AP Business with Personal Finance · Free-response skill

Use KPIs and a SWOT to make a decision

The move. Read a business's KPIs and SWOT, find the KPI that shows the problem, choose a strategy that uses a strength, and say how to check whether it worked.

How to do it

  1. Read each KPI against its target. The problem is the KPI that misses its target, or that moves the wrong way, by the most. Quote both numbers.
  2. A strength is internal and helps the business. A strategy that uses a strength names the strength and says what the business will do with it.
  3. Tie the strategy back to the problem: say how the action should move the problem KPI in the right direction.
  4. To say how you will judge success, name the KPI, the level it must reach and when you will check it.

Practice prompt Try it

Summit Fit is a fictional gym with 1,000 members. Its manager gathered the KPIs below for the last two years and wrote a short SWOT. Strengths: certified trainers whose small-group classes get excellent reviews; the gym is open 24 hours. Weaknesses: old cardio machines; a small parking lot. Opportunities: a new apartment complex nearby; local employers want wellness programs for their workers. Threats: a low-price gym chain opened nearby last year; rents in the area are rising.

Summit Fit (fictional): KPIs for the last two years

KPITargetLast yearThis year
Membership renewal rate70 percent72 percent55 percent
New members per month404245
Average class attendance80 percent of spots85 percent88 percent
Trainer satisfaction score4.0 out of 54.44.5

Use the KPIs and the SWOT to answer each part.

  1. Which KPI in the table points to Summit Fit's biggest problem? Back up your choice with numbers from the table.
  2. Suggest one strategy that uses one of Summit Fit's strengths to deal with the problem you named in part (a).
  3. Explain how your strategy from part (b) could improve the KPI you named in part (a).
  4. A year from now, what result should the manager look for to decide whether your strategy from part (b) succeeded?

Write each part, then check yourself against the checklist. Nothing you type here is saved or graded.

Check yourself and see a model answer

Checklist

Our own checklist of what a full answer does, one line per point. Tick each one your response earns.

0 of 5 points

Model answer, annotated

(a) The membership renewal rate shows the biggest problem. It fell from 72 percent last year to 55 percent this year, 15 points below its 70 percent target. Every other KPI met its target this year.

  • Point 1 Names the renewal rate as the problem KPI in the first sentence.
  • Point 2 Quotes the fall from 72 to 55 percent and the 70 percent target.

(b) Summit Fit should use its certified trainers, whose small-group classes get excellent reviews, to give every member one free small-group class a month and a progress check with a trainer every three months.

  • Point 3 Builds the action on a listed strength: the trainers and their small-group classes.

(c) Members who join a free class and meet a trainer every few months get more value from their membership and feel connected to the trainers and to other members. Members who get more from the gym and feel known there have more reasons to stay when their membership comes up for renewal, so more of them should renew and the renewal rate should rise.

  • Point 4 Links the strategy to renewing through more value and a closer connection to the gym.

(d) In a year, the manager should work out the renewal rate again. If it has climbed from 55 percent back to at least the 70 percent target, the strategy worked.

  • Point 5 Names the KPI to recheck and a specific success level: back to the 70 percent target.