SWOT Analysis (An Example)

Module: Entrepreneurship Responsibility:

Unit 2: The Business Plan—Part 1 Business Plan Committee
CEO and VPs

Standard:
Virtual Enterprise students will research business opportunities and participate in the
development/revision of a business plan. (Must comply with national Virtual Enterprise format for
competition.)

Lesson Create the SWOT Analysis and discuss the economic conditions and business
Objective(s): risks for the selected business opportunity.

What Is SWOT?
SWOT is an acronym which stands for Strength; Weakness; Opportunity and Threats.
SWOT is usually used to assess a business or a proposition..

A SWOT analysis is a tool used to audit an organization and its environment. This framework helps
you to focus your activities in areas where you are strong and where the greatest opportunities lie.
It is the first stage of planning and helps marketers to focus on key issues. It provides a good
framework for reviewing strategy, position and direction of a company or business proposition, or
any idea. This analysis should be used to build on strengths, resolve weaknesses, exploit
opportunities, and avoid threats.

Internal Audit—Inside the Firm

Strengths—A firm’s resources and capabilities that can be used as a basis for developing a
competitive advantage.

Strengths Examples of Strengths

What advantages do you have?
What do you do well?
What relevant resources are accessible
to you?
What do other people see as your
strengths?
Strong brand names
Good reputation among customers
Favorable access to distribution networks
Convenient location

Weaknesses—List of areas where the company might struggle. Also included are the absences
of certain strengths which may be viewed as weaknesses. Do not use lack of training or expertise
of employees as a weakness. Companies would not hire a person for a position unless they have
the knowledge, background and skills needed to perform the job well.
 Weaknesses Examples of Weaknesses
Do customers recognize your brand Weak brand name
names?
What is your reputation in community? Poor reputation among customers
What is your cost structure? High cost structure
Do you have access to primary Lack of access to key distribution
distribution channels? channels
External Audit—Outside the Firm

Opportunities—Areas that may reveal new opportunities for profit and growth.

Opportunities Examples of Opportunities

What is going on in the world that may
contribute to your success?
What are the interesting trends in your
area?
Does your product meet a currently
unfulfilled customer need
Has the government recently removed or
modified any international trade barriers
Changes in technology and markets
Local events
Changes in social patterns, population
profiles, lifestyle changes, etc.
Loosening of regulations

Threats—Changes in the external environment which may present threats to the company.

Threats Examples of Threats

What obstacles do you face?
What is your competition doing?
Is changing technology threatening your
position?
What changes in the economy will impact
the company?
Shifts in consumer tastes away from
firm’s products
New government (local, state, federal)
regulations
Emergence of substitute products
Increases in interest rates, high
unemployment, high gasoline prices, etc.

Discussion of Business Risks

Risks Identified—Possible areas where the business may be in jeopardy of reaching stated
goals. What could happen (inside or outside the company) that inhibit your company from
reaching its goals?

Risks Addressed—Clear evidence of understanding of identified risks and feasible

solution/strategy proposed to eliminate or reduce risk. What could your company to
minimize or reduce risk?
*Extracted in part from “United States Network of Virtual Enterprises National Business Plan Competition” with explanations from SCVEN.

What you need to do and how to do it:

Use the Market Analysis (Lesson 3) information, the website resources, and the SWOT Analysis
Worksheet to help create/revise the SWOT Analysis of the business plan using the guidelines
above. Make sure you have documentation of your analysis. For example:

If you are selling cars, an increase in interest rates may affect sales because customers will need
to pay more to borrow money to purchase a car. What documentation have you found that
indicates an increase in interest rates will substantiate your statement? (ie., economic forecast,
auto sales information based on previous increases in interest rates, etc.)

For the discussion of business risks, identify your business risks and explain how you would
eliminate or minimize these risks. Investors want to know you are prepared to react in a positive
way to potential risks.