Industry and Environmental Analysis: Business Opportunities
Opportunities Identification  These are positive impacts of various external
Chapter 3 SWOT Analysis
SWOT
 SWOT or situation analysis is used when
wanting to look at both the internal and
external environment.
 SWOT stands for Strength, Weakness,
Opportunity and Threat.
 The internal factors considered are the
strengths and weaknesses where the
opportunities and threats are external factors
that are all used and considered to help
improve the overall decision making process in
dynamic strategic situations the business is
facing.
SWOT Analysis
Strengths
 These are internal characteristics of firms or
industry that can contribute directly to the
profitability of firms and the industry.
Strengths of the industry may include:
 The ability of the skilled laborers, highly
qualified management team, adequate
equipment, and modern physical plant
conducive for production and distribution
activities.
 Firms in the industry have sufficient financial
resources to implement their productive and
distributive activities.
 Firms also utilized state of the art technologies
in production and distribution that make them
competitive domestically and internationally.
Weaknesses
 These are internal characteristics of firms or
industry but unlike strengths they mitigate the
profitability of firms and industry.
Among the key features that may classifies as
weaknesses:
 Unskilled workforce, low morale employees,
high rate of labour turnover, lack of managerial
talents, and insufficient financial resources.
 Old physical plant that uses traditional and
outmoded technology for its production and
distribution processes.
environments on the profitability of an industry.
Some items that may be included are:
 Positive impacts of a growing economy,
economic dynamism in the global markets,
reliable suppliers of raw materials and factor
inputs as well as first-rate infrastructure that
provides quality, reliable and cheap power
access to various means of transportation, and
telecommunications facilities.
Threats
 These are undesirable impacts of external
factors because they can potentially impair the
profitability of firms in an industry.
Some damaging impacts of external environments:
 Caused by weak infrastructure with high cost of
electricity and inadequate transportation
system.
 The absence of supporting industries that will
supply the raw materials can impair
profitability.
 A closed economy and highly regulated market
can prevent entry into the market.
 A global economy experiencing a recession or a
financial crisis can dispel prospect for the
industry.
SWOT Analysis and Business Climate
Business Climate
 Interaction between various sets of internal
factors and external factors manifesting as
strengths, weaknesses, opportunities, and
threats.
 These interaction among internal and external
factors are further formed by government
through implementation of macroeconomic
policies, regulatory framework, and institutional
support.
Macroeconomic policies – are course of actions of
government meant to stabilize and promote growth in
economy.
 Policies on money supply
 taxation and government expenditures
 human resource development and employment
 Trade and industrial development
Government regulations – are set of rules meant too
address market distortions brought by several reasons.

Institutional support – refers to host of assistance from

the government that can make favorable business
climate.
 Provision of excellent networks of
transportation and communication
 Implementation of the rule of law
 Peace and order are secured