2 (a) Explain one benefit Sports Direct could gain from conducting a SWOT analysis.
- Edexcel - A-Level Business - Question 2 - 2022 - Paper 2
Question 2
2 (a) Explain one benefit Sports Direct could gain from conducting a SWOT analysis.
Worked Solution & Example Answer:2 (a) 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 is a strategic planning tool that helps businesses identify their internal strengths, internal weaknesses, external opportunities, and external threats. This analysis enables a business to gain a better understanding of its position in the market.
Step 2
Application: Internal Strength
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Answer
One specific benefit for Sports Direct is that in 2018 they generated sales revenue of £3.359.5 million. By identifying this strength, Sports Direct can leverage its sales performance to enhance its market strategy.
Step 3
Application: Internal Weakness
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Additionally, Sports Direct faced an internal weakness by losing £85 million due to its investment in Debenhams. Recognizing this weakness through SWOT can help the company to reassess its investments.
Step 4
Application: External Opportunity
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An external opportunity is the acquisition of House of Fraser, which has the potential to position Sports Direct as the ‘Harrods of the High Street’. This strategic move can attract more customers and improve sales.
Step 5
Application: External Threat
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Moreover, the growth in online sales at a rate of 10 times the rate of physical store sales represents an external threat. By recognizing this threat, Sports Direct can adapt its strategy to address changing consumer behaviors.
Step 6
Analysis of SWOT Importance
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Answer
Ultimately, conducting a SWOT analysis is crucial for Sports Direct as it informs their strategic planning to exploit opportunities like the acquisition of House of Fraser while addressing weaknesses and threats in the retail landscape.
