Analyse business position with strategic tools
Use SWOT, PEST, Porter's five forces and core competence to organise strategic evidence without treating frameworks as answers.
Cambridge International AS & A Level Business 9609, 2026–2028 syllabus and 2029 syllabus, section 6.2.1. Apply legal, economic and political examples to the relevant country and date. Written practice is self-checked. Specialist review has not been completed for this lesson; these exercises do not award an official mark or establish exam readiness.
Before you begin
- Use the lesson's stated business context and distinguish evidence from assumptions before recommending a response.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Which part of SWOT usually includes a new rival entering the market?
What you will learn
- Distinguish internal and external analysis
- Use SWOT and PEST to organise evidence
- Assess industry pressures and distinctive capabilities
Frameworks organise evidence
PEST analysis examines political, economic, social and technological influences; some versions add environmental and legal factors. SWOT organises internal strengths and weaknesses alongside external opportunities and threats. These tools can help identify issues but do not establish which issue is most important or what the business should do.
Evidence can be misclassified if a firm labels an external trend as an internal strength. State the source, time period and business impact of each factor, then identify which factors connect to the objectives.
Industry and capability analysis test strategic fit
Porter's five forces analyse rivalry, threat of entry, threat of substitutes, and the bargaining power of buyers and suppliers. Stronger competitive pressures may constrain returns, but the framework depends on defining the industry and relevant alternatives carefully.
A core competence is a capability that contributes value, is difficult for competitors to imitate and can be applied to opportunities. A resource alone is not automatically a competence. Test whether the capability is distinctive, valuable to customers and supportable as the market changes.
Pause and explain
What does Porter's five forces help analyse?
Worked example
A regional grocer has trusted local suppliers, while a national chain plans to enter the area and online delivery is growing. Classify these factors and explain which tool could add further analysis.
Show the worked solution
- Trusted supplier relationships can be an internal strength if evidence supports them.
- The rival and delivery trend are external threats or opportunities depending on response.
- Five forces can test rivalry, substitutes, buyer power and supplier power.
Answer Trusted supplier relationships may be a strength if they improve freshness or reliability. The entrant may threaten sales, while online delivery could be an opportunity if the grocer can serve customers effectively. A five-forces analysis could examine rivalry, delivery as a substitute, buyer choice and the grocer's supplier power; the tools need evidence about local customers and costs.
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Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A bicycle maker has strong design skills, faces cheaper imports and sees rising demand for e-bikes. Use SWOT to classify the evidence and state one additional fact needed before choosing a response.
Give me a hint
Separate the firm's internal capability from outside market changes.
Compare my reasoning
- Design skill can be an internal strength.
- Cheaper imports may be a threat; e-bike demand may be an opportunity.
- Check capability, customer evidence, production cost or competitor response before deciding.
Design skill is a potential strength; cheaper imports are an external threat and e-bike demand may be an opportunity. Before investing, the maker should test customer demand, its ability to design and produce e-bikes at an acceptable cost, and how rivals are positioned. SWOT organises issues but does not choose the action.
Look for these in your work
- Internal and external factors are distinguished
- Opportunity and threat are classified
- A decision-relevant evidence gap is named
A coffee chain considers a new market. Explain how PEST and five forces answer different questions.
Give me a hint
PEST examines the wider environment; five forces focuses on industry competition.
Compare my reasoning
- PEST may examine incomes, regulation, demographics and technology.
- Five forces examines rivalry, substitutes, entry, buyer and supplier power.
- Use both with local evidence and strategic objectives.
PEST can identify wider political, economic, social and technological conditions such as food rules, incomes, customer habits and digital ordering. Five forces examines competition in the coffee market, including rivalry, substitutes and buyer or supplier power. Together they can frame risk, but local evidence is needed to judge significance.
Look for these in your work
- Frameworks are differentiated
- Examples fit each framework
- Evidence and context remain necessary
A software firm's customer data are valuable, but competitors can copy the interface quickly. Assess whether its data capability is a core competence.
Give me a hint
Test customer value, rarity or imitability, and the firm's ability to use it.
Compare my reasoning
- Customer data may improve service if used lawfully and accurately.
- Copyable interface features may not protect returns.
- Assess data access, analytics skill, privacy, retention and rival imitation.
The data capability could be a core competence if it creates customer value, is difficult for competitors to replicate and the firm can turn it into a sustained service advantage. The interface alone may be easy to copy. The firm should also test data quality, lawful use, privacy protections and customer trust; valuable data can become a liability if misused.
Look for these in your work
- Core-competence tests are applied
- Imitability is assessed
- Privacy and trust are included
Common mistakes
- Treating a SWOT list as a strategy
- Using PEST without connecting trends to the firm
- Claiming a capability is core without evidence of value and difficulty to imitate
What can you explain now?
Which part of SWOT usually includes a new rival entering the market?
Compare with the explanation
Threat
It is an external development that may harm the business.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
What can strategic frameworks clarify, and why must managers still test evidence, importance and fit?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.