Skip to 0 minutes and 2 secondsThere are many tools we can use to help us make business decisions. One of these tools is known as a SWOT Analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. With a SWOT analysis, we create a matrix. Strengths and weaknesses are internal issues. Opportunities and threats are external issues. Let's say you're a keen photographer and you want to open up your own camera shop, selling cameras and giving tuition on how to use them. You're thinking about opening the shop in Sydney, Australia, as you've heard that the country is keen to attract people in your age group, but you've not run the business before by yourself. From a SWOT perspective, you could create the following matrix.
Skip to 0 minutes and 53 secondsYour internal strengths are that you speak the local language and you are familiar with cameras and are likely to know what's important to customers. Internal weaknesses are that you've not run your own business. You may not have enough money and you may not be familiar with the local market. External opportunities could be that Australia is looking for people and there may be a gap in the market. External threats may include the need to get a visa, to find a good location, to source suppliers or raw materials, and the risk, the existing market may be saturated. This way of thinking allows you to have a better understanding of the risks and opportunities associated with pursuing new ventures.
Analysing business decisions
To make good decisions we need to be able to clearly analyse the options available and choose between them.
In this video you will learn about SWOT analysis, one of many tools that businesses use to help make decisions.
SWOT stands for: Strengths, Weaknesses, Opportunities and Threats. As Peter explains, breaking down a decision into these categories can help a business think through the options and better understand the advantages and disadvantages of different strategies.
Many of the most important decisions an organisation needs to make are about how it can successfully grow. In the next step we will explore the different options for growth that are available to most organisations and how businesses choose the best strategy to pursue.
Have your say
Imagine you are an experienced hair stylist who has worked in the TV industry, but you are now considering starting a hairdressing business. You are located in central Berlin. Identify one strength, weakness, opportunity and threat you would need to consider, and post these as a comment.
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