(PAPER 2) 3.1.3 SWOT analysis

Question 1

SWOT analysis definition

Answer 1

a method of analysing a business, its resources and its environment. it focuses on the internal strengths and weaknesses of a business and the key external opportunities and threats for a business.

Question 2

SWOT looks like:

Answer 2

> internal strengths e.g. motivated employees
internal weaknesses e.g. demotivated employees
opportunities in the external environment
threats in the external environment

Question 3

the result of the analysis is a matrix of positive and negative factors for management to address

Answer 3

…………………………+ factors ……….. - factors…….
………………………………………………………………………
internal factors. strengths weaknesses
………………………………………………………………………
external factors. opportunities threats
………………………………………………………………………

strengths & weaknesses:

• internal to the business
• relate to recent situation

opportunities & threats:

• external to the business
• relate to changes in the environment which impact the business

Question 4

what SWOT analysis aims to discover

Answer 4

• what the business does better than the competitors
• what competitors do better
• whether it is making the most of the opportunities available
• how a business should respond to changes in its external environment

Question 5

SWOT- must be actioned:

Answer 5

MATCH strengths with opportunities
CONVERT weaknesses into strengths

it is difficult for businesses to convert weaknesses into strengths, so possible responses to problems are:

• outdated technology: acquire competitors with leading technology (merges and takeovers)
• skills gap: invest in training and more effective recruitment
• overdependence on a single product: diversify the product portfolio by entering new markets
• poor quality products: invest in quality assurance
• high fixed costs: examine potential for outsourcing or offshoring

Question 6

+ & - of SWOT analysis

Answer 6

+ logical, easy to understand model
+ encourages businesses to analyse the external environment
- can be too detailed and can lack focus
- within a fast changing external environment, data can become out of date

Question 7

key points to be remembered about SWOT

Answer 7

STRENGTHS AND WEEKNESSES:
- internal to the businesses 
-relate to the present situation 
OPORTUNITIES AND THREATS:
- are external to the business
- relate to the changes in the environment which will impact the business.

Question 8

matching weaknesses with possible responses

Answer 8

• outdated technology: acquire competitor with leading technology
• skills gap: invest in training and more effective recruitment
• overdependence on a single product: diversify the product portfolio by entering new markets
• poor quality products: invest in quality assurance
• high fixed costs: examine potential for outsourcing or offshoring