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 involves examining a business's strengths, internal weaknesses, external opportunities, and external threats. This framework allows Sports Direct to assess its current position in the market and identify areas for improvement.
Step 2
Application 1: Internal Strength
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Answer
One internal strength for Sports Direct is its revenue generation, with reported sales of £3.359.5 million in 2018. This strong revenue position provides the company with a solid foundation.
Step 3
Application 2: Internal Weakness
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Answer
An internal weakness is that Sports Direct faced a loss of £85 million due to its investment in Debenhams. This highlights financial vulnerabilities that need to be addressed.
Step 4
Application 3: External Opportunity
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Answer
An external opportunity for Sports Direct is the acquisition of House of Fraser, allowing it to enhance its brand presence by transforming it into a luxury department store, 'the Harrods of the High Street'.
Step 5
Application 4: External Threat
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A significant external threat is the rapid growth of online sales, which are occurring at a rate 10 times that of physical stores. This shifting landscape demands strategic adaptations from Sports Direct.
Step 6
Analysis
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Answer
Conducting a SWOT analysis is crucial for planning Sports Direct’s strategy. It enables the company to leverage its strengths, such as high revenue, while addressing weaknesses and recognizing opportunities, like expanding its market through acquisitions, thereby maintaining competitiveness in a challenging retail environment.
