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SWOT Analysis

A SWOT analysis looks at the strengths, weaknesses, opportunities and threats of a business.
The SWOT quadrant
© RMIT University 2017
A SWOT analysis looks at the strengths, weaknesses, opportunities and threats of a business. It is both an internal and external analysis: strengths and weaknesses look inward at the business and focus on resources and experience; opportunities and threats and look at what is happening externally that might affect your business.
Strengths and weaknesses both share similar characteristics for analysis:
  • Human and technological resources: Do you have sufficient staff? Are you employing the right staff? Will the systems you intend to use provide your customers with exceptional customer service?
  • Financial resources: Do you have sufficient funds to support your venture? Do you have adequate financial resources to weather any unforeseen costs that may arise?
  • Distribution: What systems will you put in place to efficiently and effectively distribute the products/services to your customers? Do you have a seamless distribution process?
  • Activities and processes: What programs will you run? What systems will you employ? How will you ensure that all activities and processes contribute to achieving your business’s objectives?
  • Past experiences: How will you use your skills and experience as building blocks for learning and success? How will you build your reputation in the business community?
The strength part of the SWOT analysis identifies the characteristics of the business that give it an advantage over its competitors. To identify your business strengths decide what your business does better than anyone else, what unique resources give your business a competitive advantage, and what others would regard as your strengths. Consider your business’s strengths both internally, and from the perspective of your customers and other competitors in our industry sector/market.
Determining your business weaknesses
Consider your weaknesses from the perspective of what you think you will do well, but not as well as your competitors. Ask yourself: What could your competitors do better than you? Weaknesses exist in many areas of the business – these are largely created by the way you manage your resources within your online business.
Opportunities are important for your business – you can identify improvements to your business, move into other markets, develop new products or services and develop a competitive advantage. Opportunities are largely brought about due to a shift in the trends in a market. What are your potential customers doing differently? For example, are they now only purchasing one product when they used to purchase two? Have they changed their attitudes toward how they want to engage with a product or service? Opportunities can come from a broad range of factors – economic changes, lifestyle changes, technological changes or even political changes.
Determining your business threats
Threats are external factors that could negatively impact your online business. For example, changes to the marketplace, a competitor’s marketing and advertising strategy, newly introduced regulations, internet security such as online fraud and hacking.
Identifying and addressing business threats is important because, if ignored, they can adversely affect your business opportunities and success. It is therefore important to anticipate any potential business threats. Be proactive not reactive in order to minimise the potential impact on your online business.
Case study
Jordan has been thinking a lot about the ongoing viability of her proposed online travel agency business and wants to make sure that before she commits to the proposed venture she is able to identify and capitalise on any strengths and opportunities and identify and minimise any weaknesses and threats.
Reflect on the information that you’ve read about Jordan’s prospective business so far, and consider the strengths, weaknesses, opportunities and threats to her business.
Consider completing your own SWOT analysis for inclusion in your business plan.

© RMIT University 2017
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