SWOT analysis

Question 1

What’s the internal audit

Answer 1

Analysis of the business itself and how it operates. It attempts to identify the strengths and weaknesses of its operations

covers areas like: - Products and their costs, quality and development

• Finance, including profit, assets and cash flow
• Production including capacity, quality, efficiency

Question 2

What’s the external audit

Answer 2

An audit of the external environment in which a business finds itself. This addresses PESTLEC and the market itself

Market= - Size and growth potential of market
- Products on offer, pricing structure, how they’re distributed and promoted

Competitors= - Size and Number of competitors
- Profits, costs

PESTLE

Question 3

What’s internal and what’s external within SWOT analysis

Answer 3

INTERNAL:

• strengths
• weaknesses

EXTERNAL:

• opportunities
• threats

That the business faces

Question 4

What are strengths

Answer 4

Positive aspects of a business from the internal audit

E.g. motivated and loyal workforce, good production facilities, loyal customer base, innovative marketing department

Question 5

What are weaknesses

Answer 5

Negative aspects of a business from the internal audit

E.g. poorly motivated workforce, high staff turnover, poor organisational structure, poor cash flow, outdated machinery, poorly presented website

Question 6

What are opportunities

Answer 6

Positive aspects from the external audit. These are options or openings that the bus ness might be able to exploit, resulting in improvements, like higher revenues or lower costs

E.g. new overseas market due to political change, fall in cost of an essential raw material, low interest rates, fall in exchange rates making exports cheaper, a collapse of a major rival

Question 7

What are threats

Answer 7

Negative aspects from the external audit. These are possible hazards that have potential to damage performance of the business

E.g. new entrant in the market, a rival appointing a new successful CEO, a looming recession, new legislation aimed at improving rights of employees

Question 8

What can a SWOT analysis be used for

Answer 8

• Decision about which new product to launch
• Help design a new marketing strategy
• Help prepare for a restructuring of the business

Question 9

Define SWOT analysis

Answer 9

An analysis of the internal strengths and weaknesses of the business and the opportunities and threats presented by its external environment