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Syllabus C. Strategy C3. Competitive Forces

C3e. Opportunities & Threats

Opportunities & Threats

SWOT analysis

  • S = Internal resource STRENGTHS
    W = Internal resource WEAKNESSES
    O = Environmental OPPORTUNITIES to increase competitive advantage
    T = Environmental THREATS to decrease your competitive advantage

Notice how S&W are internal; O&T are external

Here we are concentrating on the opportunities and threats in the competitive environment

TOWS matrix

All of the factors influencing the current and future position of the organisation is divided into:

  1. External and internal to the organisation,

  2. Having negative and positive impact on the organisation.

The intersection of above distinctions gives four categories of factors:

  1. External and positive (opportunities)

  2. External and negative (threats)

  3. Internal and positive (strengths)

  4. Internal and negative (weaknesses)

Strengths Weaknesses
Opportunities S / O W / O
Threats S / T W / T

SO - using your strengths to take advantage of opportunities - this may be expected to produce good short-term results, while

WO - minimising weaknesses to take advantage of opportunities  is likely to take much longer to show results.

ST (using strengths to overcome threats) and WT (minimising weaknesses to reduce threats) strategies are more probably relevant to the medium term.

How can they be identified?

  1. Look for changes in the environment

  2. Look for strategic spaces (gaps in the market)

  3. Use the PESTEL framework to ensure you’ve searched for O&T in the full environment

After the identification, the next step is to

Consider the competition

  • Think of how the 5 forces may change

  • Think of which area of the lifecycle the market is in - is it about to change area?

  • Is there an opportunity for a new market segment?