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How Can Firms Use Models of Analysis to Understand Their Business Environment? Discuss Using Appropriate Examples.

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How can firms use models of analysis to understand their business environment? Discuss using appropriate examples.

Organizations can use one business analysis model to analyse a section of its business or combine this with other business models to help them in the strategic planning process to gain a competitive advantage in today’s fast changing markets.
SWOT and TOWS are acronyms for strengths, weaknesses, opportunities and threats. SWOT (internal-external) provides a checklist of strengths, weaknesses to minimize, uncover opportunities to take advantage of and identify threats to avoid. Whereas the TOWs matrix is (external-internal) matching internal strengths and weaknesses with external opportunities and threats provides a more in depth look at your company’s standing in its current market and gives an understanding of your competitors. External Opportunities (O) External Threats (T)
Internal Strengths (S) (SO)
Maxi-Maxi Strategy
Use strengths to create opportunities (ST)
Maxi-Mini Strategy
Use strengths to minimise threats
Internal Weaknesses (W) (WO)
Mini-Maxi Strategy
Minimize weaknesses to take advantage of opportunities (WT)
Mini-Mini Strategy
DEFENSIVE
Minimize weaknesses and avoid threats

It is important to use verifiable statements such as “Opportunities to save $10M in changing supplier” rather than “Opportunities to save will be good if we change supplier”. If the business is small it is important to know the risks and limitations in using SWOT. Prune long lists and prioritize them as there is no weighting or points system. Ensure opportunities are carried through to the planning stage and apply SWOT at the right level, product line or department level rather than company-wide.
SWOT is often combined with other business models such as PEST or Porters Five Forces Model. PEST help companies brainstorm the big picture

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