3.1.3 SWOT analysis Flashcards
Internal parts of SWOT
Strengths and weaknesses
External parts of SWOT
Opportunities and Threats
Business environment
refers to external forces, factors and institutions that are beyond the control of the business, but which affects its functioning
What factors affects the business environment?
- demography
- economic factors
- new laws and regulations
- technical factors
What factors affects the business environment?
-demography
- population change
- changes to the age distribution of a population can affect the target market of a business
- sharp rise in elderly population
- immigration in UK has increased the amount of working age
What factors affects the business environment?
-new laws and regulations
- changes in law
- can either boost a business or make it negatively change
What factors affects the business environment?
-technological factors
- can create opportunities or threats (disruptive technology)
- increase competition
What factors affects the business environment?
-commodity prices
- internationally trade goods that include oil, copper, wheat and cocoa
- prices can fluctuate
- price of oil affects transport costs
- the price of oil is determined by the relative strength of the world supply and the world demand for oil
What factors affects the business environment?
-economic factors
- no influence over rate of economic growth, the level of unemployment and the rate of inflation
- firms will be affected by the governments monetary and fiscal policy responses
Aims of SWOT analysis
- identify what the business does better than competition
- what competitors do better
- are they making the most out of their opportunities
- how a business should respond to changes in its external environments
Benefits of doing a SWOT analysis
- little or no cost
- concentrates on the most important factors affecting your business
- understand your business better
- address weaknesses
- deter threats
- capatilise opportunties
- take advantages of your strengths
- develop business goals and strategies for achieving them
Limitations of a SWOT analysis
- for more complex issues, firms will need to conduct more in depth research and analysis to make decisions
- can only identify SWOT’s that are certain meaning it is difficult to address uncertain
- doesn’t prioritise issues
- can generate too many ideas but not help you choose which one is best
What is a SWOT analysis?
an analysis of the internal strengths and weaknesses of the business and the opportunities and threats presented by its external environment
What is the typical data looked at for strengths and weaknesses?
- market share
- productivity
- efficiency
- market capitalisation
- sales revenue
- profitability
- brand recognition and loyalty
- reputation for quality
