SWOT analysis is one of the most widely used strategy formulation techniques for businesses. Using your knowledge in Business Management, you are required to explain:
(i) the concept of SWOT analysis (2 marks)
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SWOT is an acronym for strengths, weaknesses, opportunities and threats and it is an analytical tool used to create an overview of a company’s strategic situation.
(ii) the elements in the SWOT analysis and provide ONE example to support each element. (12 marks)
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i) Strengths: These are the resource capabilities of the organization and which it can use to gain competitive advantage over its rivals (2 marks) Examples: adequate financial resources, acknowledged market leader.
ii) Weaknesses: These are resource constraints that can put the organization in a competitive disadvantage position. (2 marks) Examples: Obsolete technological infrastructure, poor customer service.
iii) Opportunities: These are favourable openings or conditions in the external environment of the company and that the company can use its strengths to take advantage of. (2 marks) Examples: Change in government policy, growing domestic economy.
iv) Threats: These are unfavourable factors in the external environment of the company that can erode all the gains made by the company. (2 marks) Examples: decline in consumer demand, environmental hazards.
(1 mark for each example)