SWOT Analysis (QAA 2,3,5,6,7)

Objective:

• Understand the use of a SWOT Analysis
• Complete a SWOT Analysis for a business

Overview:

The activity is designed to assist the entrepreneur/ small business owner to create a SWOT Analysis for their business. This is normally completed before the business starts, however review and examination (re-completing a SWOT Analysis) throughout the life of the business is recommended, especially to support any major decision making.
This activity can be completed by anyone/group who wants to understand what a SWOT Analysis is.

Firstly, what is a SWOT & how is it used?

A successful business considers the wider environment in which it operates.  In the business planning process, the SWOT analysis provides a framework to consider the strengths and weaknesses of the internal aspects of your business; and the opportunities and threats of the environment in which you are operating.

For example, your business planning should consider factors such as:


•  The state of the economy [local/regional/national] and how growth and decline are likely to affect your sales business
•  Changes in legislation that could support or create a burden for your business
•  Social trends that may have an impact on market size or consumer choice
•  Political pressures for or against your business activity

Carrying out a thorough SWOT helps you to plan to maximise strengths, take opportunities to meet customer needs and develop the business.  It also allows you to develop ways of overcoming any weaknesses, and removing or being prepared for potential threats.

Strengths and Weaknesses
Strengths and weaknesses are issues that already exist and are internal to the business.

Examples of common strengths and weaknesses include:
Strengths: You as the entrepreneur
 Relevant experience e.g. 5 years working in retail/with children
 Transferable or life skills such as being a good organiser / time manager etc.
 Skills that are directly related to the business such as design skills, customer service, financial management skills
Strengths: Your business
 A good location, convenient and accessible to customers
 Highly level of expertise in staff team
 Confirmed orders for your product / service
Weaknesses: You
 Inexperienced at running your own business
 Additional training / accreditation required e.g. hygiene certificate
 Limited selling skills
Weaknesses: Your business
 Need to borrow funds to set up
 Waste in business operations
 Working from home, with limited space to work and danger of becoming isolated

Opportunities and Threats
These are external issues that your business may face, consider what could happen?
Opportunities
 Fulfil some needs of customers which you know at this stage are not  being met e.g. a delivery service to busy or housebound customers
 Offer something different (compared to who you know to be probable competition) or something better e.g. beauty services for men / a luxury product range
 Possible changes in the business environment or market place e.g. increase in mobile phone market creates growth in accessories
 Access certain support – if your business is in a regeneration area, for example
 Changes in the law which might affect your business operations, such as changes in licensing laws
Threats
 Increasing cost of borrowing
 Emerging competition using your ideas
 Personal illness may affect running of the business
 Technological advances making your equipment or methods outdated
 Changes or reductions in government spending
 Disagreements between partners

Sample SWOT Analysis:
 
1. For a domestic cleaning business:

Activity:

If you are working with an individual or group who is going to set up their own business, invite them to complete a SWOT Analysis for their business.

If the individuals are not considering setting up their own business, then ask the group to complete a SWOT Analysis on a famous company. A favourite is to chose well known brands such as McDonalds, what are the strengths, weaknesses, opportunities & threats for them, but specific sector specialists can be chosen.

Another exercise is to consider what a SWOT would have looked like when designing a product. For this exercise, split the groups into 4-6 people. Ask them to think back to when they owned a CD player or depending on their age, a Walkman or even record player.
Ask them to imagine that they have invented the ipod and need to outline its strengths and weaknesses to their shareholders.

Give each of them a piece of flip chart, draw a cross and mark an S, W ,O, T (one in each of the quadrants) and work on each section together as a group.
Ask them to ask themselves, What are the Strengths of the IPOD – How is it a better product that the CD player? What are the weaknesses of the product?
Looking at the wider environment, what opportunities has the iPOD got to develop and finally what are the weaknesses.

The session should take no more than 30 minutes and around the same if they are to report their findings back to the group.

 
Skill Development:

Completing a SWOT Analysis helps individuals to consider both internal and external factors. To complete the exercise, the group will need to use a number of skills including – research, audit, evaluation, discussion, debate, negotiation & presentation.

 
Resources:
• Post-its or similar sticky pads
• Pens 
• Papers/pads
• Flip charts