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SWOT Analysis in International Business

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  • 0:04 SWOT Analysis
  • 1:18 Using SWOT Analysis
  • 2:38 Understand & Applying SWOT
  • 4:29 Lesson Summary
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Lesson Transcript
Instructor: Allison Tanner
This lesson will define SWOT analysis and discuss how the tool is used for evaluating an organization. It will then discuss how SWOT can be applied to international business operations.

SWOT Analysis

Let's look at a hypothetical situation in order to understand how to successfully use SWOT analysis. Risky P., a business consultant, will be helping the international organic beverage company, Soda Above, understand how international environments impact their business operations, or day-to-day work activities.

When working in any environment, an organization should measure what they are doing well and how they can improve what they are doing. In order to help Soda Above get on the right track, Risky P. suggests that Soda Above start using SWOT Analysis, which is a strategic tool for identifying the internal and external factors that positively and negatively impact an organization's success.

Thus, SWOT analysis can help Soda Above to better understand what internal and external factors will help them to operate smoothly in international environments. It will also identify the challenges they will need to overcome when operating in different regions.

The internal factors, or strengths and weaknesses, look at what aspects within an organization are impacting success. The external factors, or opportunities and threats, look at the relationship between potential opportunities and potential risks in the organization's environment.

Using SWOT Analysis

SWOT can be analyzed using a variety of questions for each category: Strengths, Weaknesses, Opportunities, and Threats. Some examples per category include:

Strengths: Internal things that the company is doing well and what sets them apart.

  • What is the organization doing well?
  • What is their competitive advantage?
  • How does the organization meet consumer demands?

Weaknesses: Internal things that the company can improve.

  • What should be improved?
  • What isn't working?
  • Where is the organization spending too much?
  • What prevents products from selling?

Opportunities: External factors the company can take advantage of in order to improve.

  • Can the organization expand in their current markets?
  • What other markets can the organization expand into?
  • Is there a growing demand for the products or services being offered?
  • How can technology improve the organization?

Threats: External forces that could harm the company.

  • What challenges does or will the organization face in the market?
  • How does the economy impact profitability?
  • Have consumers stopped buying the organization's products?
  • Has changing technology negatively impacted the organization?

Evaluating each category through important questions can provide insight into the overall health of the business and can help an organization see potential problems.

Understanding and Applying SWOT

The analysis from SWOT helps to explain where the organization is today and can assess how far it is from where it wants to be. Thus, SWOT can be used to forecast, or estimate a particular outcome; it can be used to predict the possible effects of a business plan on future operations. SWOT helps businesses understand how to leverage what they do well, and also addresses the challenges they need to overcome.

Risky P. explains to Soda Above that this is especially important when trying to develop an international operation strategy, or a plan of action for achieving a specific goal.

Applying SWOT

Okay, so Risky P. will now use a SWOT Analysis to take a look at Soda Above and help them forecast the implementation of global operations in a new country. Here is an example:

Strengths:

  • Strong customer loyalty
  • High-quality marketing
  • Proven employee training programs

Weaknesses:

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