Diagnosing the strategic health of an organization from SWOT analysis results: case study of the Australasian cost management profession

Abstract

To achieve strategic goals and success in the long term, every organization needs to be in a good state of health. It is argued that the strategic health of an organization depends on how the key strengths are leveraged to exploit prime opportunities, while at the same time, minimize exposure of the critical weaknesses to the serious threats in the external environment. Based on a SWOT analysis (strengths, weaknesses, opportunities and threats), the Strategic Health Index (SHI) was developed as a conceptual tool for diagnosing the strategic health of an organization. Application of the developed model was demonstrated in the assessment of the strategic health status of the Australasian cost management profession using analysed feedback from a convenience sample of 15 senior cost managers in Australia and New Zealand. Results show that expertise in procurement and cost consultancy was the key strength most leveraged to exploit identified opportunities, while lack of flexibility and versatility of service was the key weakness exposing the profession the most to the identified threats. Based on the SHI values, the overall strategic health of the cost management profession was diagnosed to be positive, in spite of its key weaknesses and threats. While these results specifically relate to cost managers, application of the model is highly recommended for use by business managers and others interested in assessing the long‐term health and survival of their organizations.

Keywords:

• Cost engineering
• organizational analysis
• strategic analysis
• strategic management
• strategic planning
• SWOT analysis

Notes

1. S2 = negotiation and dispute resolution skills.

2. S3 = procurement and cost advice.

3. S4 = contract and cost management skills.

4. W1 = lack of strategic and change management skills.

5. W3 = lack of flexibility and versatility of service.