interests in making specific technological products like the iPad, compulsory in education organisations throughout the world is on the increase. Products can be developed to assist reading and other difficulties accompanying the global aging population. Focus of product development in relation to other population trends like growing urbanization and migration would assist in staying ahead. Apple operates in a highly competitive market and this SWOT analysis highlighted a few threats. Microsoft, launched operating systems, leading in sales to the business sector. Rivals and companies providing software with compatibility issues in relation to Apple could form strong agreements and competitive teams against Apple. High cost could
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make rival products more desirable in the current volatile global markets. Some rival products are available at no cost. Negative influences on Apples share markets resulted from reports on production cuts to its popular iPad. The loss of an outstanding leader in Steve Jobs can create issues relating perceptions of Apples consumers of its ability to stay innovative in providing to their needs. An investigation on outcomes of other SWOT analysis on Apple Inc., done in the pasts by various individuals and organisations, showed material differences to the outcomes of the analysis performed for this essay. The differences were mainly due to the time variances in when the analysis was conducted. Other variances like quality of knowledge in relation to the market of the conductors of SWOT, and available information to these conductors, also had significant impact on the outcomes. These differences underline the shortcomings of SWOT and the need to use other relevant methods to assist the planning process of organisations. However, in spite of these imperfections, SWOT was a powerful and excellent starting point in the planning process, pointing out many areas of concern and opportunities.

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