Notes 2.
SWOT ANALYSIS
SWOT stands for Strength, Weakness, Opportunities, and Threats. SWOT analysis is the next step after you have
made your business plan. This is to validate if your business is profitable and viable. Profitable means if it has the
capacity to generate income on top of your expenses. Viable means if its doable or if your plan is realistic considering
the prevailing conditions of the environment.
The primary purpose of conducting SWOT analysis is to guide you in deciding whether to push through with your
business plan or not. Just remember the descriptions are relative or dependent on your point of view. It must base on
facts not just personal perceptions or opinion. Consider the following statements:
Correct: There are approximately ten suppliers of banana leaves within the area.
Faulty: There are plenty of suppliers of banana leaves.
Strength - These are qualities or situations that will help you achieve your business goals.
Weaknesses - These are qualities or situations that you should improve or change because they prevent you from
achieving your goals.
Opportunities - These are events or situations that you can explore in order to establish or expand your business.
Threats - These are events or situations that you should avoid to prevent future loss or closure.
Here are some examples of strengths, weaknesses, opportunities, and threats that is true for all types of business.
STRENGTH WEAKNESS
RESOURCES Adequate capital Insufficient fund
MANAGEMENT Reflective and proactive management Passive and traditional management
THE LOCATION OF YOUR STORE Is accessible and found in the business Is located in remote and far flung area
district
STRENGTH WEAKNESS
RESOURCES The supply of raw materials is The supply of raw materials is
abundant within the area dependent on a lot of factors like
weather
MANAGEMENT The owner is experienced and The owner lacks the exposure or first-
knowledgeable in the field hand experience in the field
THE LOCATION OF YOUR STORE The area is not prone to flooding and The crime rate in the area discourage
is accessible to all types of customers from visiting the store
transportation
To effectively use SWOT analysis, you have to identify which aspect of your business you want to analyze. This will make
you analysis easier. The accuracy and reliability of your SWOT analysis will depend on how specific your business plan is.
You can use the diagram in doing your SWOT analysis.
- Provide games that they
For Strengths and Weakness STRONG POINTS fancy.
- A lot of young adults are - Provide other amenities
State what aspect of your into computer games. that will encourage them
business you want to to stay longer
analyze.
WEAK POINTS
Example: - The government is very
Computer Shop strict in monitoring the
games accessible to children
- Check on the list of
prohibited games.
The target customers are
students and not financially
- Make the rent more
capable of paying for
affordable.
themselves
You must have a big capital.
You may add more strong points and weak points but what is important is to establish corresponding actions on how
you intend to respond to your weakness and to improve your strong points.
