SWOT Analysis in The Formulation of Tourism Develo
SWOT Analysis in The Formulation of Tourism Develo
SWOT Analysis in The Formulation of Tourism Develo
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Bolesław Goranczewski
Wrocław School of Banking
Faculty of Economics in Opole
[email protected]
Daniel Puciato
Opole University of Technology
Institute of Tourism and Leisure
[email protected]
Abstract: The aim of the paper is to identify the role of SWOT analysis in the formulation of tourism development strategies for
destinations. SWOT analysis helps to establish a reliable diagnosis of the internal potential shown by a tourism destination and
its environment. In the Polish economic situation, SWOT analysis is frequently used in a fragmentary manner which should be
considered as a serious methodological oversight and may jeopardize the value of the entire process related to the strategic
management of the tourism destination.
Key words: strategic management, SWOT analysis, tourism development strategy, destination.
1. INTRODUCTION
The dynamic growth of leisure travel and related tions. The prime stage of this concept is a strategic
tourism expenditure has now turned tourism into analysis, and its quality determines, to a large extent,
a mass phenomenon. Quantitative trends are accom- the success of the entire process. The most popular
panied by qualitative ones which include, above all, method of strategic analysis in the Polish economic
technological progress, particularly in the fields of situation is SWOT analysis. The review of tourism
transport and IT technologies, liberalization of inter- development strategies of many gminas, powiats and
national economic relations and the regionalization of województwos, however, shows that the application of
the world. In practical terms, this means a wider offer this analysis to the strategic management of tourism
for an average consumer and tougher competition destinations leads to a number of problems and
among entities representing the supply side of tourism methodological mistakes.
(DZIEDZIC 1998). Due to the unique character of the The aim of the paper is to identify the role of
spatial structure of tourism, problems connected with SWOT analysis in the formulation of tourism develop-
its development should be looked upon at local and ment strategies for destinations. The research material
regional levels. The bulk of tourism consumption is composed of secondary data collected from the
takes place in specific towns or tourism regions, with literature, bibliographic studies and documents.
all the positive and negative implications it brings for A descriptive approach, an inductive research method,
these destinations. The growing importance of tourism was employed. The paper outlines the concept of
for local and regional economies of numerous a tourism development strategy as an instrument used
territorial units, the high volatility of macro- and in the strategic management of a destination, describes
micro-environments of tourism entities and a risk, SWOT analysis and presents the most important
higher than in other areas of activity, make an increas- problems and methodological mistakes resulting from
ing number of municipalities or regions take advantage the application of SWOT analysis as a strategic plann-
of strategic management concepts for tourism destina- ing tool in destinations.
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between the tourism destination and its macro- advisable to present the selected issues in order of
environment is a one-way interaction. The macro- priority, i.e. from the most relevant to those with
environment is essential for the functioning of the secondary importance (DZIEDZIC 1998). An analysis
tourism destination, but the tourism destination has carried out in this way may constitute a valuable
practically no impact on the situation in the macro- instrument which helps to make strategic choices and
environment. The most popular methods for the select the appropriate leading strategy (stage 4).
analysis of the more remote environment are a trend A detailed description of SWOT analysis will be
analysis, a strategic gap analysis, the Delphi method presented in the following section. Once selected, the
and scenario methods. The aim of the analysis of the development strategy for the destination should be
competitive environment, which may be somehow translated into functional strategies (e.g. marketing,
affected by the tourism destination, is the identifica- financial, personal etc). Functional strategies are then
tion of its attractiveness in terms of market growth translated into operational and tactical plans, and
and the type of competition, and is the analysis most these plans, in turn, into the budgeting of activities.
often carried out for the most important products or An effective procedure for the implementation of the
segments of the tourism market. The subject matter of leading strategy may be a balanced scorecard (BSC)
competition analysis for the tourism destination is the which allows the strategy to be implemented in four
evaluation of its prospects in terms of (DZIEDZIC 1998) main perspectives: financial, learning and growth,
a forecast pace of growth in tourism demand, its customer (tourists and visitors), and internal business
structure, the profitability of factors affecting the processes (KAPLAN & NORTON 1992). The implementa-
demand, the type of competition and its determinants, tion of the functional strategies is the first task at
and the position of a competitive tourism destination. the last stage of the development strategy planning
The most popular methods used to analyze the closer process. Next, the criteria for evaluation of the
environment are Porter’s ‘five forces’ analysis, a sector strategy implementation are formulated, the effects
economic profile, a score assessment of sector attractive- are measured and compared with accepted assump-
ness, and a strategic group map. The internal analysis tions. This stage should reveal any faults in operation
of the tourism destination potential should focus on and management as well as indicating ways of remov-
the key success factors which are the source of the ing these negative phenomena (corrective actions) and
destination’s competitive advantage. According to protecting against them in the future (preventive
DZIEDZIC (1998), the most essential factors determin- actions). If this stage goes through properly, the
ing the success of the tourism area on the market parties that manage the tourism destination obtain the
are a set of tourism products and their availability, complete set of data needed to perform the next
competences in provision of services and the level of strategic planning cycle. The strategic management
technologies, marketing, the level of organization and process is progressive and concerns subsequent time
management, the level of costs, profitability and horizons.
financial resources. These factors can be evaluated
using the following methods for analyzing the area’s
internal potential: a strategic balance, an analysis
of key success factors, a score assessment of potential,
3. DESCRIPTION OF SWOT ANALYSIS
a competitive profile, a value chain, and the lifecycles
of a tourism product and a destination. The logical SWOT analysis is one of the most frequently used
conclusion of strategic analysis results in the analysis methods in strategic management. It is employed to
of strategic options (stage 3) which the destination can build an overall development strategy (general) as
choose from. This concerns concrete products, as well well as functional strategies (fractional), concerning
as the conditions in which activities are performed. a function to be performed by a state, a local govern-
Such analyses are conducted using integrated (port- ment unit or an enterprise (marketing, finance,
folio) methods, such as McKinsey’s, ADL, Hofer’s and logistics, etc.). GIERSZEWSKA & ROMANOWSKA (2002,
BCG matrices or SWOT analysis. The most popular pp. 235) claim that SWOT is not a method of strategic
and important, for the needs of this paper, is SWOT analysis but is ’a unique algorithm of a strategic
analysis. It may be carried out for the most important analysis process, a systemic proposal and a wide-rang-
tourism products, as well as for the entire destination. ing evaluation of external and internal factors which
When conducting the analysis, one should remember specify a company’s current status and its develop-
to take into account only those factors which are most ment potential’. The term ‘SWOT’ is an acronym,
relevant for the competitiveness of the destination. standing for strengths, weaknesses, opportunities and
A particular emphasis is placed on the attributes threats. This method is wide-ranging because it
which are important for potential tourists. It is also concerns internal factors (the organization as such),
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external factors (the closer environment – the com- and a floating exchange rate) or negative unpredict-
petitive environment, and the more remote environ- able events (e.g. flood, a terrorist attack, a war).
ment – the macro-environment). The combination of In SWOT analysis, there is no need to specify all
external and internal factors leads to four categories the factors. Instead, those which are of prime
(GIERSZEWSKA & ROMANOWSKA 2002): external positive importance and may determine the future should be
– opportunities; external negative – threats; internal in focus. In business practice, the four-field SWOT
positive – strengths; and internal negative – weak- matrix is often divided into smaller parts. Depending
nesses. The SWOT analysis model is presented in fig. 2. on the accepted methodological variant of the analysis,
opportunities and threats, for example, may be
divided into more remote (macro-environment) and
closer (sectoral environment), and strengths and weak-
nesses into economic, social, legal, spatial, environ-
external
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50 Tourism 2010, 20/2
WEIHRICH (1982), based on the observations of finance for tourism investments or establish an associa-
enterprises and studies of their strategies, stated that tion of tourism municipalities.
SWOT analysis should also include analysis of the The assessment of the environment leads to the
organization’s current situation and design of the distinction of four typical strategic situations and
strategy for the four types of strategic situation. The related activities. They are described in Table 2.
flow of analytical activities, according to the author’s
idea, is presented in Fig. 3.
WEIHRICH (1982) also distinguished four model T a b l e 2. Division of undertakings by opportunities
strategic variants of an organization, depending on the and threats
combination of internal and external factors:
1. SO (strengths-opportunities) situation – a maxi- Opportunities
Threats
maxi (expansive) strategy. This concerns an organiza- Big Small
tion dominated by strengths inside and opportunities Small Perfect chances Stable undertakings – give
in its environment. In this situation, the strengths – great opport- a chance to obtain some
should be used to take advantage of the opportunities unities are small benefits, with low
accompanied by threats and limited opport-
from the environment, through strong market expan-
a low risk of unities for development
sion and attempts to achieve diversified develop- threats
ment. A tourism destination with unique tourism Big Speculative Problematic undertakings
advantages, for example in conditions of fast grow- undertakings – – changes in the environ-
ing domestic tourism demand, may carry out an aggregation ment do not create any
aggressive strategy of market penetration by expand- of opportunities opportunities and pose
and threats numerous threats
ing its modern tourism infrastructure and undertaking
intense promotional activities. S o u r c e: authors, based on GOŁĘBIOWSKI 2001; KOT-
2. WO (weaknesses-opportunities) situation – a mini- LER 2005; NIESTRÓJ 1998.
maxi (competitive) strategy. This refers to an organiza-
tion which is dominated by weaknesses, but operates
in a favourable environment. Its strategy, consequently,
Similarly, the analysis of the organization’s strengths
should be focused on taking advantage of the opport-
and weaknesses can be used to distinguish the follow-
unities and, at the same time, eliminating the weak-
ing situations (Table 3).
nesses. With a growing tourism demand, a tourism
destination which has some tourism advantages but
a poor accommodation base, may try to find some
T a b l e 3. Division of undertakings by strengths
strategic partners for cooperation (e.g. the establish-
and weaknesses
ment of an association of tourism municipalities).
3. ST (strengths-threats) situation – a maxi-mini Strengths
(conservative) strategy. In this situation, an organiza- Weaknesses
Big Small
tion has great internal potential but operates in adverse
Small Absolute advantage – Average position
external conditions. Therefore, it needs to overcome
the resultant – the resultant
the threats, making the best use of its strengths. of strengths and of strengths and
For example, in conditions of diminishing domestic weaknesses is better weaknesses is
demand for tourism services, the destination may try than competitors’ similar to
to attract visitors or stimulate some type of tourism competitors’
(business, ethnic, health), with lower income flexibility Big Partial advantage – Weak position –
the organization’s the organization’s
of tourism demand, by launching innovative tourism
strengths are bigger strengths are
products. than the competitors’ smaller than
4. WT (weaknesses-threats) situation – a mini-mini the competitors’
(defensive) strategy. This concerns an organization
without any prospects for development and with S o u r c e: authors, based on GOŁĘBIOWSKI 2001; NIE-
STRÓJ 1998.
a small internal potential, operating in an adverse
external situation. Its aim is to minimize the weak-
nesses and avoid the threats. In a worst-case scenario,
the destination should change its dominant functions, The conditions presented in Tables 2 and 3 may be
e.g. from tourism to an industrial function, and in a aggregated and presented in the form of a matrix,
best-case scenario, it should strive to survive the showing the combinations of variants of situations and
difficult time, trying to find some external sources of corresponding strategic options (Table 4).
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In business practice, so-called SWOT scoring and The probability of strategic success ranges from
the probability of strategic success are also used. This zero to one. The condition for achieving the success is
involves the evaluation on an accepted scale of key to have a co-efficient value which exceeds 0.5. The
internal and external factors, and determining whether internal strength (SP) is calculated taking into account
there are more strengths than weaknesses in the the list of strengths (S) and weaknesses (W), and the
organization and more opportunities than threats in external strength (AS) by evaluating opportunity (O)
its environment. This procedure helps to choose the and threats (T).
right strategy and may be combined with the assess-
ment of the probability of strategic success using an SP =
∑S
algorithm constructed by BERLIŃSKI (2002). Within this ∑S +W
procedure, the following stages may be distinguished
(BERLIŃSKI 2002; BERLIŃSKI & PENC-PIETRZAK 2004): AS =
∑O
1. A list of strengths and weaknesses in the form of ∑O + T
a table, and their evaluation on an accepted scale, e.g.
1-5 points, summarizing strengths and weaknesses
and proving advantage or balance.
2. Similar to item 1, the same procedure for threats 4. SWOT ANALYSIS AS AN INTEGRATED
and opportunities. STRATEGIC PLANNING TOOL FOR TOURISM
3. Identification of an organization’s strategic IN DESTINATIONS
position, with one of the four strategies (SO, WO, ST,
WT), as described above, ascribed to it. The application of SWOT analysis enables the entities
4. Assessment of the probability of strategic success which are responsible for management of local or
(PSS), according to the formula: regional tourism policies in destinations, to position
SP + AS tourism in the overall and general strategic planning
PSS = in a methodical and orderly way. The local govern-
2
where: ment units are obliged, by law, to pursue a tourism
PSS – coefficient of probability of a strategic success, policy where planning is an important function. The
SP – the organization’s internal strength, identification of objectives and methods to be
AS – the organization’s attractiveness in the environ- employed in the development of tourism, i.e. func-
ment, tional planning, should always be preceded by SWOT
strategic positioning as an integrated tool which can
0 < PSS ≤1,
be used to carry out such activities as planning,
PSS > 0.5 → 1.
coordination, monitoring, control and promotion.
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52 Tourism 2010, 20/2
It should be clearly emphasized, however, that entities operating on the tourism services market
SWOT analysis may only be helpful on condition that which are planning to carry out specific tourism, or
it is carried out completely and used fully. No semi-touristic, investments in a given tourism destina-
management method, technique or tool, if used just tion. Tourism enterprises, when creating their own
partially, can fulfil its tasks. Nevertheless, a review of strategic or investment plans, carefully analyze local
tourism development strategies at the regional level or regional strategies for tourism development, and
(e.g. Województwo pomorskie) or the local level (e.g. the conclusions drawn from these analyses are
Kraków and Wrocław) shows that SWOT analysis important assumptions for making business decisions.
tends to be used in an improper way, i.e. partially. This may be of major importance not only for the
It is, most frequently, a detailed specification of future of these economic entities, but also for the entire
individual fields from a matrix without further scal- local or regional economy of the tourism area, as well
ing. Such an approach is a serious methodological as for the quality of its inhabitants’ lives.
mistake and threatens the value of the strategic
analysis of the destination. Only a comparison of
positioning factors on an appropriate scale can lead to 5. CONCLUSIONS
a correct formulation of problems whose identification
serves to establish the conclusions needed as a basis Due to the growing importance of tourism for the local
for improvement. and regional economies of numerous destinations,
The SWOT framework, when used partially, is a well-run tourism policy becomes a priority. It should
deprived of the attributes of completeness which be oriented towards making the best use of advant-
integrate all tasks connected with planning, coordina- ages, and removing any possible disruptions which
tion and task monitoring concerning tourism. The may be caused by the development of tourism.
completeness postulate is so vital because the in- Specific operational or tactical activities should result
tegrated planning function determines the position from strategic plans and, most of all, from local and
and the status of the tourism economy within the regional strategies for tourism development. Such
entire spectrum of social and economic activities strategies have to be based on reliable analyses of the
carried out by local government units. internal potential and the environment of a destination
SWOT analysis is also an important element of by making use of a complete SWOT analysis. A partial
place marketing used by local governments to approach to SWOT analysis, which can often be
stimulate processes related to the development of seen in tourism development strategies implemented
business activity connected with tourism. The place by Polish gminas, powiats and województwos, should be
marketing process concerning tourism may include regarded as a serious methodological mistake that
the following elements (SZROMIK 2008): distorts the meaning of this analysis. The analysis has
− making an inventory of areas and places which to be complete to ensure that strategic options are
may be attractive for tourism-related development, properly formulated, the right strategic choice is made
and business activities connected with such develop- and strategic plans are correctly implemented and
ment, inspected, as it provides a starting point for sub-
− developing a concept for giving access to invest- sequent planning cycles.
ment advantages, by preparing profitability analyses
and estimates for undertakings,
− preparing offers containing a complete descrip-
tion of advantages, including possibilities of co- BIBLIOGRAPHY
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