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SWOT Analysis

Level:: GCSE, AS, A Level

Board:: AQA, Edexcel, OCR, IB

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SWOT analysis is a method for analysing a business, its resources and its environment. It focuses on the internal strengths and weaknesses of a business (compared with competitors) and the key external opportunities and threats for the business.

SWOT is commonly used as part of strategic planning and looks at:

Internal strengths
Internal weaknesses
Opportunities in the external environment
Threats in the external environment

SWOT analysis aims to discover:

What the business does better than the competition
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

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

The key point to remember about SWOT is that:

Strengths and weaknesses

Are internal to the business
Relate to the present situation

Opportunities and threats

Are external to the business
Relate to changes in the environment which will impact the business

Using SWOT analysis

There is no point producing a SWOT analysis unless it is actioned! SWOT analysis should be more than a list - it is an analytical technique to support strategic decisions

Strategy should be devised around strengths and opportunities

The key words are match and convert:

A key challenge for any business is to convert weaknesses into strengths. For example:

Weakness	Possible Response
Outdated technology	Acquire competitor with leading technology
Skills gap	Invest in training & more effective recruitment
Overdependence on a single product	Diversify the product portfolio by entering new markets
Poor quality	Invest in quality assurance
High fixed costs	Examine potential for outsourcing or offshoring

Don’t forget that for every perceived threat, the same change presents an opportunity for business.

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