3.1.3 SWOT analysis Flashcards
SWOT analysis
a four factor model that details the strengths, weaknesses , opportunities and threats that a businesses faces
When making a business strategy or making business plan it’s important to what?
Important to gather appropriate information
What are the two ways to gather appropriate information?
Internal audit and External audit
Internal audit
An analysis of the business itself and how it operates.It attempts to identify the strengths and the weaknesses of it’s operations
What type of areas does internal audit cover? (5)
1) Products (Costs, quality and development)
2) Finance (Profits , assets , cash flows )
3) Production (Capacity , quality , efficiency and stock management
4) Internal organisation ( divisional and departmental structures)
5) Human resources (Skills , training , recruitment )
External audit
Analysis of the environment in which the business operates in and over which it has little/no control over.
What type of areas should external audit cover?
1) Size + growth potential of the market
2) Characteristics of customers in market
3) How products are promoted
4) Industry practices e.g trade association and government regulation
5) Pricing structure
What does SWOT stand for
S-Strength
W-weakness
O-opportunity
T-Threat
What letters are internal and external in SWOT
S-Internal
W-Internal
O-External
T-external
Strengths
Internal factors within a business that can help it achieve its objectives e.g great leader , motivated workforce , usp
Weaknesses
Internal factors within a business that could prevent a business from achieving its objectives e.g unmotivated workforce, old product range , poor cash flow
Opportunities
External business circumstances that can help it achieve it’s objectives e.g new overseas market, collapse of major rivals , removal of some regulations
Threats
External problems that may prevent a business from achieving it’s objectives e.g new entrant to market , new legislations, pressure from environmentalists
