Question: SWOT analysis

Question:

Hi Luke

 
In the book IGCSE Business Studies page 253, Activity 16.4, I am asked to carry out a SWOT analysis on a product of my choice. I was just wondering – does this have to be an existing product, or can the product be fictional?
 
Regards
Daniël
 
Answer:
 
Hi Daniël

 
You may use either a real product or a fictional one. This should be fine so long as your layout is correct; the strengths, weaknesses, opportunities and threats are realistic for the type of product used; and you use business-related terminology.
 
A common mistake with the SWOT analysis: it can be easy to confuse the internal/external nature of the SWOT elements. Remember that strengths and weaknesses relate to the internal situation of the business, whilst opportunities and threats are external of the business and thus tend to be more out of the control of the firm. 
 
 
Regards
Luke

Cost-benefit analysis question

Lidia asks:

“I would like to know if external benefits and costs are like advantages and disadvantages, but in a financial way? And that goes the same for social costs and benefits, except this it is not focused on financial way.
 
On p87, Act. 5.3 A question states that l should list external costs and benefits  from a case study. But when I checked at the back for the answer, it gave an answer that was about social c. and b. and NOT the external c. and b. Because I am still bit unsure about both of them l don’t know what to do and l they are totally different.”
Answer:
Yes, you are correct, we can consider external benefits and costs in the sense of being advantages and disadvantages. However, keep two things in mind here:
Firstly, the terms used are very specific and thus important to know well. If a question deals with external benefits, costs or cost-benefit analysis in general, then we must be careful to use these terms. An external benefit benefits society, not the business or any other entity. A business that chooses to locate in an economically disadvantaged area provides an external benefit since it is the surrounding community (specifically the potential workers) that directly benefit, i.e. the society. So yes, here we have an advantage, but not an advantage in general. It is an external benefit.
Secondly, these are finance-related as you mention. It’s important to remember that associating a specific number or value to these costs and benefits is not always straight-forward. As your textbook says, these are estimates; we could say that they are more qualitative than quantitative in nature.
To answer the second part of your question: yes, the same applies to social costs and benefits. Remember, this will also be considered in finance terms as we are dealing with a cost-benefit analysis.
Social costs = private costs + external costs
Social benefits = private benefits + external benefits
Cost-benefit analysis sums up social costs and benefits, and makes a recommendation based on which is greater.
 picture_cost_benefit_analysis
The answer to question (b) in activity 5.3 provides external costs and external benefits. These are also social costs and social benefits because – as you can see above – social costs and benefits include private costs and benefits as well as external costs and benefits. The answer provided in the textbook only offers the external costs and benefits, not the private ones as that is not questioned.
Image source: http://www.12manage.com/images/picture_cost_benefit_analysis.gif

How do I know if I’m covering everything that could be asked in the exams?

Hi everyone

To make sure you’re studying everything that could be asked in the exams, it’s a good idea to work with the syllabus for the exam session relevant to you.

Download the syllabus below (PDF file) and scroll to ‘curriculum content’. A list is provided of all the sections you need to cover. You can use the syllabus as a checklist – each time you learn a section, check it off on the list.

IGCSE:

AS Level:
Sources:
 http://www.cie.org.uk/qualifications/academic/uppersec/alevel/subject?assdef_id=735

Do you need to familiarise yourself with UK-based content?

I received an email from Lara – AS Level student – about whether or not CIE Business Studies students need to know the details of UK-oriented information. Here’s the question and my answer below:

Hey Luke, quick question.

On page 257 of the prescribed text book a list of socio-economic groups in the UK are given. Do we need to know those? Will we be asked UK orientated questions in the exams in May?

Thanks
Lara.

ANSWER:

Hi Lara

No, you don’t need to know the specifics of the UK socio-economic groups; these are provided as an example of how one might use demographics/socio-economic groups in market segmentation. Socio relates to social class and economic relates to income category.
According to your syllabus: “The emphasis should be on the application of concepts and issues to the local context (i.e. the candidate’s

own country), where appropriate” (page 7). For example, if a question about market segmentation asked for you to consider your own country in your answer, you could mention previously disadvantaged communities and those more economically advantaged in suburban areas of South Africa. Hence we may find that a supplier of soaps and detergents is likely to market a more affordable range of cleaning products to the previously disadvantaged community, whilst a wider range – including higher quality, luxurious goods – may be targeted and supplied to the ‘wealthier’ market segment.
Both the economically disadvantaged community and the wealthier customers are market segments – they are part of the larger market for soaps and detergents, and an even larger market for household retail products.
Hope this helps! Let me know if you need any further clarity.
Regards
Luke