Evaluate the usefulness of SWOT analysis as part of the strategic analysis required before HD's directors make the choice between option 1 and option 2.

Mark scheme

Marking points from the official mark scheme (May/June 2022). The mark or mark type is shown in brackets.

1. Explanation of SWOT as a strategic analysis technique
2. Strengths, Weaknesses, Opportunities, Threats
3. Helps understand the internal and external environment
4. Helps decision making and identifying growth strategies
5. Place of SWOT within strategic management
6. Explanation of other strategic analysis techniques – PEST, Boston Matrix, Porter's 5 Forces, core competencies e.g.
7. Core competence: The main strengths or strategic advantages of a business.
8. Porter's 5 forces analysis includes: buyer power, supplier power, threat of substitutes, ease of entry and competitive rivalry.
9. Need to understand the external environment – requiring a detailed PEST analysis
10. Significance of objectives in decision making
11. Making use of the business context:
12. Reference to SWOT analysis results
13. Takeover of manufacturer - links to weakness of operating at over capacity
14. Design, develop and manufacture a new product - links to opportunities of developing innovative products
15. HD design, manufacture and supply circuit boards.
16. Corporate objective of continued long term growth.
17. HD's mission statement: 'to provide world class software...'
18. Analysis:
19. The time, money and effort needed to conduct SWOT analysis and impact on HD
20. Effective SWOT analysis may result in clearer and more relevant business objectives, better strategic decisions and less risk as HD will be better prepared for the future
21. How SWOT analysis will improve business planning and decision making, reduces risk
22. Analysis of how information in Appendix 1 might guide strategic decisions
23. Focus on strengths will reduce risk to the business
24. Identification of consequences of weaknesses such as high labour turnover of design engineers for alternative strategic options
25. Anticipating changes to the external environment such as new technology replacing circuit boards and how that impacts the different strategies
26. Generation of possible objectives relating to option 1 and 2 from the SWOT analysis.
27. Relating SWOT to the options and to corporate objective of growth.
28. Evaluation:
29. Only award EVAL if the candidate has also demonstrated APP.
30. Clear conclusion as to the effectiveness of SWOT analysis
31. Depends on:
32. How up to date the SWOT analysis is
33. Subjectivity of individual conducting the SWOT analysis
34. How comprehensive and detailed the analysis is
35. Importance of understanding where the business is now in order to generate ideas and/or support for expansion
36. Weighing up importance of other stages in strategic management especially objectives and choice techniques in relation to strategic analysis
37. Using only SWOT may be insufficient to identify appropriate strategies. Other strategic analysis and strategic choice techniques are also important:
38. Understanding the market through appropriate PEST analysis will inform HDs decisions and improve effectiveness of strategy choice
39. Understanding core competencies will enable HD to focus on strategies that HD will have a competitive advantage in and therefore are likely to be more successful
40. By using Porter, HD can assess the threat of substitutes etc. to decide whether Strategy 1 or 2 is better. This will reduce the risk of entering the wrong market
41. Decision tree, investment appraisal, Force Field Analysis, Ansoff’s Matrix. (If these are developed it may lead to additional EVAL marks.)