A LevelBusinessEdexcelRevision Notes3. Business Decisions & Strategy3.1 Business Objectives & Strategy3.1.3 SWOT Analysis

SWOT Analysis (Edexcel A Level Business)

Revision Note

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Lisa Eades

Understanding SWOT Analysis

  • SWOT Analysis is an analytical tool used by businesses to identify
    • Internal strengths and weaknesses
    • External opportunities and threats
       

3-1-3-an-example-of-a-swot-analysis-for-a-small-cafe-business

An example of a SWOT Analysis for a small cafe business

 

  • Once a SWOT Analysis has been completed by a business, appropriate decisions can be made to improve performance
    • Strengths should be harnessed
    • Weaknesses should be eliminated
    • Opportunities should be seized
    • 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

  • What the business is good at

For example:

    • Qualities that separate the business from rivals
    • Internal resources such as skilled staff or a particular innovation
    • Possession of assets such as capital, patents or intellectual property
    • A loyal customer base
    • Effective leadership

WEAKNESSES

  • What the business does poorly

    For example:

    • Ways in which the business lags behind competitors
    • Resource or capital limitations including labour and finance
    • Lack of a competitive advantage
    • Lack of a unique selling proposition (USP)
    • Poor online presence


OPPORTUNITIES

  • Options a business may exploit to enjoy further success

    For example:

    • Developing markets for specific products become apparent
    • Few competitors exist
    • A changing legal or political environment positively impacts on business processes and decisions
    • Social or technological developments create an emerging need for the businesses products
    • Economic indicators becoming more favourable
    • A potential for positive media coverage of the business


THREATS

  • Hazards that have the potential to damage business performance

    For example:

    • New or emerging competitors are gaining market share
    • A changing legal or political environment negatively impacting on business processes and decisions
    • Social or technological developments threaten obsolescence of products
    • Economic indicators becoming less favourable
    • Negative press coverage
    • Changing customer attitudes towards the business

Exam Tip

A SWOT Analysis will vary significantly for businesses of different sizes, with different objectives and operating in different sectors.

For example, a micro start-up business will face vastly different SWOT factors as compared with a large multinational. Having conducted a SWOT analysis, you should be able to make strategic and/or tactical decisions to achieve corporate objectives (see sub-topic 3.1.2)

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    Lisa Eades

    Author: Lisa Eades

    Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.