SWOT Analysis (DP IB Business Management)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
Understanding SWOT Analysis
SWOT Analysis is an analytical tool used by businesses to identify
Internal strengths and weaknesses
External opportunities and threats
Effective SWOT analysis can help senior managers to understand the current business position and future changes that may occur so that appropriate strategic decisions may be made
Factors Considered in a SWOT Analysis
STRENGTHS | WEAKNESSES |
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OPPORTUNITIES | THREATS |
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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
Diagram: example SWOT analysis
Having compiled the SWOT Analysis the owner of the cafe may conclude that the business should
Seize the opportunity presented by the growing interest in locally sourced ingredients by promoting the cafe's strength of its seasonal, locally sourced menu, especially given the threat from large competitors
Make use of the government funding for staff training to attempt to reduce staff turnover
Increase the volume of sales to a geographically wider target market by teaming up with delivery apps and establishing an inexpensive social media presence
Evaluating the SWOT Analysis Tool
The usefulness of SWOT analysis depends on a range of factors
Factors Affecting the Usefulness of SWOT Analysis
Factor | Explanation |
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The quality & relevance of data used |
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Objectivity & bias |
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Depth of analysis |
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Stakeholder involvement |
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Dynamic nature of the business environment |
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