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- 10 Marks
Question
A Threat which is an element of SWOT can be described as a factor or situation in a firm’s external environment that can be an obstacle to the efficient operations of the organisation. Required: In reference to the statement above, explain FIVE (5) factors which can pose a threat to the successful operations of a business organisation.
Answer
- Entry of New Firms: The entry of new firms into the market can pose a serious threat to an organization, especially in a low-growth market where competition can drive down prices and erode market share.
- Introduction of New Products or Services by Competitors: Competitors introducing new or improved products or services can attract customers away from the business, potentially reducing sales and market share.
- Emergence of New or Cheaper Technologies: New or more affordable technologies can render existing products or processes obsolete, forcing firms to quickly adapt or risk losing competitive advantage.
- New or Revised Government Regulations: New or more stringent regulations by central or local government can increase operational costs or impose additional compliance requirements, impacting the firm’s efficiency.
- Increase in the Cost of Capital: Rising costs of capital can be a significant threat to firms relying heavily on borrowed funds, as it increases financial burden and affects profitability.
- Tags: Business Environment, Competitive Forces, SWOT Analysis, Threats
- Level: Level 1
- Topic: Competitive forces and markets
- Series: JULY 2023
- Uploader: Theophilus