Explain one benefit Sports Direct could gain from conducting a SWOT analysis.
- Edexcel - A-Level Business - Question 2 - 2022 - Paper 2
Question 2
Explain one benefit Sports Direct could gain from conducting a SWOT analysis.
Worked Solution & Example Answer:Explain one benefit Sports Direct could gain from conducting a SWOT analysis.
- Edexcel - A-Level Business - Question 2 - 2022 - Paper 2
Step 1
Knowledge of SWOT Analysis
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Answer
A SWOT analysis enables a business to assess its internal strengths and weaknesses, alongside external opportunities and threats. This understanding helps Sports Direct gain clearer insights into where it stands in the competitive market.
Step 2
Application: Internal Strength
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Answer
One benefit of conducting a SWOT analysis for Sports Direct is identifying its internal strength, which is the generated sales revenue of £3.359.5 million in 2018.
Step 3
Application: Internal Weakness
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Answer
A second benefit would be recognizing its internal weakness, as Sports Direct suffered a loss of £85 million due to its investment in Debenhams.
Step 4
Application: External Opportunity
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Answer
An external opportunity identified through the analysis is the acquisition of House of Fraser, which can help transform it into a high-end department store akin to 'the Harrods of the High Street'.
Step 5
Application: External Threat
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Answer
Lastly, the SWOT analysis would allow Sports Direct to recognize external threats, such as the significant growth in online sales occurring at a rate ten times that of physical store sales, which could jeopardize its brick-and-mortar business.
Step 6
Analysis of Strategic Planning
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Answer
Overall, the SWOT analysis is crucial for Sports Direct in planning its strategy, particularly to achieve its goal of becoming the 'Selfridges of Sport', as it allows the company to leverage its strengths and address its weaknesses and threats.
