SWOT Analysis

SWOT ANALYSIS
SWOT (strengths, weaknesses, opportunities, and

threats) analysis is a framework used to evaluate a
company's competitive position and to develop
strategic planning. SWOT analysis assesses internal
and external factors, as well as current and future
potential (Grant, 2020).
SWOT analysis is a technique for assessing the
performance, competition, risk, and potential of a
business, as well as part of a business such as a
product line or division, an industry, or other entity.
INTERNAL FACTORS: STRENGTHS (S) AND
WEAKNESSES (W)
These are the resources and experiences readily available to the

business proponents. These factors include:
1. financial resources such as money and source of funds for
investment;
2. physical resources such as the company’s location, facilities,
machinery, and equipment;
3. human resources consisting of employees;
4. access to natural resources, trademarks, patents,
and copyrights; and
5. current processes, such as employee programs,
sales, and distribution capabilities, marketing
programs, etc.
STRENGTHS
describe what an organization excels at and
what separates it from the competition: a
strong brand, loyal customer base, a strong
balance sheet, unique technology, and more.
WEAKNESSES
stop an organization from performing at its
optimum level. There are areas where the business
needs to improve: lack of raw materials, personnel
attitude, poor location, and lack of budget for
product promotion, among others.
EXTERNAL FACTORS:
OPPORTUNITIES (O) AND THREATS
(T)
1.economic trends such as stock market,
economic performance, and the like;
2. market trends such as new products or
technology, changes in tastes and lifestyle of
society;
3. national and local laws and
regulations;
4. relationship with suppliers; and
5. competitive threats.
OPPORTUNITIES
• refer to favorable external factors that could give
an organization a competitive advantage.
Examples include larger market, company
expansion, and new customer trends, among
others.
THREATS
• refer to factors that have the potential to harm an
organization. For example, changes in government
policy, changes in consumer tastes and
preferences, inflation, and recession, among
others.
PORTER’S FIVE FORCES
ANALYSIS
• Porter’s Five Forces analysis is a framework or a
guide for assessing and evaluating the competitive
strength and position of a certain industry. It was
developed by Michael E. Porter in 1979 and
identifies the five basic forces:
FIGURE 1. PORTER’S FIVE FORCES ANALYSIS
1. Threat of new entrants, 2. Bargaining power of
suppliers, 3. Bargaining power of buyers, 4. threat
of substitute products or services, 5. and Existing
industry rivalry.
PORTER’S FIVE FORCES:
1. COMPETITIVE RIVALRY
• This force examines how intense the competition currently is

in the market, which is determined by the number of existing
competitors and what each is capable of doing. Rivalry
competition is high when consumers can easily switch to a
competitor offering for little cost.
2. BARGAINING POWER OF SUPPLIERS
• This force analyzes how much power a business’ suppliers

have and how much control it has over the potential to raise its
prices, which, in turn, would lower a business’s profitability.
Also, it looks at the number of suppliers available. The fewer
there are, the more power they have.
3. BARGAINING POWER OF BUYERS
• This force looks at the power of the consumer to affect
pricing and quality. Consumers have power when there
aren’t many of them, but lots of sellers, as when it is easy
to switch from one business’s products or services to
another. Buying power is low when consumers purchase
products are small amounts and the seller’s product is
very different from any of its competitors.
4. THREAT OF NEW ENTRANTS
• This force examines how easy or difficult it is for the
competition to join the marketplace in the industry being
examined. The easier it is a competitor to join the
marketplace, the greater the risk of a business’s market
share being depleted. Barriers to entry include absolute
cost advantages, access to inputs, economies of scale, and
well-recognized brands.
5. THREAT OF SUBSTITUTE PRODUCTS OR SERVICES
• This force studies how easy it is for consumers to switch
from a business’s product or service to that of a
competitor. It looks at how many competitors there are,
how their prices and quality compare to the business
being examined, and how much of a profit those
competitors are earning, which would determine if they
can lower their costs even more.
TABLE 1. CHARACTERISTICS OF THE FIVE FORCES
WAY TO SUCCESS!
“STUDY while others are sleeping.”

ACTIVITY: SWOT ANALYSIS
• Directions: Identify if the following situations are under
STRENGTHS, WEAKNESSES, OPPORTUNITY, and
THREATS. Write the number of the corresponding
market situation in the SWOT Analysis Matrix.
BUSINESS: BARBECUE STAND
1. The City Council of LGU in Pasig passed a new bill
requiring small businesses to register in the Business and
Licensing Department of the City which is costly.
2. More customers are beginning to like the sauces used
by the barbecue business.
3. The carinderia in front of the barbecue stand added
grilled meals in their menu.
4. Customers are asking if they can order ahead of time by
texting the owner.
5. There is a steady supply of meals in the market.
6. Poor sanitation practices by the helpers.
7. A new building is under construction near the barbecue
stand.
8. Only 2 helpers are attending to the needs of growing
customers.
• Activity: Porter’s Five Forces Analysis Directions:
Analyze if the following forces below are under
SUPPLIERS, BUYERS, NEW ENTRANTS,
SUBSTITUTE PRODUCTS, and INTENSITY OF
RIVALRY. Write the number of the corresponding
market force in each box.
1. Industry growth 6. Customer’s
information
7. Capital
2. Government policy requirements
3. Differentiation of 8. Diversity of
inputs competitors
4. The relative price 9. Exit barriers
performance of the
other products 10. Buyer
propensity to

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SWOT ANALYSIS

SWOT (strengths, weaknesses, opportunities, and

These are the resources and experiences readily available to the

• This force examines how intense the competition currently is

• This force analyzes how much power a business’ suppliers

“STUDY while others are sleeping.”

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