3.7.1 (3) SWOT Analysis Flashcards
SWOT Analysis
Method for analysing a business, its resources and its environment
What does SWOT stand for?
Strengths, weaknesses, opportunities, threats
What does SWOT analysis help with?
- What the business does better than the competition
- What competitors do better than the business
- Whether the business is making the most of the opportunities available
- How a business should respond to changes in its external environment
Which factors are internal in SWOT analysis?
Strengths and weaknesses
What factors are external in SWOT analysis?
Opportunities and Threats
Strengths of SWOT analysis
- Things a business is good at
- A characteristic giving a business an important capability
- Sources of clear advantage over rivals
- Distinctive competences and resources that will help the business achieve its objectives
Examples of potential business strengths
High market share High productivity High quality Achieving economies of scale Technological leadership Employee skills Flexibility of production Financial resources
Weaknesses of SWOT analysis
- A source of competitive disadvantage
- Things the business lacks or does poorly
- Factors that place a business at a disadvantage
- Issues that may hinder or constrain the business in achieving its objectives
Examples of potential business weaknesses
Low market share Low productivity Poor quality Lack of innovation High costs Skills shortages Cash flow problems De-motivated staff
Potential business opportunities
Technological innovation New demand Market growth Higher economic growth Demographic change
Potential business threats
New market entrants Demographic change Change in tastes/needs New regulations Economic downturn New substitute products
Evaluating SWOT analysis
Advantages:
Easy to understand, logical structure, focuses on strategic issues, encourages analysis of external environment
Disadvantages:
Too often lacks focus or contains too many elements, can quickly get out of date, is it an independent assessment
