SSRN-id2133022.pdf

7/29/2019 SSRN-id2133022.pdf

1/23

- 1 -

Quantitative SWOT analysis:

An aggregation approach allowing for dependencies

Dr. Regina W. Schrder

Affiliation: School of Economics and Management

Free University of Bozen / Bolzano

Universittsplatz 1 / Piazza Universit 1

39100 Bozen / Bolzano

Italy

Current position: Assistant professor

Email address: [email protected]

Abstract

In times of an increasingly insecure external environment, the internal environment gains in

importance, meaning that every company today pays more attention to the strengths and

weaknesses in place within the corporation. As a result, nowadays the SWOT analysis con-

cept regarding both the corporate surroundings and the companys settings is well-established

and widely-used. But the proposed concepts so far are missing a clear definition of the inte-

grated concepts.

Amongst others there nowadays exist qualitative SWOT approaches and quantitative

ones. While a broad range of quantitative SWOT methods have already been proposed in lit-

erature, most of them (except for two) abstract away from relations between the four concepts

included in the SWOT analysis and/or between the elements that are part of the different

groups. For example, it is possible but not taken into account that an opportunity depends on

another chance.

7/29/2019 SSRN-id2133022.pdf

2/23

Quantitative SWOT analysis: An aggregation approach allowing for dependencies

- 2 -

To eliminate this gap the author supposes an aggregation approach, not only taking target

dependencies, but also relations among the considered events, capabilities and knowledge

factors into account. Altogether 573 dependencies can be distinguished.

Though the proposed model conveys at first glance the impression of being comprehen-

sively conceptualized, it still seeks, amongst others, proof of its validity. In addition, other

characteristics await their consideration. For example, the time factor, particularly important

in the context of cause and effect-chains, is disregarded. However, every opportunity, threat,

strength or weakness possesses its own lifetime, during which it may become important, and

the factors presumably dont show their effects immediately, but with a specific time lag.

Keywords

SWOT analysis, quantitative, interrelations, aggregation

JEL-Classification

D 81; L 21; M 21

7/29/2019 SSRN-id2133022.pdf

3/23


- 3 -

Introduction

Strategic management, in general, represents a collection of decisions and actions taken by the

management of a company. In the strategic management process multiple instruments can be

applied. Among them is the SWOT analysis (acronym for strengths, weaknesses, opportuni-

ties and threats) as an approach to systematically analyze a corporations internal and external

environment and to, thus, identify factors presumably affecting the corporate future.

Up to now a plurality of SWOT approaches exist. While some of them just highlight and

almost list the identified factors, others aim at quantifying the strengths, weaknesses, oppor-

tunities and threats. Particularly taking the latter methods into account, two questions arise:

(a) Is it suitable to consider all factors independently from one another, or are there interde-

pendencies that have to be factored in?, and (b) Is it possible to connect the SWOT analysis

with an aggregative approach, allowing for dependencies?

To contribute to answering both questions, this article not only illuminates the under-

standing of the four concepts, but also proposes a new SWOT concept which allows for de-

pendencies. Hence, the article is structured into five partly further differentiated sections. Fol-

lowing to this introduction, a literature review focusing on the SWOT analysis and its differ-

ent conceptions is given, before the third section eliminates one shortage of the previously

developed methods, namely the missing clarification of the concepts integrated in the analy-

sis. In the fourth section the proposal of an aggregative SWOT analysis is tabled, on which a

conclusion follows.

Literature Review

Research encompasses qualitative and quantitative methods. This also pertains for the SWOT

analysis, in which, however, the former approaches for an analysis of the internal and external

environment prevail. The main objective of the SWOT analysis is to provide the information

7/29/2019 SSRN-id2133022.pdf

4/23


- 4 -

needed for formulating a well-founded strategy (Kangas, Pesonen, Kurtilla and Kajanus,

2001).

In a qualitative SWOT analysis the four scrutinized factor types (the strengths, weakness-

es, opportunities and the threats) are commonly summarized in a template, resembling a

(2 x 2)-matrix. The tables columns comprise the results of the analysis of the internal envi-

ronment, i.e. the strengths and weaknesses, whereas the matrixs lines include the factors

identified by analyzing the external environment, namely the faced threats and opportunities

presenting themselves (or vice versa). The resulting template gives a summary of the sur-

roundings plus their development tendencies and of the corporate situation, including all gath-

ered capabilities, knowledge and motivation.

Kurtilla, Pesonen, Kangas and Kajanus (2000) find fault with this overview, as the analy-

sis results often are superficial, imprecise and incomplete. The main lack of the quantitative

SWOT analysis approach, according to Kurtilla et al., consists in the method merely pinpoint-

ing factors belonging to the four mentioned groups, without assessing the groups and, thus,

identifying the most important among them. In the same year, Anwar and Siddique agree to

the qualitative SWOT analysis failure to quantify the importance of each of the four con-

cepts. They, moreover, amend two further deficiencies of the traditional SWOT analysis: (a)

They characterize the considered method as being highly subjective, and (b) refer to the

short-term and the long-term impact of each variable which cannot be derived from the analy-

sis. In 2004 Kajanus, Kangas and Kurttila repeat some of the in 2000 already mentioned defi-

ciencies of the qualitative SWOT analysis, but also lay emphasis on the common use of this

tool, which to their mind provides a good basis for strategy formulation, if used properly.

Recapitulating the qualitative SWOT analysis deficits listed before, the need for another

design of the analysis becomes apparent. To meet this demand, various approaches for a

quantitative SWOT analysis have been developed. The devised methods can be divided into

7/29/2019 SSRN-id2133022.pdf

5/23


- 5 -

two groups: in native and in hybrid techniques. The former aim at analyzing data on the

strengths, weaknesses, opportunities and threats statistically.

To achieve this target, various methods have been put forward: the External Factor Eval-

uation Matrix (EFE), the Internal Factor Evaluation Matrix (IFE) and the Competitive Profile

Matrix (CPM) (Chang and Huang, 2006). Though each of these three methods is subjective,

they aim at easing the subjectivity of the SWOT analysis. This is done by assigning weights

to the considered factors, which represent the factors importance for being successful in the

firms industry. Then, a company-based rating is assigned to the considered factors. Multiply-

ing the weights by the assigned rating, gets the weighted score of each factor. The last step in

formulating an IFE, EFE or CPM is to sum up the weighted scores. While the IFE (EFE) just

takes the strengths and weaknesses (the opportunities and threats) into account, a competitive

profile sums up the weighted scores of the corporate critical success factors in order to identi-

fy business advantages and disadvantages (Lee and Lin, 2008). Simultaneously comparing the

results of such a SWOT analysis for several companies remains difficult (Chang et al.; Lee et

al.), encouraging the search for another quantitative SWOT analysis approach.

Such an analytical method has been found in adopting the concept of Multiple-Attribute

Decision Making (MADM) (Chang et al., 2006), also called Multiple Criteria Decision Sup-

port (MCDS) (Kajanus, Leskinen, Kurtilla and Kangas, 2012), whose methods are combined

with the SWOT analysis. There are three MCDS techniques (or families thereof) which can be

applied to assess the importance of all SWOT factors (Kajanus, Leskinen et al.): the Analytic

Hierarchy Process (AHP), the Simple Multi-Attribute Rating Technique (SMART) together

with its variations called SMARTS and SMARTER (Edwards and Barron, 1994), and the

Stochastic Multicriteria Acceptability Analysis (SMAA) methods, with which uncertain or

inaccurate data can be analyzed. Combining the SWOT with the AHP method results in a

hybrid approach called AWOT, which has been the first MCDS method used in SWOT anal-

ysis and until now is the method most often applied (e.g., Kajanus, Leskinen et al.; Kurtilla et

7/29/2019 SSRN-id2133022.pdf

6/23


- 6 -

al., 2000; Lee et al., 2008; Stewart, Mohamed and Daet 2002; Shresta, Alavalapati and Kal-

mbacher, 2004; Ho, 2008).

The original AWOT method proceeds as follows:

(1) The SWOT analysis is carried out, identifying and including all relevant factors of the

external and of the internal environment.

(2) The identified factors within each SWOT group are pairwise compared to determine the

more important factor within each pair, and to decide how much more importance the

more important factor possesses.

(3) Based on the determined importance of every factor, the relative importance of each of

the four SWOT groups has to be evaluated.

(4) The beforehand generated decision alternatives are assessed with respect to each SWOT

factor according to the AHP method.

(5) Following the general AWOT decision hierarchy (Kangas, Pesonen, Kurtilla, Kajanus

2001, their figure 1) the global priorities for the strategy alternatives are calculated, al-

lowing for a strategy to be chosen.

Kangas, Kurtilla, Kajanus and Kangas (2003) refined the AWOT technique by modifying the

process and by applying the SMAA-O within the SWOT framework. This is particularly help-

ful if just ordinal and not cardinal data is available.

The development of the SWOT analysis, however, hasnt reached its end yet. Rather, lit-

erature already points out future paths of development, with which SWOT analysis may in-

crease in importance (Kurtilla et al., 2000). Anwar and Siddique (2000), for instance, propose

to differentiate for each of the four concepts considered in the analysis if they are valid at pre-

sent, i.e. for a short-term period, or for the long-term period. Yksel and Dadeviren (2007)

suggest instead of the MCDS techniques used so far in quantitative SWOT analyses the appli-

cation of an analytic network process (ANP). The advantage of such an approach is that it

7/29/2019 SSRN-id2133022.pdf

7/23


- 7 -

considers dependencies among the four different SWOT concepts when deciding on a strate-

gy. Accordingly, the authors seize an idea formerly addressed by Weihrich (1982).

Basis for conceptual understanding

Beside the deficiencies of the SWOT analyses already discussed in this articles second sec-

tion, the qualitative and the quantitative approaches mentioned have in common that they all

lack in elaborating on the supposed understanding of the four concepts integrated, i.e. the

strengths, weaknesses, opportunities and threats. Moreover, though Weihrich (1982) already

suggested to integrate interactions among the four concepts considered in the SWOT analyses,

focusing on pairwise combinations, and primarily facing strategies, many alternative depend-

encies pass unheeded. The present section aims at bridging both of the listed gaps.

Analysis of the internal environment

A companys internal analysis aims at detecting the corporate strengths and weaknesses,

which may be enhanced and, thus, adapted. To the strengths or weaknesses of a company be-

long the resources gathered, the corporate culture, the capabilities and knowledge compiled,

and the motivation of each employee. As the resources form the basis for the corporate ac-

tions, and as the corporate culture can be interpreted as a factor determining the general

framework, just the capabilities, knowledge and motivation remain to evaluate the corporate

internal environment. In the following, strengths and weaknesses are understood as factors

potentially responsible for a deviation from the target striven for. If such a factor exists, the

strength or weakness may realize itself depending on the motivation of the person responsible

for reaching the objective set (see Figure 1).

Accordingly, a strength or weakness can be formalized by multiplying the po-

tentially caused target deviation by the motivation of the charged person :

= (1)

7/29/2019 SSRN-id2133022.pdf

8/23


- 8 -

The occurrence of a strength or weakness depends on the type of objective striven for and of

the direction of the deviation caused. Generally, all objectives belong to one of five groups.

Fixation targets: A fixed target level (plus/minus a safety margin) shall be achieved, al-

lowing for positive and negative deviations. The former occur if either the obtained capa-

bility or the gained knowledge diminish a target exceedance or if a lower deviation is ob-

tained and decreased. Factors causing diametrically opposite effects result in occurring

weaknesses.

Maximization targets: In this case any deviation caused by knowledge factors or by capa-

bilities that increases the level of achievement will be positively judged. A weakness,

however, occurs if a factor arises which diminishes the achievement level.

Minimization targets: If the achievement of the target striven for is to be minimized, the

effects described for maximization aims have to be judged conversely. Consequently, fac-

tors diminishing the level of achievement cause a strength. A factor increasing the

achievement, however, results in a weakness.

Satisfaction targets: Here a satisfactory target level has to be obtained, any exceedances

of this level are not considered important. Consequently, for such objectives primarily

weaknesses may occur. These result if a realized factor lowers the achieved target level,

so that not even the level striven for is realized.

Limitation targets: Such objectives describe the opposite of a satisfaction target, i.e. any

factor increasing the obtained target level is considered as a strength, if the target level is

already exceeded. Factors not even resulting in the achievement level striven for, but

leading to a lower level, represent a weakness.

7/29/2019 SSRN-id2133022.pdf

9/23


- 9 -

Analysis of the external environment

In contrast to the above described strengths and weaknesses, an analysis of the external envi-

ronment results in an identification of opportunities and threats. Instead of these terms often

the terms chances and risks are used.

Of the four concepts included in a SWOT analyses, the risk subject is spread widest in

literature. The multitude of risk definitions proposed results, at least partly, from opinions and

beliefs altering over time. Thus, to date, an amazing variety of risk definitions exists. These

can be structured in three categories: (1) definitions focusing on causes responsible for the

emergence of a risk, (2) terms which primarily concentrate on the caused effects, and (3) un-

derstandings combining the characteristics of the first two groups, i.e. referring to the risks

sources and its effects. Though a transfer of this distinction to chances is still missing, it is

easily conceivable. In the following, an understanding of opportunities and threats will be

applied which belongs to the third group distinguished, and that reminds of the definition pro-

posed for strengths and weaknesses. Threats

represent the potential missing of an objec-

tive due to supposedly arising events , whereas opportunities can be inter-

preted as a result of probably occurring events, from which the target achievement benefits.

Supposing that every event possesses a specific occurrence probability , the two defini-

tions given can be formalized as follows.

= (2)

Each company frames its own set of objectives, which is why all strengths, weaknesses,

opportunities and threats are strictly company specific and depend on the formulation of the

targets pursued.

Interrelations between the factors in a SWOT analyses

Former publications by Weihrich (1982) and by Yksel et al. (2007) give the idea to integrate

dependencies in the SWOT analyses. So far just interactions between two concepts at a time,

7/29/2019 SSRN-id2133022.pdf

10/23


- 10 -

e.g. between strength and opportunity, have been considered. According to Weihrich two

forms of relationship are differentiated between, if the strengths and opportunities are consid-

ered, namely a match of the internal strengths and the external opportunities indicated by a

+, and a weak or nonexistent dependency represented by a 0. To decide on the best match

in every strategy box (strengths-opportunities (SO), weaknesses-opportunities (WO),

strengths-threats (ST) and weaknesses-threats (WT)) Weihrich cautions to simply consider the

relationship type and, thus, abstracting away from the weighting of the factors considered.

Several other forms of interrelations should, however, be taken into account. So far de-

pendencies between various strengths (weaknesses, opportunities or threats) have not been

minded. To help closing the identified gap the second and the third following subsections

elaborate on interrelations only among strengths and just among opportunities. Prior thereto,

relations among targets, important for both of the subsequently considered dependencies are

discussed. Though, many so far not mentioned types of relations are considered, the following

elaborations do not catch-all existing dependencies. For example, the possibility to turn a

weakness into a strength (Genc, 2010) and a similar presumably existing relationship among

threats and opportunities remain disregarded.

Target relations

If more than just one objective is affected by a realizing factor, target relations have to be tak-

en into account. Targets may affect other aims striven for, either with or without the affected

objectives retroacting. In both cases, the first one of interdependency and the second one of

dependency, three alternative consequences caused by the target first effective can be distin-

guished.

Indifference:

In this case, the realized target does not exert any influence on the second objective con-

sidered. The two aims behave neutral to one another.

7/29/2019 SSRN-id2133022.pdf

11/23


- 11 -

Complementarity:

If the two objectives taken a look at behave complementary to one another, the one objec-

tives level of achievement supports the realization of the second target. Accordingly,

both develop in the same direction.

Conflict:

Assuming the first objective to be in conflict with the second target striven for, any

achievement of the first hampers the realization of the second objective.

A fourth, rather extreme relationship between two targets exists, if they are identical.

Relations among causative factors

Apart from the target dependencies elaborated on before, two strengths can also be related

because of dependencies among the them causing factors. The sources of strengths also

interact either positively or negatively, or stay independent, i.e. do not affect the second factor

causing a strength to occur.

Remembering the statistical theory of probabilities, which similar to the motivation con-

sidered here, take values in the range from zero to one, various forms of positive dependen-

cies among causing factors can be distinguished:

Identity:

The same source causes deviations from more than one target.

Equivalence:

Two factors are called equivalent, if their respective occurrence probabilities (or in case

of strengths and weaknesses caused the corresponding degrees of motivation) are con-

sistent with the probability (motivation) that stands for the joint realization of the two fac-

tors. However, from the factors equivalence it does not follow that the sources are co-

herent.

7/29/2019 SSRN-id2133022.pdf

12/23


- 12 -

Coherence:

Such a relationship is just given, if one causative factor is part of the second factor con-

sidered. The realization of the first factor then implicates that the probability (motivation)

tied to the other source rises to its maximum, i.e. the amount of 100 %.

In contrast to the before described forms of a positive source dependency, two negatively re-

lated factors cannot be jointly realized. If the two factors considered are, for example, incom-

patible, the occurrence of one causative factor prevents the second factor from realizing, i.e.

the corresponding probability (motivation) fall to zero. It remains, however, possible that

none of two factors considered realizes. This restriction just doesnt hold true if one factor is

the very reverse of the second one. Then, the non-realization of one factor means the other

occurs.

Though it hasnt been clearly pointed out, the described causative relations hold true for

the occurrence of a weakness, a strength, a threat and for an opportunity.

Illustrative summary

Recalling each of the cause- and effect-related dependencies just listed, it becomes apparent

that numerous (inter)relations among strengths, among weaknesses, between opportunities or

among threats exist (Figure 2). All of these dependencies should be considered when conduct-

ing a quantitative SWOT analysis.

All in all the identified strengths, weaknesses, threats or opportunities can each interact

with other members of the same group in 63 different ways (= 1 [case A] + 7 [case B] + 7

[case C] + (7 x 7 1) [case D]). If, however, the elements of two different groups (e.g. oppor-

tunities and strengths) are considered, altogether 64 (and surely not just two, as proposed in

Weihrichs (1982) interaction matrix) different relations have to be born in mind. The slightly

higher number of relations arises, as, for instance, the same factor may affect the same objec-

7/29/2019 SSRN-id2133022.pdf

13/23


- 13 -

tive, however, in different ways. Consequently, an identity regarding the source and the af-

fected objective may occur.

Summing up, 573 (= 4 x 63 + 6 x 64) dependencies among strengths, between weakness-

es, among opportunities and between threats can be distinguished and have to be taken into

account when evaluating the corporate environment and choosing a strategy. The assignment

of weights to each relation insofar is unnecessary, as every relationship is characterized by

motivational factors and/or probabilities, and by the caused deviation from the target striven

for.

Proposal for a quantitative, aggregative SWOT analysis integrating dependencies

To quantitatively evaluate the corporate internal and external environment at the same time,

an enterprise may refer to the existing approaches for a SWOT analysis. These, however,

mostly leave dependencies among the four concepts out of account, from which, regarding the

variety of relationships among strengths, weaknesses, opportunities and/or threats, difficulties

potentially arise.

An aggregation of all factors presumably causing target deviations and therein integrating

multiple, if not all relations, establishes another approach to evaluate a companys internal

and external environment. The new approach proposed, thus, provides a well-founded basis

for corporate acting and decision making.

The following elaborations are structured as follows. The first subsection describes the

preliminary activities needed for the intended evaluation, whereas the second subsection in-

troduces the conceptualized method. This section concludes with a part containing a valida-

tion of the proposed model.

7/29/2019 SSRN-id2133022.pdf

14/23


- 14 -

Preliminary activities

Prior to an aggregation of corporate strengths, weaknesses, opportunities and threats some

preparations need to be made. Firstly, based on all objectives striven for and considering their

relations a target system has to be formulated. Literature encompasses different target sys-

tems, which can be used as guidance for the corporate system definition (e.g., the DuPont

scheme and the Balanced Scorecard (Kaplan and Norton 1992, 1996, 2001a, 2001b)). Due to

an increasingly dynamic external environment, the target system is subject to continuous

changes, i.e. irrelevant objectives need to be deleted, so far not considered aims must be add-

ed, and the targets amount striven for often needs to be revised. Such a reformulation of the

target system also includes a revision of the effect-related relations, leading to changes in the

coefficient matrix B later on needed.

Apart from that the events inducing target deviations as well as the capabilities and/or

knowledge factors, which may also cause deviations from the targets striven for, the presuma-

bly caused effects have to be identified. The probably long list of causative factors that have

to be taken into account needs a limitation. Such a limit provides the operationalization of the

given threats, opportunities, strengths and weaknesses. The operationalization asks on the one

hand for a clarification of the relevant presumably occurring sources and the potentially

caused effects, together with their amounts. In addition the time dimension, during which the

factor and the caused result may occur, needs to be sorted out.

Having identified the possibly occurring events, which may lead to threats and opportuni-

ties, and having pinpointed the knowledge factors and capabilities inherent in the corporate

workforce responsible for certain tasks the identified threats and opportunities, similar to the

strengths and weaknesses, can be illustrated together in an opportunity/threat-portfolio and

respectively in a strength/weaknesses portfolio (Figure 3).

7/29/2019 SSRN-id2133022.pdf

15/23


- 15 -

Procedure of aggregation

In the following an aggregation technique, referred to as SWOTagg and based on the afore

specified elements, is described as a method of preparing the choice of strategy.

The SWOTagg is composed of seven major steps.

1) Identification of a factor to start with: An event, a capability or a knowledge factor has to

be chosen, with which to start the aggregation procedure. For example, either the event

with the highest occurrence probability, or the knowledge factor or capability tied to the

highest motivation shall be chosen. To make a decision among the different factor types,

the factor (event, capability or knowledge factor) causing the highest target deviation

might be selected.

2) Assumption that the chosen factor is realized: The supposed realization of an event means

that its occurrence probability rises to one. If instead of an event a knowledge factor or

a capability are assumed to be given, their assigned individual motivation factor increases

to the amount of one.

3) Assessment of the induced effects: Assuming that the realization of an event exerts influ-

ence not only on the occurrence probabilities of other events, but also on the motivational

factors of capabilities and presumably occurring knowledge factors. The same is true for

entered capabilities and knowledge factors.

The realized effect depends on the relationship between the occurred event/ capability or

knowledge factor and the other factors considered. If a look is taken at two different fac-

tors, these either do not affect each other, i.e. behave neutrally, or they are positively or

negatively dependent. In the first case the realization of one factor leads to an increase in

the probability/ motivational factor of the second one. If the factors are negatively de-

pendent the opposite is true, i.e. the probability or the motivational factor of the second

factor decreases. All in all the probability and/or the motivation vector changes.

7/29/2019 SSRN-id2133022.pdf

16/23


- 16 -

4) Posing of a question regarding the other events, capabilities and knowledge factors giv-

en: If there is no factor to which either a changed occurrence probability or a motivation

amounting to one is assigned, signifying that the factor is surely realized, the procedure

moves to the next step. Otherwise, the second and third steps are repeated, i.e. it is as-

sumed that the factor now possessing a probability of one or to which a motivation of one

is assigned, is realized, making changes as described afore.

5) Calculation of the SWOTagg: Referring to the following formula the aggregated SWOT

amount is computed.

= + (1)

Accordingly, the transposed joint probability and motivation vector ((p + m)T) is multi-

plied with a matrix containing the total caused target deviations (T), with the inverse of

the coefficient matrix (B-1

), which represents the existing target relations, and with a vec-

tor containing as many ones as there are targets striven for.

6) Posing of a question regarding the afore formulated criterion when to abandon the ag-

gregation procedure: The considered process surely come to an end, if all events, identi-

fied capabilities and knowledge factors have already been taken into account.

An earlier end may, however, be justified, if the calculated SWOTagg amount resembles

the sum of the strengths, weaknesses, opportunities and threats computed before. Then,

the chosen starting point may be inappropriate. To justify this supposition another start-

ing point may be chosen. If the process then leads to approximately the same result, i.e.

an aggregated SWOT amount close to the calculated sum of all strengths, weaknesses,

opportunities and threats, it has to be assumed that the integration of dependencies does

not lead to accessory insights.

Another approach to decide on an early end of the aggregation process considers the con-

ditional probabilities and motivational factors. Assuming that a lot of factors have already

been assumed as realized, the conditional probabilities and motivational factors converge

7/29/2019 SSRN-id2133022.pdf

17/23


- 17 -

to zero. Then, the aggregation procedure can come to an almost immediate end, because

further on just small probability or motivation changes can be achieved.

As a fourth possible point to end the aggregation, a rule may be formulated that the con-

ditional probabilities and the motivational factors shall not in total adopt values smaller

than a value determined before.

7) Ending of the procedure or reversion to its first step, assuming that another factor first

realizes.

Validation of the proposed model

The importance of testing the validity of models developed is a well-known fact. However,

due to the novelty of the model the testing so far has been neglected and criteria for testing

have not been developed yet.

A major problem which is encountered when testing the models validity is that the sup-

posed approach has not been applied using past data, due to the unavailability of such data.

Moreover, no ratio, e.g. the consistency ratio, verifying the models validity has been calcu-

lated. Another difficulty arises due to the complexity of the approach and the necessity to

provide a large amount of data.

The model specified also doesnt take account of the time dimension. For example, most

targets are not valid for an infinite length of time. The same might be true for the assumed

relations among the deviation causing factors, which certainly can alter over time.

Conclusions

In the light of strengths, weaknesses, opportunities and threats the SWOT analysis aims at

providing a basis for selecting a strategy fitting for the company considered. While various

approaches for a SWOT analysis exist, these fail to consider all presumably existing relations

among the SWOT analysis factors.

7/29/2019 SSRN-id2133022.pdf

18/23


- 18 -

In this paper I sought to reveal the plurality of dependencies among the four SWOT con-

cepts, and to demonstrate that it is possible to perform a quantitative SWOT analysis wherein

the presumably existing relations among SWOT factors are included.

Future research may seek to consider other, so far neglected characteristics of the de-

pendencies, e.g. the time factor, leading to a Time-driven SWOT analysis (TDSWOT). In

addition the developed model surely needs further consideration, in particular some regarding

its deficiencies and benefits.

7/29/2019 SSRN-id2133022.pdf

19/23


- 19 -

References

Anwar, S. F.; Siddique, S. R. (2000). SWOT with a quantitative outlook: Re-visiting the anal-

ysis. Proceedings of the 2000 IEEE International Conference on Management of Innova-

tion and Technology, 128-133.

Chang, H.-H.; Huang, W.-C. (2006). Application of a quantification SWOT analytical meth-

od. Mathematical and Computer Modelling 43, 158-169.

Edwards, W.; Barron, F. H. (1994). SMARTS and SMARTER: Improved Simple Methods for

Multiattribute Utility Measurement. Organizational Behavior and Human Decision Pro-

cesses 60(3), 306-325.

Genc, R. (2010). Turning Weaknesses into Strengths: Nordic Tourism, Potentials for Growth

and Major Challenges. Acta Universitatis Danubius : Oeconomica, 6(1), 54-67.

Ho, W. (2008). Integrated analytic hierarchy process and its applications: A literature review.

European Journal of Operational Research 186, 211-228.

Kajanus, M.; Kangas, J.; Kurttila, M. (2004). The use of value focussed thinking and the

AWOT hybrid method in tourism management. Tourism Management 25, 499-506.

Kajanus, M.; Leskinen, P.; Kurttila, M.; Kangas, J. (2012). Making use of MCDS methods in

SWOT analysis: Lessons learnt in strategic natural resources management. Forest Policy

and Economics 20, 1-9.

Kangas, J.; Kurtilla, M.; Kajanus, M.; Kangas, A. (2003). Evaluating the management strate-

gies of a forestland estate. The S O S approach. Journal of Environmental Manage-

ment 69, 349-358.

Kangas, J.; Pesonen, M.; Kurtilla, M.; Kajanus, M. (2001). A-WOT: Integrating the AHP with

SWOT analysis. Proceedings of the 6th

ISHAP, Berne, Switzerland, 189-198.

Kaplan, R. S.; Norton, D. P. (1992). The Balanced Scorecard. Measures that dive Perfor-

mance. Harvard business review 70(1), 71-79.

7/29/2019 SSRN-id2133022.pdf

20/23


- 20 -

Kaplan, R. S.; Norton, D. P. (1996). Using the Balanced Scorecard as a Strategic Manage-

ment System. Harvard business review 74(1), 75-85.

Kaplan, R. S.; Norton, D. P. (2001a). Transforming the Balanced Scorecard from Perfor-

mance Measurement to Strategic Management: Part I. Accounting Horizons 15(1), 87-

104.

Kaplan, R. S.; Norton, D. P. (2001b). Transforming the Balanced Scorecard from Perfor-

mance Measurement to Strategic Management: Part II. Accounting Horizons 15(2), 147-

160.

Kurtilla, M.; Pesonen M.; Kangas, J.; Kajanus, M. (2000). Utilizing the analytic hierarchy

process (AHP) in SWOT analysis; A hybrid method and its applications to a forest-

certification case. Forest Policy and Economics 1, 41-52.

Lee, K.-l.; Lin, S.-ch. (2008). A fuzzy quantified SWOT procedure for environmental evalua-

tion of an international distribution center. Information Sciences 178, 531-549.

Shrestha, R. K.; Alavalapati, J. R. R.; Kalmbacher, R. S. (2004). Exploring the potential for

silvopasture adoption in south-central Forida: An application of SWOT-AHP method.

Agricultural Systems 81, 185-199.

Stewart, R. A.; Mohamed, S.; Daet, R. (2002). Strategic implementation of IT/IS projects in

construction: a case study. Automation in Construction 11, 681-694.

Weihrich, H. (1982). The TOWS matrix. A tool for situational analysis. Long Range Planning

15(2), 54-66.

Yksel, I.; Dadeviren, M. (2007). Using an analytic network process (ANP) in a SWOT

analysis. A case study for a textile firm. Information Sciences 177, 3364-3382.

7/29/2019 SSRN-id2133022.pdf

21/23


- 21 -

Figure 1: Conceptualization of strengths and weaknesses

Capability ci

Knowledge ki

oij

0

oij = 0

+

-

mi

(1-mi)

sij = mi oij

No strength orweaknessis realized.

wij = mi oij

oij

oij

7/29/2019 SSRN-id2133022.pdf

22/23


- 22 -

Figure 2: Classification of dependencies between causative factors

Case A

Case C

Independence

In

dependence

Relations based on the deviation causing factors

Relationsbasedontheaffectedtarget

Case B

Case D

i

ngeneral

Identity

Equivalence

Coherence

i

ngeneral

Incompatibility

Complementarity

Positive

dependency

Negativedependency

Identity

Conflict

Complementarity

Indifference

Conflict

Complementarity

Indifference

Interdependency

Dependency

Key:

Case non existent

7/29/2019 SSRN-id2133022.pdf

23/23


Figure 3: Opportunity/threat-portfolio

Amount of the

caused target

deviation ijo

0

0

opp22

t12

t21

t31

opp11

opp32

0,5 1 Occurrence

probability of

the event ie

SSRN-id2133022.pdf

Documents

Transcript of SSRN-id2133022.pdf