Environmental Scanning Tools: SWOT Analysis, Porter’s Five Forces and Scenario Planning (Basics) Questions

Question 1

What is SWOT analysis?

Accepted Answer

**SWOT analysis** is a tool that summarizes **Strengths, Weaknesses, Opportunities and Threats** of a business.

Question 2

In SWOT, strengths and weaknesses belong to which environment?

Accepted Answer

**Internal environment**.

Question 3

In SWOT, opportunities and threats belong to which environment?

Accepted Answer

**External environment**.

Question 4

What is Porter’s Five Forces model used for?

Accepted Answer

It is used to analyze **industry competition** and **profitability** by studying five competitive forces.

Question 5

What is scenario planning?

Accepted Answer

**Scenario planning** is preparing for multiple possible futures by developing alternative scenarios and action plans.

Question 6

Give one example of a threat in SWOT.

Accepted Answer

Example: entry of a strong **new competitor** or strict new **regulation** increasing cost.

Question 7

Explain SWOT analysis and its significance (any three points).

Accepted Answer

**SWOT analysis** identifies internal strengths/weaknesses and external opportunities/threats.

Significance (any three):
- helps choose suitable **strategy** based on strengths and market opportunities
- highlights key **weaknesses** to improve (training, finance, distribution)
- prepares the firm to face **threats** (competition, substitutes, regulation)
- supports decision making for expansion, product changes, and positioning

Question 8

Explain the five forces in Porter’s model (brief points).

Accepted Answer

Porter’s Five Forces:
- threat of **new entrants**
- threat of **substitutes**
- **buyer power**
- **supplier power**
- **competitive rivalry**

These forces decide the intensity of competition and profit potential in an industry.

Question 9

Differentiate SWOT analysis and Porter’s Five Forces (any three differences).

Accepted Answer

SWOT vs Five Forces:
- **Focus**: SWOT = firm-level internal + external summary; Five Forces = industry competition structure.
- **Components**: SWOT = **S/W/O/T**; Five Forces = entrants, substitutes, buyer power, supplier power, rivalry.
- **Use**: SWOT helps select strategies (SO/WO/ST/WT); Five Forces helps judge industry profitability and competitive pressure.

Question 10

Explain scenario planning and state its steps (basic).

Accepted Answer

**Scenario planning** prepares a firm for multiple possible futures.

Basic steps:
- define the decision/problem
- identify driving forces and key **uncertainties**
- build 2–4 scenarios (best/worst/most likely/disruptive)
- prepare action plans and monitor indicators

It reduces surprises and improves long-term planning.

Question 11

Explain SWOT analysis with a diagram/table and a small example.

Accepted Answer

### **SWOT Analysis (with example)**

**SWOT** summarizes internal and external factors:

| | **Positive** | **Negative** |
|---|---|---|
| **Internal** | **Strengths** | **Weaknesses** |
| **External** | **Opportunities** | **Threats** |

Mini example (local bakery):
- **Strengths**: strong taste, loyal customers
- **Weaknesses**: limited delivery, small capacity
- **Opportunities**: growing online orders
- **Threats**: new bakery chain nearby

Thus, SWOT helps convert understanding into a practical strategy (e.g., start delivery to use opportunity and reduce weakness).

Question 12

Explain Porter’s Five Forces model with a diagram and show how it helps strategy.

Accepted Answer

### **Porter’s Five Forces (model + strategic use)**

Porter’s model explains how five competitive forces determine industry profitability:

```text
           Threat of New Entrants
                    ↑
Supplier Power → Rivalry among Competitors ← Buyer Power
                    ↓
            Threat of Substitutes
```

**How it helps strategy**:
- if **rivalry** is high → differentiate or improve cost efficiency
- if **buyer power** is high → build brand, improve value, create switching costs
- if **supplier power** is high → multi-sourcing, long-term contracts
- if **entry threat** is high → build barriers (brand, scale, patents)
- if **substitutes** are strong → innovate and improve uniqueness

Hence, Five Forces guides competitive strategy and entry/exit decisions.

Question 13

Explain scenario planning with a flowchart and show why it is needed in uncertain environments.

Accepted Answer

### **Scenario Planning (process + importance)**

Scenario planning prepares an organization for different possible futures when the environment is **uncertain** (policy changes, technology disruption, global shocks).

```text
Define problem → Identify drivers/uncertainties → Build scenarios
        → Evaluate impact → Prepare action plans → Monitor indicators
```

Why needed:
- reduces surprises and improves preparedness
- supports better long-term decisions and risk management
- helps create flexible strategies instead of one rigid plan

Thus, scenario planning improves strategic readiness under uncertainty.

Question 14

Compare SWOT, Five Forces and Scenario Planning with a table (use-case based).

Accepted Answer

### **Comparison: SWOT vs Five Forces vs Scenario Planning**

| Tool | Focus | Best used for | Output |
|---|---|---|---|
| **SWOT** | firm-level internal + external | summarizing S/W/O/T, forming strategies | SWOT matrix + SO/WO/ST/WT ideas |
| **Five Forces** | industry competition | judging industry attractiveness and competitive pressure | force strengths + strategy implications |
| **Scenario planning** | uncertain future | preparing for best/worst/disruptive futures | multiple scenarios + action plans |

This comparison helps choose the right tool based on the decision context.

Question 15

Explain SO, WO, ST and WT strategies in SWOT (any four).

Accepted Answer

SWOT can be converted into strategies:
- **SO strategy**: use **Strengths** to exploit **Opportunities**.
- **WO strategy**: overcome **Weaknesses** to exploit **Opportunities**.
- **ST strategy**: use **Strengths** to face **Threats**.
- **WT strategy**: reduce **Weaknesses** and avoid **Threats** (defensive).

These help convert SWOT findings into actionable plans.

Environmental Scanning Tools: SWOT Analysis, Porter’s Five Forces and Scenario Planning (Basics)

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