Business communication: writing a SWOT analysis
Business communication: writing a SWOT analysis

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

Business communication: writing a SWOT analysis

7.3 Describing opportunities and threats

The next activity is focused on recognising opportunities and threats that affect a business, and interpreting notes made about these.

Described image
Figure 9 Thinking about the ‘O’ in ‘SWOT’.

Activity 10

Now read the Brompton Bicycle text once more (below), this time looking for the sentences and phrases that refer to opportunities and threats. (You have already noted the references to strengths and weaknesses in the previous activity.) To help you do this, look at the table below, which includes the bullet point notes that a business and management student, Michael Boyd, made in his SWOT table when reading the text. Next to each bullet point, write a corresponding sentence or phrase from the text. There may be more than one sentence or phrase for each bullet point.

Bike maker prepares to step up a gear: Brompton wants to keep up with the competition without its folding bicycles losing their uniqueness.

This year, Brompton Bicycle expects to sell 19,000 of its folding machines, generating revenues of £7m and a pre-tax profit of £925,000.

But new managing director Will Butler-Adams is aware that if the west London business is to remain a player in a rapidly expanding global market it has to see significant sales growth. ‘Last year one of our competitors made 350,000 bikes,’ said Butler-Adams. ‘The market potential is huge. Selling 19,000 is nothing.’

The problem is a mix of capacity – emphasised by a six-month lead time – and sluggish production methods. ‘In the past we have not been able to make enough bikes to meet demand,’ Butler-Adams said. ‘We have been losing market share. The market has been growing 20% to 25% a year and we haven't been growing at the same rate.’

Using a system of double shifts backed by slicker systems, he wants to boost production to 50,000 bikes a year. To reach that, Brompton Bicycle is half way through a £1m production revamp and has just had a change of management.

Yet Butler-Adams is well aware that the debt-free firm's investment could be undermined by a competitor that not only compares on quality but undercuts on price. ‘We are knee-deep in competitors,’ he said. ‘There is always the risk that someone could turn up with a bike just as good and compact as ours but for two thirds of the price.’ Brompton bikes sell in the UK for between £550 and £1,200. Sales to Europe, the US and Far East account for 70% of income.

‘I think we have the best folding bike but the competition is getting better all the time. If we don't take advantage of the opportunity in front of us, someone will come along and do a better job. They will be taking revenue and investing in research and development and will come up with something better. We have to move forward.

‘The Brompton is unique, but not that unique.’

There are other problems. Any patents Brompton had expired eight years ago, although the bike's design is still covered by copyright. Also, being based in a 22,000 sq ft site in London, it does not benefit from the low wage structure of Taiwan, where 80% of bikes are made.

In a country where traditional manufacturing skills are in short supply, Brompton has had to train many of its 85 staff in skills such as welding and brazing. It means that Brompton Bicycle – named after the area of London where the prototype was first developed – is unwilling to relocate.

In other cost areas, said Butler-Adams, it is more competitive. ‘Most bike manufacturers are perpetually changing their models and so never refine their manufacturing process,’ he said. ‘Our bikes have hardly changed in 20 years and we have been able to invest over time in the tooling. It’s a big upfront cost but it's an investment we have already made.’

Butler-Adams has further reduced costs by outsourcing non-core elements of the manufacture, retaining only the skilled machining and complex engineering at its Brentford base.

It is that engineering ethos that underpins Brompton. Butler-Adams said attention to detail – which started with the firm’s founder, inventor Andrew Ritchie, when he created the company 20 years ago – is Brompton’s main differentiator. ‘They are built to last,’ he said. ‘We have to make sure that we don’t become so obsessed by growing that we lose sight of that quality.

‘The Brompton is not a commodity product. We don't want to sell 250,000 a year as that would undermine the brand, making it so mainstream that it would lose its appeal. We are not interested in sales for sales' sake.’

The big sales push is focused overseas. Despite having just 10 outlets in the US – compared to 100 in the UK – America accounted for 5% of sales last year. ‘We need to grow our overseas sales.’

Brompton sells direct to bike shops in the UK and US, using distributors to sell in other parts of the world. As only Brompton makes the spares, the firm continues to benefit from a revenue stream generated by the shops’ after sales and servicing. It is that aftercare that precludes direct internet sales.

‘We had the chance to go into 15 new shops in the US but didn’t because we couldn't supply them,’ said Butler-Adams, a chartered engineer who joined Brompton five years ago and who took over at the top this month following Ritchie’s decision to step down and relinquish his majority shareholding.

Marketing so far has been by word of mouth: enthusiasts from its 150,000 worldwide users singing the praises of their Brompton. ‘The foundation of a brand is what people say to each other about it,’ he said. But to ramp up sales, Butler-Adams knows that the firm will need a more structured approach. ‘We are going to have to start from scratch with marketing. We need to decide what we are about and what we want to communicate. We have to get our distribution, routes to market and brand awareness right.’

The target market are urbanites, commuters and those with boats and caravans – anyone, in fact, who wants a bike that folds to the size of a suitcase. The good news for would-be customers is that the six-month waiting time is now down to three weeks. ‘I guess that’ll give us another challenge,’ said Butler-Adams. ‘Now we are fulfilling orders more quickly, how do we fill the lull in the winter months?’

(Smith, 2008)
Sentence in text Bullet point notes made by Michael
To use this interactive functionality a free OU account is required. Sign in or register.

Opportunities

  • Growth potential in a rapidly expanding global market
  • Increase marketing presence

  

To use this interactive functionality a free OU account is required. Sign in or register.

Threats

  • Competition from other manufacturers 
  • Price undercutting from competitors
  • Competitors’ research and development departments are improving their products
  • Seasonal demand issues
Words: 0
Interactive feature not available in single page view (see it in standard view).

Note: make sure you understand the difference between ‘market presence’ and ‘marketing presence’.

Answer

Sentence or phrase in text Bullet point notes made by Michael
Opportunities
  • Will Butler-Adams is aware that if the west London business is to remain a player in a rapidly expanding global market it has to see significant sales growth… ‘The market potential is huge.’ [bullet point 1]
  • ‘We need to grow our overseas sales.’ [bullet point 1]
  • ‘We are going to have to start from scratch with marketing. We need to decide what we are about and what we want to communicate.’ [bullet point 2]
  
  • Growth potential in a rapidly expanding global market
  • Increase marketing presence
Threats
  • Last year one of our competitors made 350,000 bikes [bullet point 1]
  • investment could be undermined by a competitor that not only compares on quality but undercuts on price. [bullet point 2]
  • the competition is getting better all the time. [bullet point 1]
  • They will be taking revenue and investing in research and development and will come up with something better. [bullet point 3]
  • ‘how do we fill the lull in the winter months?’ [bullet point 4]
  • Competition from other manufacturers
  • Price undercutting from competitors
  • Competitors’ R&D are improving their products
  • Seasonal demand issues

Discussion

You will see that the wording of the bullet points is very concise. In some cases a single bullet point has been used to summarise more than one sentence from the original text. Some of the words used in the bullet points are key business concepts, such as ‘growth potential’. The use of the phrase ‘growth potential’ enables you as the writer of the analysis to look at a real-world business situation, (e.g. the fact that a business has the possibility to sell to customers in many other countries where there is a high level of new demand) and make a more general, abstract statement about the situation. The phrase ‘growth potential’ includes many practical, real, on-the-ground facts but describes the situation succinctly and keeps the focus of the reader at the level of an idea, a concept. These words are ‘spring loaded’ in that we use a short word or phrase to represent a considerable amount of information without including all the details or evidence. This is useful as it enables you as the case study analyst to see at a glance the ‘snapshot’ of the company in its environment. It also means that when you come to write your analysis, you are able to write in a formal, abstract, academic style which is a convention in case study analyses.

LB170_1

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371