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Business Strategy and Accounting Basics

A company making power semiconductors for automotive use performed a SWOT analysis. Which would be classified as an opportunity?

  1. AThe company has its own manufacturing technology that combines high breakdown voltage with reliability
  2. BA new competitor using low prices as its weapon is entering the same market
  3. CDemand for automotive power semiconductors is growing as electric vehicles spread
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Answer: C. Demand for automotive power semiconductors is growing as electric vehicles spread

SWOT analysis sorts internal factors of the company into strengths and weaknesses, and external factors of the environment into opportunities and threats. Growth in market demand is an external factor the company cannot control, and it is a tailwind for the business, so it is an opportunity. The company's own technology is an internal factor and therefore a strength, and the entry of a new competitor is an external factor and therefore a threat. The results are used to work out strategies by combining factors, for example by using strengths to seize opportunities.

  • A. This is an internal factor that gives an advantage in competition, so it is a strength.
  • B. This is an external factor that works against the business, so it is a threat.
  • C. Correct. It is a change in the external environment that is a tailwind for the business, so it is an opportunity.
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  2. Which correctly describes a "cash cow" business in PPM?
  3. For a semiconductor manufacturer, only a few makers can supply the manufacturing equipment it needs, so the equipment makers have the upper hand in negotiating prices and delivery times. Among the competitive forces of five forces analysis, which does this situation correspond to?
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