ACCA P5 Advance Performance Management
ACCA Article: SWOT (TOWS) Analysis
SWOT is one of widely
used strategic analysis tools. SWOT represents Strength, Weakness,
Opportunities and Threats an organisation faces. Strengths and weakness relates
to internal environment of an organisation whereas opportunities and threats are
concerned with impact on organisation from external environment. SWOT starts
with self-analysis (i.e. identification of internal and external issues that
have positive and negative effect in performance of organisation. Strength and
weakness evaluates financial, managerial, marketing, production related and
other internal aspects of business. Opportunities and threats evaluate boarder
business environment (PESTEL), government policies and regulations and other
external aspects of industry the business is in. The resulting action from the
analysis should focus on addressing weakness, protecting against threat, exploiting
opportunities and matching strength with opportunities.
Boston Consulting Group Matrix: BCG Matrix is a simple 2by2
matrix where columns represent market share of business and rows represent the
growth prospect of business activities. BCG illustrates that a viable and sustainable
business should have mixture of more than one business lines representing cow,
star and child. Here, growth is measure of market attractiveness and market
share is indicator of competitive attractiveness. On cash flow basis cow is
regarded as cash generator whereas the child is supposed to be cash user. The
star and the dog are cash neutral. Therefore, the right mix of cash generating,
star and child means the business is viable for long run. The problem however
is about the uncertainty of lifespan of these activities and viewing the
activities under only two constraints. Further, it focus that all dogs should
be condemned. There is also practical difficulty in determining as high and low
growth. It also assumes that every activities are independent which may not
always the case (e.g. joint product and by products).
ACCA Article: Business strategy and performance models
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