What Is SWOT Analysis? A Level Business
Learn what SWOT analysis means in A Level Business, how strengths, weaknesses, opportunities and threats shape strategy, and the common mistake to avoid.
SWOT analysis is a tool a business uses to assess its strengths, weaknesses, opportunities and threats before making a strategic decision. It helps managers compare what the business can do well with what is happening in its external environment.
The Four Parts
Strengths and weaknesses are internal: they come from within the business. A strong brand or skilled workforce could be a strength. Limited production capacity or high costs could be a weakness.
Opportunities and threats are external: they arise outside the business. Growing customer demand could be an opportunity, while a new competitor or rising supplier prices could be a threat. A business may respond to these factors, but it cannot directly control them.
Using SWOT
Suppose a café is considering opening a second branch. Its loyal customers are a strength, but its limited management team is a weakness. Growing demand in a nearby area is an opportunity, while an established café there is a threat. The analysis suggests the new branch might succeed, but the owners need to decide whether they can manage it effectively and compete for customers.
SWOT is useful because it brings relevant factors together when considering a strategy. However, it does not tell managers which decision is best. They still need evidence about costs, demand and competitors, and must judge which factors matter most. A SWOT analysis can also become outdated as circumstances change.
Common exam mistake: Do not classify a new competitor as a weakness just because it is bad for the business. It is a threat because it comes from outside the business. For each factor you identify, explain how it could affect the decision.
