SWOT analysis SWOT analysis A key method used

SWOT analysis

SWOT analysis A key method used to audit an organisation’s internal and external environment is a SWOT analysis. This looks at the internal strengths and weaknesses of the business and its external opportunities and threats. A key outcome of a SWOT analysis is to prepare the business for the future.

Strengths By identifying a business’ strengths it can build on its core competencies to remain competitive. For example, strengths could include: A strong brand reputation Being a market leader A unique selling proposition (USP) which creates a competitive advantage

Weaknesses Any business needs to know where its weaknesses are so that it can improve and manage them. Weaknesses are negative factors that detract from the achievement of objectives.

Opportunities occur in the marketplace outside the business. A business uses its strengths to take advantage of them.

Threats occur from external factors outside of the business. For example, the actions of competitors can create a threat. Economic factors such as the recent recession is another example of a threat. A business must consider these threats when forming business strategies.

Benefits of SWOT analysis Acting on the results of a SWOT analysis can: Increases responsiveness of firms to market changes Increase competitiveness Help form business strategies and prepare for the future Help cuts costs Increases efficiency Provide a competitive advantage