How Various Concepts solve the problem of SWOT Analysis

Subject: Business
Type: Profile Essay
Pages: 4
Word count: 1037
Topics: SWOT analysis, Entrepreneurship, Organizational Behavior

SWOT analysis, also known as SWOT matrix, is a tool used by most businesses in making strategic business plans as it identifies both internal and external factors that have a direct impact on a business’ growth. Lidl, just like other best performing retailers globally also relies on SWOT analysis to gain its competitive advantage. Despite its notable essentials, Pahl and Richter (2007) record that the analysis is never free from its limitations. To begin with, Yüksel and Dagdeviren (2007) record that SWOT analysis is just a single stage of the business planning process that cannot help much in large corporations with complex issues. Multinational companies like Lidl will be required to conduct an in-depth analysis and research for decision-making purposes.  

Additionally, Getter (2010) stresses that it is not possible to analyse uncertain or two-sided factors using SWOT matrix as the tool only covers a business’ strengths, weaknesses, opportunities, and threats. Berger (2010) suggests that a further drawback of SWOT analysis is seen in its exclusive nature. This is because the tool can highlight a company’s weaknesses and threats but it does not give alternative decisions or possible solutions to those shortcomings. In Blunden’s (2005) opinion, SWOT matrix may not be among the best analysis techniques because it does not prioritise issues.

Chermack and Kasshanna (2007) stress that most limitations of SWOT analysis are unanimous in every organisation. Zott and Amit (2008) however record that every challenge must have a possible mitigative channel. So are the limitations of SWOT analysis. This study uses Risk and Uncertainty and Corporate Social Responsibility (CSR) concepts in finding solutions to the Lidl SWOT analysis shortcomings. 

Risk and Uncertainty are key nontrivial concepts that have much to say about a firm’s long-run performance. According to Von Braun and Meinzen-Dick (2009), a risk is termed as an exposure to danger due to uncertainties. Its occurrence often affects any of the business’s objectives as echoed by Kim (2010). Brav et al. (2008) add that if a risk affects a business project positively then it is a positive risk and the vice versa. Brav et al. (2008) further note that a negative risk response strategy may be adapted to diminish the impact of negative risks and a positive risk response strategy, on the other hand, may be developed to maximise the happening chances of positive risks. Uncertainty, according to Akerlof (2011), is the complete inability to measure or guess the outcome of an event. A detailed analysis of risk and uncertainty may be used as a tool to mitigate some limitations of SWOT analysis.

One of the limitations of SWOT matrix that can be solved using proper analysis of risk and uncertainty is its non-prioritisation nature. SWOT analysis does not provide a means through which factors affecting business can be prioritised and compared objectively. Managers and other decision makers will, therefore, have to rely on other planning tools such as cost-benefit analyses to arrange a firm’s strengths, weaknesses, opportunities, and threats in the order of importance. Accordingly, Bluhm et al. (2003) say sound understanding of cost-benefit analysis calls for in-depth evaluation of risk and uncertainty concepts.

Proper evaluation of risk and uncertainty can further be used to address the two-sided factors that cannot be fully addressed by SWOT analysis. Becker and Huselid (2008) show that such factors that could be seen as either strength or weakness or both may be a strategically located business premise which is very expensive. Analysis of risk and uncertainty, therefore, promotes proper decision making as it helps in weighing the overall advantages and limitations of such ambiguous factors. 

Corporate Social Responsibility, as noted by Aguinis and Glavas (2012), is a sustainable development tool that corporations use to assess and implement their responsibility for the social and environmental wellbeing. Donaldson (2009) notes that this concept takes different forms including giving money to charity and sponsoring projects. Additionally, Wang (2008) opines that proper Corporate Social Responsibility policy can be used as a management tool to curb some SWOT analysis drawbacks. When a company identifies its weaknesses and threats drawn from internal and external environments respectively, the immediate plan that should follow, as Turker (2009) suggests, is how to curb them. This is a very important concept that SWOT analysis omits. Thanks be to Corporate Social Responsibility.

Bhattacharya et al. (2010) opine that strong Corporate Social Responsibility policy can be adopted to help in finding solutions to a company’s weaknesses and threats. If Lidl’s SWOT analysis indicates that one of its major weaknesses is less concern for community development, effective Corporate Social Responsibility plans may be drawn to remedy this weakness. In their opinion, Tai and Chuang (2014) say that a company may practice Corporate Social Responsibility through investing in the local communities so as a way of mitigating its internal environment drawbacks. Some of the Corporate Social Responsibility activities that Lidl as the company may perform to show its concern for the community within its regions of operation include offering medical services to the community at no cost, construction of schools or improving sanitation within the regions.

Finally, Corporate Social Responsibility may be used as a planning tool with a broad base of alternative plans. Fatemi and Glaum (2010) suggest that giant multinational corporations like Lidl should not solely rely on SWOT analysis in drawing conclusions that a firm needs to rely on in decision making due to the complex nature of the organisations. Banerjee and Banipal (2005) suggest that a detailed research should, therefore, be conducted by the company to enhance sound decision making and adopting an appropriate Corporate Social Responsibility may act as one of the ways towards achieving this. By way of example, Lidl may conduct a research that aims at finding out how the general public views them through sponsoring of sports activities in various regions where they operate. They may draw conclusions from various variables including the total number of participants who turn out. During the sports activities, Lidl may as well sell the majority of their products at equal discounts and observe which products sell best and why. By so doing, the company gains an additional understanding of their consumer behaviour and this helps in making better decisions.

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