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Diagnostics vs. SWOT AnalysisIon VERBONCU1Andreea CONDURACHE2AbstractDiagnostics and SWOT analysis approach as management methods is adelicate endeavor, as both specialists and beneficiaries of their results have differentopinions about their role in management. A considerable part of them consider SWOTthe best way of investigation and analysis, as they have on hand, together, strengths,weaknesses or failures, opportunities and vulnerabilities or threats. From thisperspective, we believe that it is confusion between SWOT analysis and SWOT matrix,the latter being the result of analysis, with high reflectivity capacity of referenceelements of internal potential (strengths and weaknesses) and regional, national andinternational organization ambient (opportunities and threats). For others, thediagnosis is the most profound way of investigation and analysis, able to capture notonly the strengths and weaknesses, but also what causes them, along with themanagerial, viability, economic, technical, technological etc. potential, depending onwhich there are provided strategic-tactical recommendations oriented towards internalpotential gain, to the extent that it is below the desired level. The comparison of the twomanagement tools can only be achieved through a detailed methodological appliedapproach, encompassed by our material.Keywords: organization diagnostics, SWOT matrix, viability potential, strengths,weaknesses, opportunities, threats.JEL classification: M101. IntroductionAny complex process, aimed at the future, regardless of its nature managerial, economic, technical or technological etc. - requires, in advance, adetailed analysis of the organization or its procedural components or structural levelson which it will occur. There are two relevant management tools used for thispurpose: organization viability diagnosis (also known as due-diligence) and SWOTanalysis. Both in Romania and throughout the world, the two methods ofmanagement have generous editorial spaces reserved in the last decades (see1Ion VERBONCU, The Bucharest University of Economic Studies, Romania,E-mail: [email protected] CONDURACHE, Technical University of Civil Engineering Bucharest,Romania, E-mail: [email protected] Volume 17, Issue 2, May 2016Review of International Comparative Management

Nicolescu, Verboncu, 1995; Nicolescu, Verboncu, 2008; Verboncu, Popa, 2001;Burduș, 2013 etc.), which proves that they are irreplaceable in managerial practice,when we want to know the "state" of the organization or its future prospects.Referred to as due-diligence or, simply, diagnosis, the diagnosis of the viability ofthe organization recorded, over time, remarkable progress, especially withmethodology, meaning that there have appeared new stages, able to highlight itsresults - strengths and weaknesses, the causes generating these and recommendations- or to process them properly in what we call "potential viability". In turn, SWOTanalysis, treated especially in terms of strategic planning, brings something new inusing and interpreting the strengths, weaknesses, opportunities and threats in pairs ofstrategic solutions worthy of being considered by the organization management.2. About diagnosisDiagnosis can be approached in several instances (Verboncu, Popa, 2001, p.47-50): as management method, possible to be used in any organization, bymanagers placed at different levels for causative investigation of ledareas; as stage debut in any organizational or management change(restructuring, managerial reengineering, legal reorganization etc.); as important foundation of the organization's strategy, along with marketstudy, environmental impact assessment, national strategy and sectorstrategy.Diagnosis is the investigation of the organization and its components using aspecific toolkit in order to identify the main causes of failures and strengths and, onthis basis, making recommendations focused on the causes of the weaknesses andstrengths.They touch therefore, the past and the present of the organization in multipleways - economic, managerial, technical, technological, social, etc. - resorting tospecific instruments of investigation and analysis drawn from various fields ofscience.Content diagnosis can be made by the organization as a whole, in whichcase we refer to a global diagnostic (recommended in the broader context ofmanagerial methodology remodeling or redesign scenario) or one or moreprocedural or structural and organizational components of its situation, in which thediagnosis is partial.The diagnostic study, resulting from diagnosis and its managerialvalorization is the element of differentiation between empirical, hasty management,focused on the "seeing and doing" (aiming mitigating adverse effects) and scientificmanagement, focused on the "anticipation and preventing", in which the causes ofthe strengths and weaknesses represent the managerial decisional and operationalsupport.Using diagnosis is performed under the following conditions:Review of International Comparative ManagementVolume 17, Issue 2, May 2016115

whenever the managers of the organization or its organizationalsubdivision want detailed knowledge of the "state" of the led field,respectively the main malfunctions and positive aspects, the causes thatgenerate them and "areas" in which there will be decisional interventions. when initiating large steps with a pronounced tinge of strategy, such asmanagement, privatization, restructuring etc. redesign (remodeling) theorganization. where, especially in state owned organizations, there is a change inmanagement teams as a result of management selection contests andsigning management contracts. at the end of important periods (usually at the end of the year) to identifythe potential of economic and managerial viability of the organizationand management team effectiveness. prior to the projection of the organization future, namely its developmentstrategy; the diagnostic study must be accompanied by market research,forecasting and environmental research, as all are important sources ofinformation in outlining the objectives, modalities of implementation andother strategic components.Regardless of the type, it is recommended that diagnostic studies bedeveloped by multidisciplinary teams of specialists, which should not be deprived ofeconomists, engineers, technicians and other socio-professional categories. Thisensures the multidimensionality of the diagnosis, for the purpose of highlightingsome economic, managerial, technical, etc. aspects in proportions to justify theirshare in the areas subject to investigations. Simultaneously, it must be ensured astrong participatory dimension in developing diagnostic studies by involving activeand effective managers and contractors in providing relevant information andformulating substantive elements of diagnosis: strengths, weaknesses, causesgenerating recommendations. Accordingly, there may be three situations: developing diagnostic studies by specialists within the investigatedorganization (self-diagnosis), where the subjective elements are crucial,and the substantiation of conclusions level is higher; developing diagnostic studies by specialists outside the investigatedorganization, seconded by the problems it faces. In this way, it ensures amore pronounced objectivity related to treating these problems but itsconclusion suffers from insufficient knowledge of the mechanisms of theinvestigated domain; developing diagnostic studies by mixed teams of specialists inside andoutside the organization in which roles are well defined; Thus, insiderssupply the necessary information, and outsiders interpret it using aspecific toolkit and together they formulate strengths, weaknesses, causesthat generate them and the necessary recommendations.Regardless of the manner in which they are developed, the diagnosticstudies should be complex and realistic, thus ensuring an adequately realisticprojection of the future of organization, in strategy and policy.116 Volume 17, Issue 2, May 2016Review of International Comparative Management

From a methodological standpoint, the diagnosis is made according to ascenario structured in seven stages (Verboncu, 2013, p. 233-242): (I) preparingdiagnosis - aims at ensuring human, organizational, informational and even materialconditions required for the completion of the diagnostic study. Among these wenote: shaping the diagnostic team, observing multidisciplinary conditions andprovenance of its components (outside and inside the organization subject toinvestigations); the roles played by each component of the diagnostic team,depending on its origin, training and managerial experience, etc.; specifying the typeof diagnosis to be made depending on the scope: global or partial; delimitation of thesubject of investigations in the sense of organization or its structural or proceduralcomponents; specifying the period to be analyzed (a minimum period of 3 years isrecommended to ensure reliable conclusions for the beneficiaries of the diagnosticstudy); setting instruments for collecting, recording and processing of data andinformation: questionnaire, interview, direct observation, study of documents;defining objectives of diagnosis related to the deadlines of the study, the degree ofinclusion of procedural and structural components, the depth of analysis, etc.;(II) documentation (investigation) involves preliminary typological highlighting ofthe main features of the organization, namely those elements that define theorganization's position better in the macro system; economic and financial situationof the organization, addressed in dynamics, the presentation of dimensional andfunctional characteristics of the management system and its components;(III) economic and management viability analysis of the organization, stage focusedon: economic viability analysis (analysis of competitive position, internal potentialanalysis, cost analysis, profitability analysis, heritage analysis etc.), managerialviability analysis, highlighting positive and negative symptoms; (IV) and (V) areintended for the causal highlight of the main strengths and shortcomings orweaknesses.It is recommended that their inclusion in a tabular format like the one shownbelow meet some requirements, such as:Table ationObservations be expressed, as far as possible, quantified; be highlighted the term of comparison in one of the following ways: theachievements of previous periods, the expected level for a certain period,competition achievements, requirements of management principles etc.; be inserted the causes generating strong or weak point;Review of International Comparative ManagementVolume 17, Issue 2, May 2016117

be presented the main implications of the respective event or weakness orstrength; be considered that any of the causes of the strengths or weaknesses canbe treated in case of an extension of the analysis, in an independent weakor strong point. This allows the "entry" in the private mechanisms of theorganization and its components and therefore a better use of diagnosis insubstantiating major managerial approaches.Step VI is designed to determine the managerial and economic viabilitypotential, using either the matrix model evaluation of internal and external factors orthe criteria of influence model. The most common way is to determine the potentialviability with assessment matrix by means of internal factors (strengths andweaknesses) and external factors (opportunities and threats). Finally, it determinesthe global viability potential, which varies within a predetermined range (between 1and 4 points). Simultaneously, depending on the score obtained, the organization isassigned to different "classes" of viability:o very low(1 – 1,6)o low(1,6 – 2,2)o medium(2,2 – 2,8)o high(2,8 – 3,4)o very high(3,4 – 4)A diagnostic study concludes by recommendations (Phase VII). As the doctorcompletes its consultation on the patient by prescribing therapeutics or indications towhich the patient would respond with his/her own will, so the team of diagnosticsdevelops recommendations, that is, ways to be followed to mitigate or eliminate thecauses of weaknesses and to generalize some cases generating strong points. Note that: recommendations are not decisions; recommendations highlight some areas where decisional and operationalintervention of managers is expected recommendations should focus on causes rather than effects (i.e.strengths and weaknesses) that these generate recommendations are therefore triggers of some complex managementapproaches; simultaneously, most strategic options or resources that giveconsistency strategies, global or partial, are based on them.3. What is a SWOT analysis and how to do it?SWOT is a method based on internal and external environment of theorganization analysis or a procedural or structural components analysis thereofembodied in establishing the main strengths, weaknesses, opportunities and threats(Nicolescu, gen. coord., 2011, p. 54). The method name comes from the fourcategories of the internal environment analysis results - Strengths, Weaknesses - andexternal environment - Opportunities and Threats. Strengths, weaknesses,opportunities and threats are inserted in a SWOT matrix, as seen below:118 Volume 17, Issue 2, May 2016Review of International Comparative Management

ts(T)Figure 1. SWOT MatrixMoreover, SWOT matrix is considered by some experts (see Helfer, Kalika,Orsoni, 2010, p.128-129) as a result of internal and external diagnosis, under whichproposals of strategic decisions may be formulated depending on the combination ofthe four quadrants of the table.The method, often used in modern, professional management, plays a majorrole in the foundation and design of strategies and policies, in regular evaluation ofthe organizations and of major components (Todoru