National Occupational Competency Testing Institute (NOCTI) Business Practice Exam

If a business conducts a SWOT analysis to decide whether or not to expand, which of the following would be categorized as an "O"?

1. There is potential for increased profits

2. Existing customer loyalty

3. Strong brand recognition

4. Competitive pricing strategy

The correct answer is: There is potential for increased profits

In the context of a SWOT analysis, the letter "O" stands for "Opportunities." When evaluating opportunities, a business seeks external factors that could contribute to its growth and success. The statement regarding potential for increased profits fits this category perfectly because it represents a favorable condition in the market that the business can leverage for expansion. This could be due to various reasons such as market trends, gaps in the competition, or emerging customer needs, all of which may allow the business to increase its revenues if it decides to expand. The other options represent factors that are more aligned with the internal strengths or weaknesses of a business rather than opportunities. Existing customer loyalty and strong brand recognition illustrate advantages the business currently possesses, indicating strengths. Meanwhile, a competitive pricing strategy reflects an approach or tactic the business employs, which also aligns with internal strengths rather than external opportunities. Therefore, recognizing potential for increased profits is crucial for identifying a viable opportunity in the business expansion decision-making process.