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Effective SWOT Analysis for Business Strategy

Chapter 3 discusses SWOT analysis as a strategic tool for businesses to identify internal strengths and weaknesses, as well as external opportunities and threats. It emphasizes the importance of gathering information through internal and external audits to inform strategy development. Effective use of SWOT analysis can guide senior managers in making informed decisions to enhance business performance.

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8 views3 pages

Effective SWOT Analysis for Business Strategy

Chapter 3 discusses SWOT analysis as a strategic tool for businesses to identify internal strengths and weaknesses, as well as external opportunities and threats. It emphasizes the importance of gathering information through internal and external audits to inform strategy development. Effective use of SWOT analysis can guide senior managers in making informed decisions to enhance business performance.

Uploaded by

malithi
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Chapter 3

SWOT analysis
Gathering information to help develop a strategy?
When making planning or developing a business strategy it is important to gather information.
A business can use variety of methods..

• The internal audit


• The external audit

Understanding SWOT analysis


• SWOT analysis is an analytical tool used by businesses to identify
o Internal strengths and weaknesses
o External opportunities and threats
An example of a SWOT analysis for a cafe business

An example of a SWOT analysis for a small cafe business showing its internal
strengths and weaknesses as well as external opportunities and threats
• Once a SWOT analysis has been completed by a business, decisions can be
made to improve performance
o Strengths should be harnessed
o Weaknesses should be eliminated
o Opportunities should be seized
o Threats should be mitigated

• Effective SWOT analysis can help senior managers to understand the current
business position so that appropriate strategic decisions may be made
Examples of factors considered in a SWOT analysis

STRENGTHS WEAKNESSES

• What the business is good at • What the business does poorly

For example: For example:

• Qualities that separate the business from o Ways in which the business lags
rivals behind competitors
• Internal resources such as skilled staff or a o Resource or capital limitations
particular innovation including labour and finance
• Possession of assets such as o Lack of a competitive advantage
capital, patents or intellectual property o Lack of a unique selling
• A loyal customer base proposition (USP)
• Effective leadership o Poor online presence

THREATS
OPPORTUNITIES
• Hazards that have the potential to
• Options a business may exploit to enjoy
damage business performance
further success
For example:
For example:
o New or emerging competitors
o Developing markets for specific
are gaining market share
products become apparent
o A changing legal or political
o Few competitors exist
environment negatively impacting
o A changing legal or political
on business processes and
environment positively impacts on
decisions
business processes and decisions
o Social or technological
o Social or technological
developments
developments create an emerging
threaten obsolescence of products
need for the businesses products
o Economic indicators becoming less
o Economic indicators becoming
favourable
more favourable
o Negative press coverage
o A potential for positive media
o Changing customer attitudes
coverage of the business
towards the business

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