4.05 PART IISWOT ANALYSIS

SEM2

What is SWOT? SWOT is an anagram that stands for Strengths,

Weaknesses, Opportunities, and Threats.

Strengths, Weaknesses, Opportunities, and Threats

StrengthAny resource or capability your business has that can

help you gain a competitive advantage in your industry Weakness

Any limitation or shortcoming your business has that can keep you from achieving your objectives

OpportunityAny favorable situation in the environment surrounding

your business Threat

Any unfavorable situation in the environment surrounding your business

Benefits of conducting a SWOT analysis: Becoming aware of issues that you hadn’t

thought of before Having a “filter” for a great deal of

information Gaining new insights about your business

environment by applying SWOT to a competitor’s company

BENEFITS

Strengths are internal - under your control.○ What are our advantages?○ What do we do well (what is our expertise)?○ What are our assets?○ What resources do we have access to?○ Where are we making money?

STRENGTHS

Examples of strengths:○ A product or service that you offer that no one

else in your area does○ A convenient location○ Strong brand recognition○ The skills and talents of your staff

Once a SWOT analysis identifies an internal strength, a business can use that strength to take advantage of a external opportunity

STRENGTHS

Weaknesses are internal - under your control.○ What can we improve?○ What resources do we lack?○ Where are we losing money?○ What are our competitors doing better than we are?

Examples of Weaknesses:○ Lack of expertise, experience, or management depth○ Bad reputation among the public○ Poor communication among staff members○ Weak brand name

WEAKNESSES

QUESTION

A SWOT analysis indicates that customers' buying preferences are changing, but the business has a very limited product line. This is an example of an

external threat attacking an internal weakness

Opportunities are external -out of your control.Collect information about the environment

surrounding your business.○ What are the newest technological breakthroughs?○ What new needs of customers can we meet?○ What economic trends are beneficial to us?○ What niches have our competitors missed?

OPPORTUNITIES

Examples of opportunities:○ A new software development○ An improved mechanical process○ A corporate merger○ Failure of another company

OPPORTUNITIES

Threats are external - of your control.○ What obstacles do we face?○ What is our competition doing?○ What economic trends are harmful to us?○ Where are we vulnerable?○ Do we have money problems?

Examples of threats:○ New competition moving into your area○ A new tax that your business owes the government○ A new law that your business must follow○ Government regulation○ A new trend sweeping the public

THREATS