SWOT Analysis

Question 1

SWOT Analysis definition

Answer 1

SWOT analysis is a management technique used to identify a business’s strengths and weaknesses, as well as the opportunities and threats to which it will be exposed.

Question 2

Examples of a businesses STRENGTHS?

Answer 2

• high level of cash
• strong brand name
• good distribution network
• highly skilled and loyal staff

Question 3

Examples of a businesses WEAKNESSES (SWOT).

Answer 3

• large amounts of long-term borrowing
• under utilised capacity
• a low net profit margin
• a lack of new products under development

Question 4

Examples of a businesses OPPORTUNITIES (SWOT).

Answer 4

• growth in a major market
• an alliance with a competitor to develop new technology
• rising income levels amongst target consumer groups

Question 5

Examples of a businesses THREATS (SWOT)

Answer 5

• being taken over by a larger competitor
• a change in consumer tastes leading to a significant fall in demand
• new laws increasing the business’s costs of production.

Question 6

How is a SWOT analysis used?

Answer 6

Managers try to SWOT as accurately as possible and then rank them in order of their significance.

From this, managers can develop a strategy, or range of strategies, that seek to:
- build on strengths to exploit opportunities
- reduce or eliminate their weaknesses
- protect the business against threats.

Question 7

Why isn’t SWOT analysis a one-off exercise?

Answer 7

Businesses are subject to constant change in its internal and external environment, this should be constantly monitored and analysed and strategies should be adjusted accordingly.