the swot analysis Flashcards
STRATEGIC ANALYSIS - models
what is a swot analysis ?
a swot analysis is 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
what are swots often used for ?
when developing corporate objectives, or on a smaller functional scale such as a marketing strategy
this analysis looks at both the things that the business can control, its strengths and weaknesses and the factors that are beyond its control, the opportunities and threats that it faces
what is the objective of using a swot ?
the development of a strategic plan that 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
what are the four areas of swot ?
strengths, weaknesses, opportunity, threats
what are the two internal areas ?
strengths and weaknesses
what are the two external areas ?
opportunity and threats
what is a strength ?
a strength is only a strength when a business is good at something and also takes advantage of this strength
examples of strengths :
- effective distribution networks
- strong brand identity
- high staff motivation
- thought of as a price leader
- good industrial relations
-high levels of productivity
what is a weakness ?
a weakness occurs when a business performs poorly in an important area of operations or when it fails to take advantage of an existing strength
examples of weaknesses :
- limited product range
- poor investment record in technology
- high levels of staff turnover
- failing to achieve industry benchmarks
- bad debt or cash flow problems
what is an opportunity ?
an opportunity is an external condition that could positively impact on the businesses performance and improve competitive advantage provided positive action is taken in time
examples of opportunities :
- changes in technology and competitive structure of markets
- changes in government policy related to the businesses field
- changes in social patterns, population profiles, lifestyle changes, fashion etc.
what is a threat ?
a threat is an external condition that could have a negative impact on the businesses performance and reduces competitive advantage
examples of threats :
- economic recession
- changing consumer incomes or tastes
- new product launches by competitors
- environmental legislation
- new or increased taxes
- new technologies being used by competitors
benefits of carrying out a swot analysis :
it makes a firm assess its current market position in terms of its strengths and weaknesses
it enables a firm to build on its strengths and protect itself against its weaknesses
it will show where there are market opportunities to exploit
it will enable a firm to reduce the impact of any threats
negatives of carrying out a swot analysis :
it may be assumed that all strengths, weaknesses, opportunities and threats have been thought of, whereas something important might have been missed which means the firm may take a wrong direction
there may be unexpected exogenous shocks, such as a recession
how can the swot be used ?
once the swot has been completed, the information can be used to help develop a strategy that uses the strengths and opportunities to reduce the weaknesses and threats and to achieve the objectives of the business
an effective swot will allow a business to :
- build on strengths
- resolve weaknesses
- exploit opportunities
- avoid threats
