DOCUMENTO EN INGLES

DEFICIENCIES IN THE USE OF THE FODA, CAUSE AND SUGGESTIONS

Objectives and structure of FODA (DAFO- DOFA)

On the origin and authorship of the SWOT mismatch between the specialists.Weihrich,
who joined the Body text prepared by Koontz (Koontz, Weirich, 2004) and is used
extensively in "Management excellence. Productivity through Management by Objectives"
(Weirich, 1989) proposing to incorporate the tooling of the Directorate for Objectives
(MBO) states that met him at a seminar conducted by George Steiner at UCLA in the late
sixties. Steiner, meanwhile, is used extensively in "Strategic Planning. What every manager
should know" (Steiner, 1991) without mentioning its origin.

Alan Chapman, (2004) in an article published on the website of gerencia.com raises, which
as reported by Albert Humphrey, "SWOT analysis emerged from research conducted by the
Stanford Research Institute between 1960 and 1970. Its origins stem from the need to
discover why corporate planning failed. The research was funded by the Fortune 500.
“Among the members of the research team does not appear Steiner.

To identify the purpose of the FODA analysis can be used two definitions, one on
"Strategic Management", another on the FODA analysis. Fred David Strategic Management
defines as follows:

A company should try to implement strategies to obtain benefits from its internal strengths,
take advantage of external opportunities, mitigate internal weaknesses and avoid or lessen
the impact of external threats. This process is the essence of the Strategic Management.
"(David, 1988, p. 35).

On FODA analysis, Steiner (1991) states the following.

FODA analysis is a critical step in the planning process. Properly examine opportunities
and threats (threats) future of a company, and in an impartial study relate to the potential
(strengths) and weaknesses of it is a huge advantage (p. 26).

Both appointments are complementary: the first, there is the essence of Strategic
Management, in the second, the tool can be used to implement it. This may be clear that the
essential purpose of the SWOT analysis is the generation of strategies that enable the
organization to "connect" with the potential actions (opportunities) that can take in its
external environment, and prepare to face the dangers ( threats), building on its strengths
and reducing the negative impact that may have their weaknesses.
The instrument that integrates the environmental analysis, with the analysis (diagnosis) is
the Matrix internal SWOT (SWOT) that in the text-Weihrich Koontz, (2004) is defined as
"a conceptual framework for a systematic analysis, which facilitates mating between
external threats and opportunities, with the strengths and weaknesses internal to the
organization "(p. 167). The FODA matrix can be represented as follows.

In this scheme, which presents the main results of the FODA analysis, after less relevant
discriminating factors that arise in the analysis process, you can count on a "snapshot" of
the main factors to keep in mind an organization to design their strategies.

Using the FODA matrix (FODA or TOWS for its acronym in English) has been extended to
applications as diverse as transnational mergers and personal life planning. In the latest
edition of the text-Weihrich Koontz (2004) discussed its use in the merger of Daimler-
Chrysler, which generated a "Matrix FODA (TOWS) 3X" consisting of preparing a matrix
for each company, where revealed complementary strengths weaknesses of one with
another. A third matrix presented the results that would merge both, identifying the "new
skills" that generate synergies with the integration of both.

Steiner (1991, p. 303) states that "Several lessons of experience with strategic planning
apply to planning areas outside the business world.One of these important areas is the
planning staff" (p. 303). Consistent with this, he devotes a whole chapter of his book
"Strategic Planning" to the use of analysis and the FODA Matrix to the "Personal Life
Plan." The baseline target that arises is "Maximize personal conformism for life."

Strategic analysis of the environment

Conventionally, we call "environment" to everything that is "outside" of the company (in

many translations is called "external environment"). Including suppliers, customers,
competitors, banks, markets, government, environment, community, legislation, national
and international economy, and so on. For their analysis, experts divide it into two parts:
the "micro-environment" or "competitive environment" and, the"macro" or General
surroundings.

The "competitive environment" includes factors that influence a particular type of business
in an "industry" in specific, Michael Porter defines as follows:

An industry (or industry) is made by a group of companies that produce products (or
services) that are substitutes for each other. Constitutes the "business" in which a company
moves, so it is allowing you to identify who your customers, your competitors and what the
market (Porter, 1991, p. 25).

The model used in the analysis of this type of environment is "The 5 Forces of
Competition" proposed by Porter in the early eighties (Porter, 1990). In this model are
analyzed: the rivalry between the companies operating in that industry, the bargaining
power of suppliers and customers of the same, the threat of potential entry of new
competitors in the industry and the emergence of products substitutes for moving in that
industry. Trends and changes in the "competitive environment" are specific to companies
operating in a kind of business (industry) specific, such as steel, furniture, power plants,
supermarkets, banks, insurance, etc..

The "macro-environment" or "general environment" refers to situations or factors that may

affect any type of business (industry). For analysis, the group specialists in the fields can
exert the most influence in business, such as: changes and trends in technology, economic,
political, social, international, legal, legal, and environmental.

Both the analysis of "competitive environment" and the "macro-environment," the company
can identify trends, factors or situations that can be used to develop its activities and results,
for example, state regulations that encourage the development of its sector, new markets
that can be positioned. These are the "Opportunities". But also, you can identify situations
that may constitute "threats", such as: presence of new competitors, deteriorating economic
situation in the country where you operate, entry of substitute products.

Analysis (diagnosis) internal strategic

To meet the demands and trends can be identified in the environment, the company must
realistically analyze the resources and possibilities which can be supported, which are the
"strengths". But also, the resources or internal factors that can limit performance and
results, which would be their "weaknesses".

To perform the analysis (diagnosis) internally, the company's management team can be led
by various instruments. One of them may be the "value chain", which proposes Michael
Porter, which "runs" all the essential process of generating value from the procurement of
supplies to the marketing of their products. A functional approach to this process identifies,
as key components of a business: Equipment, Technology, Logistics, Marketing,
Distribution Channels, Human Resources, Finance, Administration and organization.

You can also use the "Model of the 7S" proposed Athos and Pascal, a consultancy
McKenzie, analyzing what they see as the main components of running a business, in their
expressions in English, start with "S". They are: Strategy, Structure, Systems, Staff (Staff),
Style, Skills (Skill) and Shared Values (Shared Values).

An analysis of its resources and its internal situation in these components, the company can
identify the strengths in which you can rely on to, with certain strategies, opportunities, or
face the threats identified in the environment. You should also diagnose the factors that
may limit their activities and performance, which would be its weaknesses and propose
strategies and actions to overcome or neutralize them.

Other aspects of the FODA analysis

Other aspects of a general nature, which include specialists on the FODA analysis, are the
time horizon of "internal analysis" and "environmental analysis" and the peculiarities of the
analysis process.

On the "horizon", McConkey, in "How to Manage By Results" states that the strengths and
weaknesses, ie the "internal analysis", "be directed to the present, while the analysis of the
Opportunities and Threats, is that the "environmental analysis" must be oriented to the
future of the period under consideration for the preparation of the strategy.”(McConkey,
1985, p. 110).

Provide reasons for this are clear. The company's strategy must be prepared on the basis of
resources and weaknesses that the company has "now", not in the future. But the impact of
this strategy will in the future, in which environmental factors may change significantly. In
short, the essential purpose of the strategy is to adapt and prepare the company to address
the foreseeable conditions in their environment in the future. That "future" is nearby.
Experts suggest that is 3-5 years. Consider a longer period is difficult to predict by the
company. Moreover, their estimate would fall within the scope of "forecasts" and requiring
prospective instrumental conceptual, technical and mathematical very different dynamics
and immediacy that should characterize the strategic planning processes.

The other aspect that experts say is the process of "analysis of the situation", for the
preparation of the strategy. Minztberg (1991) and others, have argued that as important as
the results is the process used for the analysis and generation strategies. Unlike "traditional
planning" which is specialized work they do, they process information and prepare
proposals for "consideration of the management team", the "strategic planning" is a task of
top management and its team.

The generation of ideas and exchange between members of the management team, which
can incorporate other specialists or members of the organization, including external factors,
such as customers, suppliers, staff and others, not only allows the analysis of the issues
from different points of view, but to generate synergy, consensus and higher levels of
commitment in implementing the strategy.

Deficiencies in the use of FODA. Root causes and recommendations

As stated above, the use of FODA is a recurring theme in master classes, workshops and
consulting management. Most participants have some experience, knowledge, or
"concerns" about this tool. Promote the exchange of ideas and experiences in these groups
is useful not only to enrich the knowledge of participants, but also to systematize trends and
experiences that can be shared with other groups. Someone told me "is doing science with
experience." Nothing new, an important part of knowledge management comes from this
source. According to Koontz-Weirich, (2004) until the middle of last century, the
"administration (management)" was nourished by empirical evidence, and not until the
fifties, they begin to work produced from the academies and scientific groups.

Below is a selection of what they have raised managerial and professional groups about
"defects" in the use of this tool, what they think are the "root causes" and offer suggestions
to overcome them.

* Identify as "opportunities" factors really are "strengths" or "threats" others are

"weaknesses". (It also happens in reverse in both cases).

Main causes. Lack of clarity between what is "environmental factors" which are outside the
"catchment area" of the executives of the company and, therefore, on which they can not
influence, and the "internal factors" who are under their influence on those who can act.

Suggestions. Before starting the generation of ideas and information gathering for the
"strategic analysis of the situation," as he called Steiner, acting as facilitator, or lead the
process should clarify the areas covered by each of these areas. When I work this in
consulting, generally after introductory conceptual explanations, I perform a "warm-up"
and do not start generating ideas until all participants are clear about the difference between
these areas, external and internal.

* In the "environmental analysis", limited to economic factors, not sufficiently weigh trends
and changes in the technological, political, social, international, legal regulations, among
others, that can have significant impacts on performance and results company.

Main causes. Underestimation of the potential impact factors "noneconomic" activity of the
company.

Tip. Before starting the analysis of the environment, the management team that will work
on this, you must specify the groups of environmental factors that may exert certain
influence on its future activity and identify trends and major changes can foresee. For this,
they orient the models of "the 5 Forces of Competition", proposed by Michael Porter
(1990) for analyzing the competitive environment and the identification of Critical Success
Factors (CSFs) in the moving business the company, among others. In general, the main
groups of factors in the "macro environment" to be analyzed are: changes and trends in
technology, economic, social, political, legal, international, and environmental. For this
there are different "guides" that are available in the literature and online.

* Overvaluation of their "strengths" that sometimes, when compared with the performances
of the competition in this area, in fact, are "weaknesses" they should try to overcome.

Main causes. Often, management attention is too focused on what happens "inside" of the
company. The lack of knowledge, monitoring and analysis of what happens in the
environment, including strategies and practices of competition, is a significant deficit that
many management teams and professionals recognize that they must overcome. It is
common among the strategies that emerge from the FODA analysis, many companies
faced: "Establish information systems and monitoring the market and competition."

A comment. This deficit is present only in American management teams, who are we have
worked with these issues. Also, in many works of "management gurus", recognizes its
presence in managerial groups in developed countries.

Tip. Regardless of entailing a strategic mentioned, management teams have proposed that,
as part of the development of the "situation analysis", it is believed an "ad hoc" to compile
"emerging information" on this matter for can be taken into account during the process.

* Giving the same assessment of factors that can have a significant impact on company
performance, that is "strategic", and others who, in practice, they are irrelevant.

An example. In the "internal analysis", a company included among its weaknesses, "Having
a single provider in a strategic input," along with "The office furniture chapillas do not have
identification."

Main causes. Two cases arise to explain this shortcoming: one, intended to "solve
everything" at the same time and, two, lack of hierarchy in the consideration of the factors
that are truly strategic. Steiner (1991) posed by the presence of these problems also in large
U.S. organizations, which used to substantiate the need to define the "Key Result Areas",
before starting the "Situation Analysis", or use them as criteria for evaluating reports that
were generated during the strategic planning process.

Tip. Management teams that have identified this problem coincide with raising McConkey
(1985) in "How to Manage by Results". They propose that, before starting the analysis of
the situation to identify the "Critical Success Factors" in the business that moves the
company and what the team believes are the "Key Result Areas" of the organization.

To complement this, after the information collected and generated ideas, techniques can be
applied "reduced list" as weighted voting, assessment of alternatives, cause-effect diagram,
among others.

* Apply the same "time horizon" to "internal analysis" and "environmental analysis".

In this theme we can find two approaches. Some companies believe that the "analysis of the
situation must be realistic." Therefore, identifying the strengths and weaknesses presented
by the company "now." But do the same with the Opportunities and Threats. In other cases,
considering that "the strategy is prepared" now ", but operate in the future", both analyzes
were projected into the future, including the strengths and weaknesses they think "may
have in the coming years." Both approaches are wrong, for reasons that were discussed
above. The suggestions are obvious and were discussed above.
Limit the FODA analysis to identify internal strengths and weaknesses, and opportunities
and threats in the environment, have a list without preparing and using the FODA matrix
which is the instrument for the preparation of strategies.

Most teams that have worked these issues agree that this is the most important deficiency
and found that significantly limits the potential of this tool.

Main causes. The main reasons identified as causes of this are:

1. Ignorance of the potential of the analysis and the FODA Matrix for generating strategies.
After preparing the list of factors in each component "we know what we can do with this,"
pose.

2. Lack of habit and culture of work on the analysis and strategy formulation. "We focus on
the daily work, and do not make time for this."

3. Low participation of other members of the organization in the process of analysis and
strategic planning. "Many times, the FODA analysis and the generation of strategies the
Manager and 2-3 do more."

The passage of "FODA Analysis" to "FODA Matrix", apparently, is part of the historical
evolution that has taken this management tool. This can be inferred from Weihrich posing
in the latest edition of the text of "Administration" (2004), when he states:

"For the space of many years, we have used the FODA analysis (SWOT) to identify:
strengths, weaknesses, opportunities and threats of the company, but this type of analysis is
static and rarely leads to the development of clear alternative strategies. Consequently, the
SWOT matrix was introduced to analyze the competitive situation of the company, or even
a nation, which identifies four sets of strategic alternatives defined ... ".(Koontz-Weirich,
2004, p. 167).
definidos de alternativas estratégicas…”. (Koontz-Weirich, 2004, p. 167).