SWOT Flashcards
what is SWOT analysis
SWOT analysis helps a business assess its competitive strength and the nature of its external environment
used to identify and analyse the internal Strengths and Weaknesses of an organisation, as well as the external Opportunities and Threats created by the business and economic environment
why use SWOT
considers many different internal and external factors and maximises the potential of the strengths and opportunities whilst minimising the impact of the weaknesses and threats
gain an overall picture of all potential influences on future business success and to adapt business strategy to reflect these influences
reveal changes, which can be useful to the future success of the business.
In general a business will want to know in what areas it is better than its competitors and in what areas it lags behind.
stages of SWOT
Stage 1
Internal analysis
Examining the capabilities of the business,by analysing the business’s strengths and weaknesses.
Stage 2
External analysis
- Gathering data on markets, competitor activities, economic outlook and the environmental impact of the business.
- Identifying those points that pose opportunities for the business and those that pose threats or obstacles to performance.
- Deciding whether the answers or the data collected reveal external opportunities or threats.
Stage 3
Prepare SWOT table
Stage 4
Using the SWOT to develop a business strategic plan or functional strategy
strengths defintion
A strength is only a strength when a business is good at something and also takes advantage of this strength
examples of strenghts
- having an USP
- a strong band identity
- good industrial relations
- high levels of productivity
- quality processes and procedures
- exclusive access to natural resources
- location
- effective distribution networks
- being seen as the price leader
- patents
- new innovative product or service
- specialist marketing expertise
- state of the art equipment
- motivated workforce
- strong financial indicators
questions asked when examining strengths
- ‘What are our advantages over our competition?
- What do we do well compared to other businesses in the industry?
weaknesses def
A weakness occurs when a business performs poorly in an important area of operations or when it fails to take advantage of an existing
examples of weaknesses
- an unsuccessful application of an asset or the failure to exploit a critical factor that diminishes company competitiveness.
- demotivated workforce
- poor customer loyalty
- a poor financial position.
- lack of marketing expertise
- differentiated products all services I.e. in relation to your competitors
- limited product range
- poor quality goods or services
- damaged reputation
- high levels of staff turnover
- location
- competitors have superior access to distribution channels
- poor investment record in technology
- failing to achieve industry benchmarks
- bad debt or cash flow problems
opportunity def
An opportunity is an external condition that could positively impact on the business’s performance and improve competitive advantage provided positive action is taken in time.
questions asked when examining weaknesses
‘What could be improved?’,
‘What is done badly?’ and
‘What should be avoided?
examples of opportunities
- Gaining market share through developing innovative products to meet new market needs
- taking advantage of tax breaks and other incentives such as grants in development areas
- diversifying into developing markets for example China and Internet
- mergers, joint ventures, or strategic alliances with other businesses
- moving into New attractive market segments
- a new international market
- removal of international trade barriers
- changes in technology and competitive structure of markets
- changes in government policy related to the business field such as loosening of regulations
- changes in social patterns ,population profiles ,lifestyle changes, fashion tastes
questions asked when examining opportunities
What are the interesting market trends?’,
‘Is our competition suffering?’,
‘Are new market niches appearing?’,
‘Are there opportunities for take-overs?’,
‘Has legislation recently changed?’ and
‘Is the economic climate improving
threats def
A threat is an external condition that could have a negative impact on the business’s performance and reduces competitive advantage
This considers the possible Problems the business may face in the future
examples of threats
- A new competitor in their home market
- price wars
- a competitor has a new innovative product or service
- new technologies being used by competitors
- economic slowdown/ recession
- new legal constraints and regulations for example changes to the environmental legislation
- increased trade barriers
- taxation may be introduced on your product or service
- demographic changes, changing consumer incomes or tastes which result in less demand for the product or service
- technological change which means there is less demand for the product
questions asked
‘What obstacles does the business face?’,
‘What is the competition doing?’,
‘Is there a new business entering the market?’,
‘Is changing technology threatening the business’s position?’ and ‘Is the economic climate getting worse?
