Fall 9-1-2006 Using SWOT Analysis To Understand The Institutional Environments : A Guide For Can Tho

Strategic planning has become the practical approach to organizational management in most of organizations in the new era, when the world has undergone major social, political, economic, technological and demographic changes. Like other organizations, in this hyper-competitive world, universities have to analyze their environments both internally and externally to identify their strengths and weaknesses as well as to optimize their opportunities and reduce the threats to their institutions. The purpose of this article is two fold. Firstly, the concept of SWOT analysis as a strategic tool to help universities to adapt to changes is discussed. Secondly, a SWOT framework to analyze Can Tho University is also presented. Of many management concepts, strategic planning has received much attention since the early 1960s (Delahaye, 2000). Business management literature has provided complex insights into the philosophies, processes and techniques of strategic planning. As Micklethwait and Wooldridge (1996 cited in Delahaye, 2000) commented: ‘For most of this century, strategic planning was regarded as the very kernel of management thought: indeed it often had a department devoted to it. Planning – a neat, definite, military concept – was adapted and required into what seemed to be an even more precise science’. There are a number of definitions of the term from different perspectives. Generally, strategic planning is considered as a complex and ongoing process of organizational change (Lerner, 1999). According to Olsen and Eadie (1982 cited in Hughes, 1994), ‘strategic planning is a disciplined effort to produce fundamental decisions shaping the nature and direction of governmental activities, within constitutional bounds. ’ Bell (2002) stated ‘at its simplest strategic planning may be understood as an approach to establishing the long-term future of an organization and then moving that organization in an appropriate direction to achieve the future state to which its member, or at least its key members aspire. ’ Quinn (1980 cited in Bell, 2002) emphasized the link between strategies, planning and the future development of the organization. He defined “strategic planning as the integration of an organization’s major goals, policies, and actions into a cohesive whole. ’ In business environment, it goes without saying that strategic planning is the key to enhance organizational performance when it helps to match the activities of an organization to its environment and to its resource capabilities (Johnson and Scholes, 1989; Miller and Cardinal, 1994; Hahn and Powers, 1999). Business literature has revealed that well-developed strategic plans can result in a variety of benefits. A number of authors like Bryson (1988); Hughes (1994); Byrne (1996); Porter (1997); Stahl (1998); 1 Quoc Hung: Using SWOT Analysis Published by OpenRiver, 2006 Schraeder (2002) argued that strategic planning can help an organization to clarify future direction, to establish priorities, to diversify its products or services, and to deal with effectively with rapidly changing circumstances. In this era of globalization when the world has undergone many rapid changes of all fields (Navarro and Gallardo, 2003; Uvalic-Trumbic, 2003), the environment in which organizations operate is no longer stable and predictable, strategic planning then can provide an operation framework allowing organizations to lead changes and gain their competitive advantages, as Navarro and Gallardo (2003) claimed, ‘in the world today, organizations that are determined to survive and maintain a sustainable competitive advantage must adapt themselves rapidly to continuous change. ’ Education, especially higher education, cannot stand apart from this global phenomenon. For the past decades, the educational sector has begun to recognize that planning is necessary to maintain its own responsiveness to a rapidly changing environment (Kriemadis, 1997). Cameron (1983) stated that ‘ the future of colleges and universities as organizations includes conditions of decline which require a new set of administrative and organizational responses. ’ To survive and prosper in this hypercompetitive environment, institutional leaders are required to identify their strengths, reduce their weaknesses, take advantage of the opportunities and minimize the effect of threats. One simple, yet effective way is to conduct a SWOT analysis, a common component of most strategic plans (Schneider and De Meyer, 1991). SWOT analysis is not a new idea in the business practice. This model originated from the Harvard Business School (Delahaye, 2000), and has dominated strategic plans since the 1950s (Lerner, 1999). Many people commonly misperceive SWOT as synonymous with strategic planning. In fact, a SWOT analysis is only one of many tools that can be used in an organization’s strategic planning process for environmental scanning. There are a number of methods of environmental analysis. PEST or sometimes called STEP analysis (an acronym with P for political, E for economic, S for social and T for technology) and Porter’s Five-Forces framework (including the risk of new competitors entering the market, threat of potential substitutes, the bargaining power of buyers, the bargaining power of suppliers, and degree of rivalry between the existing competitors) are common for scanning the external environment whereas the Value Chain analysis and Functional Audit are merely for internal environment analysis (Kheng-Hor and Munro-Smith, 1999). SWOT analysis, which is by far the most popular, can serve a dual function: it can be used for both internal and external environment scanning (Kheng-Hor and Munro-Smith, 1999; Lerner, 1999). SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Interestingly, this acronym SWOT makes a nice sound, which rhymes, and it also implies the order the strategy planners should follow in the strategic planning process. During the process of strategic planning, the SWOT analysis is neither the first nor the last step. The first step in the strategic planning process should be a thorough analysis of the organization’s mission or vision statements. These statements should serve as a foundation of all planning activities. If the organization does not have a mission or vision statement, the development of such a statement should precede any further plan 2 Essays in Education, Vol. 18 [2006], Art. 12 https://openriver.winona. edu/eie/vol18/iss1/12 development activities. In very broad terms, for any organization, overall objectives or ‘missions’ have to be defined, then internal resources need to be assessed and relevant parts of external environment need to be analyzed before conducting a SWOT analysis and following planning steps (Schraeder, 2002). To understand SWOT in the whole process of strategic planning, it is essential to position this step into a relevant framework. One useful model developed by Johnson and Scholes (1993) is used popularly. The model consists of three main areas arranged in a triangular form. They are: strategic analysis, strategic choice and strategy implementation, and all these areas are closely interlinked. The strategic analysis includes three elements such as the environment, the resources, and the stakeholders’ expectations. During strategic analysis, the strategy planners have to identify the organization’s strategic position in its environment. Strategic choice follows strategic analysis and also includes three elements: strategic options, option evaluation, and strategy selection. In this step, strategy planners have to generate options, then find ways to evaluate these options and finally, to select a strategy or strategies that are most viable. That is, the chosen strategies must ‘reflect the organization’s values’, must be ‘economically justifiable’ and ‘politically attainable’ (Schraeder, 2002; Tsiakkiros and Pashiardis, 2002). More specifically, Dobson and Starkey (1994 cited in Tsiakkiros and Pashiardis, 2002) pointed out three different kinds of strategies the planners should consider. They are competitive strategies ‘to achieve a superior profit compared with competitors’; development strategies ‘to decide the most appropriate direction or method for the organization’s development’ and portfolio strategies to maintain a portfolio of activities. The last step in the model, strategy implementation, deals with planning and allocating resources, organization structure and managing strategic change. From the whole process of strategic planning, SWOT analysis is the early but very important step in the area of strategic analysis, as Pashiardis (1996) commented, ‘environmental scanning is essential for an effective planning. One needs to know the environment in which one operates before making any decisions about the organization, so as to be able to match one’s capabilities with the environment in which the organization operates. ’ SWOT consists of two main parts: the analysis of the internal situation (strengths and weaknesses) and the analysis of the external environment (opportunities and threats). It is important to note that the external environment should be described in a dynamic sense by considering the actual situations, namely existing threats, unexploited opportunities as well as probable trends. The internal situations should also be discussed on the basis of the existing factors. In other words, the SWOT analysis should not contain speculative, future weaknesses or strengths, but real, actual ones (Horn, Niemann et al., 1994). In the world of business, a strength can be of any internal asset such as motivation, technology, finance, which will help to exploit opportunities and to fight off threats. A weakness can be understood as internal deficits hindering the organization in meeting demands. An opportunity is defined as any external circumstance or trend that favors the demand for an organization’s specific competence. A threat, on the other