SWOT Analysis
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Section T - Strategic Analysis SWOT
Topic: Strategic Analysis and SWOT Analysis in Business Studies
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Specific Learning Outcomes
T1: Explain the nature and purpose of SWOT analysis.
T2: Evaluate the usefulness of SWOT analysis for a given business situation.
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Objectives
By the end of this pre-recording, students should be able to:
Explain the meaning of the SWOT acronym.
Use a SWOT analysis to assess the state of an organization.
Examine how SWOT can influence strategic planning.
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Strategic Analysis
Definition: The process of conducting research into the business environment and the organization itself to help form future strategies.
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Questions Addressed by Strategic Analysis
Aims to answer three key questions:
Where is the business now?
How might the business be affected by current or future events?
How can the business respond to these changes?
SWOT analysis is one of the techniques that assist in strategic analysis.
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SWOT Analysis
Purpose: Provides information to match an organization’s resources and strengths to its competitive environment.
Focus:
Internal factors: Strengths and Weaknesses
External factors: Opportunities and Threats
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Strengths
Definition: Internal factors advantageous to the organization.
Examples:
Excellent reputation for high-quality products.
Highly-skilled staff, with effective recruitment processes.
Good working environment.
High profitability compared to similar organizations.
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Weaknesses
Definition: Internal factors needing improvement or indicative of poor practices.
Examples:
Reputation for being a poor employer.
Oversaturated product portfolio with declining offerings.
Limited training provisions for staff.
High levels of staff turnover and absenteeism.
Poor quality products.
lack of marketing expertise
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Opportunities
Definition: External openings for organizations to exploit positively.
Examples:
Main competitor facing financial difficulties.
Low wages and unemployment in the local skilled labor market.
New global market opportunities.
Social trends favoring certain products.
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Threats
Definition: External factors that may negatively impact the organization.
Examples:
New competitors entering the market.
Activism against the establishment of new facilities.
Predicted downturns in the business cycle.
Release of new competitor products.
Price wars with competitors.
Economic ramifications of the UK leaving the EU.
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Advantages of SWOT Analysis
Can be used to:
Highlight current and potential market changes.
Relate organizational position and future potential to the market to inform decisions.
Influence strategies to achieve organizational aims and objectives.
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Disadvantages of SWOT Analysis
SWOT analysis can be:
Time-consuming with rapidly changing situations.
Subjective; different managers may have varying assessments.
Concerned with future opportunities and threats, which can evolve.
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Conclusion: SWOT Analysis
Value: Provides clarification and mutual understanding through focused analysis.
Usage: Should serve as a management guide for future strategies rather than as a strict prescription.