Swot_Analysis

Literature Review 1. Introduction. This report has been carried out to gain an understanding of the concept and benefits of a SWOT analysis to an organisation. The report has a central aim with three structured objectives. The report highlights important and critical factors of a SWOT analysis and applies this use of SWOT to a specific organisation. Bigger intro!!! 2. Literature Review 21. Importance of SWOT analysis The purpose of this report is to evaluate the importance of a SWOT analysis to an organisation in terms of gaining strategic advantage within the market. This report does not aim to question this theory; it simply tries to credit/encourage its use by an organisation in the tertiary sector. Relevant literature has been studied and analysed for drafting of this report. The aim is split into three objectives which are the following: 1. To analyse the concept of a SWOT analysis 2. To evaluate the benefits of SWOT to an organisation 3. To make recommendations for the continued use of a SWOT analysis 2.2Concept of SWOT analysis A SWOT analysis is an auditing tool that managers use to critically evaluate their business and their current position within the market. It can also be classified as a structured evaluation of internal and external marketplace conditions (Duncan, 2005). It allows managers and marketers to analyse the environment which they operate in. The environment must be split into two main areas, firstly internal analysis and secondly the external environment. Organisations need to deploy their resources at their disposal strategically, ensuring that areas of strengths and weaknesses are acknowledged and utilised effectively (Thompson, 2001). The SWOT looks at the strengths and weaknesses of the organisation; it also highlights opportunities and threats to the company. It is the effective use of this information/analysis of the company’s resources which allows organisations to strategically position themselves or take advantage of the current situation. It is evaluating the SWOT in relation to needs of marketplace and/or in relation to competitors which leads to accurate strategic positioning within the market (Thompson, 2001). When identifying strengths internally it is essential that we compare this to the market standard or our main competitors, for example if we have a tight distribution chain which is as good as our main competitor or the industry standard we cannot view this as a huge strength, but if our distribution chain is much more effective than industry standard the SWOT will allow us to highlight this strength and potentially address an opening opportunity within the market. The use of this analysis is very beneficial to organisations as the marketplace is ever so dynamic and competition for market share always intensifying. Firms need to be consistently evaluating themselves and their competitors in an effort to gain competitive advantage. A threat/weakness in one business can be an opportunity in another and it is this constant differentiation and the allocation of resources which sets organisations apart (Porter, 1998). The SWOT as stated before is an analysis of the strengths and weaknesses present internally in the organisation, coupled with the opportunities and threats that the organisation faces externally (Lynch, 2006) .It is this awareness of the current position and the potential changes or emergences within the market which managers need to predict/forecast for to stay competitive within the market. It is the un forecasted/unplanned occurrence of unforeseen events which hinder company’s performance and enables competitors to gain competitive advantage over their competitors (Kotler, 2001). 2.3Application of SWOT analysis Organisations need to plan for the unexpected so that they are not left behind by their competitors and to try and be the first to react to the situation and offer something different to their competitors. External factors can include new market trends/segments, change in political or environmental factors, international growth, new market entrants etc in relation to opportunities and threats within the market (Lynch, 2006). There are factors which the organisation can have no influence over but can still sufferer or gain from their occurrence depending on strategic positioning/reaction to the situation compared to competitors. Organisations need to try and be proactive and not reactive continually assessing their position within the market and potential setbacks/opportunities for the future. It is about generating economic value from the market place and gaining competitive advantage over your competitors which leads to above average industry profits. On the other side the internal side weighs up the strengths and weaknesses of the business which are always changing. Allocation of resources and comparison to industry standards or main competitor is why and how the SWOT analysis is so effective. It differentiates between being good at something compared to being better than our competitors at something. It is the segmenting of the SWOT which leads to effective analysis of the organisation. The strengths and weaknesses need to be evaluated in relation to allocation of resources and the opportunities and threats analysed in relation to the environment which the organisation operates in (Lynch, 2006). 2.4Use of a SWOT in the restaurant industry The restaurant industry is an extremely competitive industry with new competition consistently emerging along with generally existing saturated competition in most instances. Owners and managers need to be aware of their competitor’s strategies and tactics employed in competing for customers and sustainability of customers. The SWOT analysis enables a manager or owner to view the strengths, weaknesses, opportunities and threats relative to their competitors. It allows the restaurant manager to take the information from the environmental analysis and separate it into internal (strengths and weaknesses) and external (opportunities and threats) issues which need to be identified (Danca). This simple auditing tool facilitates in augmenting existing frameworks which may not be utilised efficiently example supply chain, it allows them to focus on certain strengths example location or market segment positioning, which may not have been so clear before the analysis (example of SWOT in appendix 1). The analysis gives a good insight into where the company is in relation to its competitors. Add more! 3. Methodology 3.1Paradigms A paradigm is ‘’universally recognised scientific achievements that for a time provide model problems and solutions to a community of practitioners ‘’ (Kuhn, 1962, pg8). A paradigm can be considered as an effective mental tool or term of reference to facilitate people within a certain group to communicate and understand each other (Jonker, 2009). It can also be viewed as progress in scientific practice based upon peoples theories and assumptions about the world and the nature of knowledge itself (Hussey, 1997). Although the term is used very loosely in research today, Morgan 1979 suggests we can use it in three different levels. Firstly we have the philosophical level which is centred around basic beliefs about the world; secondly we have the social level which deals with guidelines for a researcher on how they should conduct research and thirdly the technical level where it articulates specific methods and techniques which should ideally be adopted when conducting research (Hussey, 1997). The type of research paradigm used by the researcher is directed by the nature of the question (Jonker, 2009). 3.2Positivistic Paradigm Originally positivism was introduced by Auguste Comte. It could be said that in general terms the paradigm views society more important than the individual as when someone dies society still lives on (Patrick McNeill, 2005). The paradigm views the researcher as an objective analyst and interpretation of a tangible social reality and the assumption that the researcher is independent of and neither effects nor is affected by the subject of the research (remenyi, 1998). Positivism adopted the same approach used in natural sciences as it was extremely successful, examples including biology, botany, and physics. The positivistic approach seeks facts/causes of social phenomena with little regard to the subjective state of the individual (Hussey, 1997). Logical reasoning is applied to the research of social reality as it replaces hunches, experience and tuition with precision and objectivity. Researchers who are positivistic ally and quantitative orientated use the language of objectivity, distance and control as they believe they are the key factors in conducting social science (Denzin, 2000). Positivists believe reality is independent of us, they assume that the act of investigating social reality has no effect on that reality (Creswell, 1994). Positivism emphasises quantifiable observations that lend themselves to statistical analysis (remenyi, 1998).The researcher chooses the best form of research for a certain situation (using expertise) and then bases his/her solutions around facts collected through the research method and then justifies it (scientifically), (Jonker, 2009). Criticism of this paradigm is widespread and according to Jung 1995 ‘’Science works with concepts of averages which are far too general to do justice to the subjective variety of an individual life’’. Positivistic research generally takes the form of primary research and some methods of research include questionnaires/surveys (generally larger level), focus groups, hall testing, and interviews. 3.3Interpretivism This paradigm implies that every event is a unique incident in its own right and its meaning is a function of the circumstances and the individuals involved (remenyi, 1998). Wheatley 1992 takes the view that ‘’No longer, in this rational universe can we study anything as separate from ourselves. Our acts of observation are part of the process that brings forth the manifestation of what we are observing’’. This paradigm assumes that social reality is within us and therefore the act of investigating that reality has an effect on that reality (Hussey, 1997) (Smith, 1983) (Creswell, 1994). Unlike positivism this paradigm does not consider the world to consist of an objective reality and focuses on the primacy of subjective coconsciousness. This research methods used under this approach are’’ interpretative techniques which are used to describe, translate and come to terms with the meaning, not the frequency of certain more or less naturally occurring phenomena in the social world’’ (Maanen, 1983). Users of this paradigm are orientated to the production of reconstructed understandings of the social world (Denzin, 2000). The researcher collects evidence as he/she begins and it is this which suggests which way to continue the research or which way to interpret it. Strong definitions/descriptions are sought after to act as building blocks of the argument or subject case which the researcher then develops. Interpretive research generally takes the form of secondary research and the following are some methods which the researcher may use: analysis of case studies, analysis of written published theory, and analysis of past financial /performance records. 3.4 The two Paradigms at a glance Positivistic Interpretive Generally produces quantitative data Generally produces qualitative data Use of large samples Use of large samples Reliability is high Reliability is low Validity is low Validity is high Data is highly specific and precise Data is rich and subjective More concerned with hypothesis testing More concerned with theory generation Location is artificial Location is natural (Hussey, 1997) 3.5Paradigm Chosen and why This report has been drafted using the interpretive paradigm, as it is the paradigm which fits best due to the nature of the reports aim and objectives. The report places a high emphasis on academic theory relating to the SWOT analysis. This report does not aim to question this theory; it simply tries to credit/encourage its use by an organisation in the tertiary sector. For this type of research interpretive is the best research paradigm to use. This type of research is very much secondary research made relative to an existing restaurant, and aims to gain an understanding of the SWOTS concept and highlight the benefits of applying it to an organisation. It is the analysis of academic theory and application of this theory to the restaurant which will result in the findings section of the final report. 3.6Reliability Reliability is the degree to which observations or measures are consistent or stable (remenyi, 1998). It deals with the findings of research and the end result. The researcher must be confident that the results are coherent and would stand up to any scrutiny. Another important question is if the research was repeated, would the end result be the same. Replication is the repeating of research to check its reliability, if it is repeated and the results are the same the research is said to be reliable. In positivistic research the replication of research is important as reliability is generally extremely important (Hussey, 1997). Under interpretive paradigm reliability may not be so important or it may be interpreted differently. The fact is that with this type of research the aim is to investigate the manifestation of a certain topic/issue in a particular setting and these conditions which the research was carried out are hard to reproduce, and it is better to follow guidelines and good practice in establishing and audit trial (remenyi, 1998).This is achieved by keeping record of the research and makes it available to others who may have doubts about the findings to allow others to investigate themselves. 3.7Validity Validity is the degree to which what is observed or measured is the same as what was purported to be observed or measured (remenyi, 1998). In non positivist paradigm this term deals with the understanding of the findings by the researcher or the actual representation of what is going on in the findings section (Hussey, 1997). It questions if the researcher gained full access to knowledge and meanings of respondents (remenyi, 1998). Validity of findings can be affected by faulty research procedures, poor measurement or inaccurate samples. The researcher tries to link multiple evidence collection methods and use several informants to ensure theory and reality is congruent (remenyi, 1998). In a positivistic approach there is high emphasis placed on reliability and precision measurement so validity emphasis maybe low (Hussey, 1997) and on the other side an interpretive approach bases itself around understanding the individuals involved and the data is generally rich in information and analysis. The most common way of testing validity is called face validity and this involves ensuring that the measurement or tests involved in the research actually represent what they should represent. 4. Results The following is a SWOT analysis for Papa Sanchos stone grill restaurant in Swansea. The SWOT analysis was conducted in February 2011 for the manager/owners as they began to notice a decrease in profit, an increase in poor customer service/complaints and bad staff morale. The SWOT analysis was carried out using a variety of sources of information including financial records, list of complaints registered, feedback from staff meetings and primary market research facilitated by the positioning matrix (see appendix 2). The SWOT analysis is the main body of the findings and is detailed below. SWOT ANALYSIS Bibliography Creswell. (1994).Handout class notes Danca, A. C. (n.d.). SWOT Analysis. Retrieved 03 22, 2011, from www.stfrancis.edu: http://www.stfrancis.edu/content/ba/ghkickul/stuwebs/btopics/works/swot.htm Denzin, Y. S. (2000). Hnadbook of qualitative research. Sage publications. Duncan, T. (2005). the concept of swot analysis. Retrieved from ehow: http://www.ehow.com/about_6583183_concept-swot-analysis.html Hussey, J. (1997). Business Research. London: MACMILLAN PRESS LTD. Jonker, J. (2009). The Essence of Research Methodology: A Concise Guide for Master and PhD. In J. J. el. Kotler, P. (2001). Kotler on marketing. In P. Kotler, Kotler on marketing (pp. 166-169). simon and schuster. Kuhn. (1962, pg8). Lynch, R. (2006). Developing strategic options. In R. Lynch, Corporate strategey 4th edition (pp. 450-452). Prentice Hall. Maanen. (1983). Patrick McNeill, S. C. (2005). Research methods third edition. Porter, M. (1998). sustaining competitive advantage. remenyi, D. (1998). Doing reasearch in business and management. London: Sage Publications. Smith. (1983).Handout class notes Thompson, J. L. (2001). Strategic Management 4th edition. In J. L. Thompson, Strategic Management (pp. 68, 245, 264-268, 333). Thomson learning.