BUSS3 A* Evaluation - The Power of SWOT for Answer Planning

Time used to plan answers during the BUSS3 exam is usually time well-spent. A good, short plan helps students be more selective in identifying their key paragraph points, draw together relevant case study evidence and also make links which will form strong lines of analysis. Above all, good planning helps line up the key evaluation ideas which move answers up to the highest level.But what kind of plan is effective given the time pressure BUSS3 students face?A really good idea is to map out a brief SWOT analysis as you read through the case study information (particularly the appendices – which will be packed full with relevant evidence for a SWOT).I'm a huge fan of SWOT analysis as a time-effective planning tool for helping to structure strong BUSS3 answers and I know lots of teaching colleagues also encourage their students to use SWOT. Here's why…

Remember that a key aspect of BUSS3 is the distinction between INTERNAL and EXTERNAL influences on the business.

INTERNAL INFLUENCES – THINK STRENGTHS & WEAKNESSES!

Internal influences are those factors that are within the control of the business. For example, management can decide what products to sell, how many people to employ and where to locate operations. They can determine the mix of sources of finance used, what projects the business invests in, and so on.

Internal influences are closely linked to the STRENGTHS and WEAKNESSES section of a SWOT analysis because they concern things management can do something about (provided the firm has the right skills and resources).

A strength only exists where a business has a competitive advantage over other businesses in the market. Be careful with strengths. By definition, most businesses don't enjoy competitive advantage over the rest of the market and management teams are often prone to exaggerating the perceived strengths of their business (particularly their own abilities!)

Look carefully for evidence (data) of strengths in the BUSS3 case study. Does the firm have a higher operating profit margin than the industry? This might suggest it is able to operate more efficiently or achieve higher added value from the way it serves customers. Are unit costs lower than the industry, or return on capital employed higher than the industry average or key competitors? Is there evidence that the case study firm has a strong brand and high customer loyalty? Does the firm have a leading market share? This is all evidence of genuine strength that could be added to a SWOT plan and used effectively to build BUSS3 answers.

By contrast, weaknesses are internal factors which lead to a firm being at a competitive disadvantage compared with the market. These need to be taken seriously by management as they indicate issues that must be addressed in order for successful strategies to be adopted.

The BUSS3 case study typically provides evidence of potentially significant weaknesses. After all, the exam is titled “Strategies for Success" and it would be a dull & boring exam paper to feature a business that is doing particularly well!

It is essential that you highlight what you believe the key weaknesses are when you read the case study (in your SWOT) and then address them wherever possible in your answers.

In particular, look out for evidence of:

· Poor liquidity and cash flow

· Inadequate financial resources or excessive gearing

· Low or declining market share

· Low or declining profitability and profit margins

· Inefficiency – e.g. poor productivity

· Poor quality and customer service

· Ineffective management and organisational structures

EXTERNAL INFLUENCES – THINK OPPORTUNITIES & THREATS!

External influences are those factors that are outside the control of the business but which are likely to affect (influence) the ability of the firm to achieve its objectives.

A key evaluative point for BUSS3 students is that external influences usually affect all firms in the industry. However, those firms will differ in terms of how they respond to the external influences. One thing is for sure: if significant threats are not addressed or major opportunities are ignored, the case study business is likely to suffer.

The key point with your BUSS3 SWOT plan is to be SELECTIVE. Pick out no more than 2 or 3 key opportunities and threats in your plan and develop them fully in your answers. The last thing you should do is write a shopping list of all the potential opportunities and threats – planning time is too short for that and it is more important to use just a few, significant points.

By building on the evidence laid out in the SWOT plan, an effective evaluative approach (particularly in the 34 marker) is to address whether:

· The strengths of the business enable it to take advantage of the opportunities available

· The strengths of the business outweigh (overall) the weaknesses (i.e. how strong overall is the competitive position of the business)

· The threats posed to the business outweigh the opportunities

· The corporate objectives of the business are consistent with / take advantage of the opportunities and threats facing the firm?

You can also use your SWOT plan effectively to develop other evaluative points. For example:

· What might it take to turn a weakness (competitive disadvantage) into strength (competitive advantage)?

· To what extent are key threats and opportunities short or long-term?