Engineering Economy, Economics

1. SWOT ANALYSIS
Introduction:
"Entrepreneurship is risky, mainly because so few of the so-called entrepreneurs know what they are
doing.” Peter Ferdinand Drucker
Peter Drucker is an Australian entrepreneur whose philosophical views and management skills
provided the foundation for modern management. Thus, he was described as the Father of Modern
Management”
What is the main reason why business fail? Managerial Weakness
Based on statistical survey: 98% - Managerial Weakness; 1% - Disaster related problems; 1% - Fraud
There is always a need to evaluate business opportunities, whether these are economic
opportunities and whether these are profitable. Factors that your business may face should be assessed as
opportunity or not and whether it will contribute to your profit or become a liability. Why do we need to do
this? Because we need assurance that our capital will be earned back and also gain profit. Without this, all
the risk, efforts and money we put in our business will be all for nothing.
To be able to systematically analyze the factors in your business, you will need SWOT Analysis.
SWOT Analysis: studies the financial resources, physical facilities, managementcapabilities, market
production process, information system, source ofsupply and social environment. Everything related in
your business.
Four Main Areas of SWOT Analysis:
S= Strengths; W= Weaknesses; O=Opportunities; and T= Threats
Based on Effects on Business:
 Positive Factors: Strength and Opportunity
o These are the things that will contribute to your business’ growth and development thus
contributing to the inflow of profit.
 Negative Factors: Weakness and Strength
o These are the factors that you should overcome or avoid as much as possible in the
business because itlessens profit.
Based on Handling Business:
 Internal Factors: Strength and Weakness
o Internal factors are factors within the business thus, they can vary depending on how you
manage your business or produce your products/services. So when you have poor
managerial skill, your internal factors will notbe balanced, and your weaknesses may
overpower the strengths ofthe business.
 External Factors: Opportunity and Threat
o External factors are factors presented by the environmentexternal to the business. So it’s
up to your if you consider a factor as an opportunity or a threat.

2. How does SWOT Analysis works?
In order to use SWOT Analysis, you should be able to categorize the differentfactors in your
business into the four; the strength, weakness, opportunity and threat.
Strength: These are the factor a business may possess thatbrings income and hopefully, profit. It can be
the uniqueness, the quality ofservice, proximity to populous area, anything as long as in contributes to the
inflow of income in the business.
Weakness: These are the negative factor that a business possesses which hinders the inflow of income
but nevertheless can be resolved with proper managementand innovative skills ofan entrepreneur.
Opportunity: You can consider a condition, phenomena or happening as an opportunity if it creates
favorable outcomes for your business.
Threats: Any external factors that halts or lessens the inflow ofincome in your business should be labelled
as threats. Safety measures should be taken before itcauses negative effects on the business.
Analyzing Business SWOT:
1. Strengths:
 How did you consider these factors as strengths of your business?
 How will you maintain the strengths of your business?
 What can you do to improve them?
 How will you increase the strengths of your business?
2. Weaknesses:
 How did you consider these factors as weaknesses ofyour business?
 What should you do to eliminate your business’ weaknesses?
 Are there any more weakness in my company or business?
3. Opportunity:
 How did you consider the factors as an opportunity?
 How will you maximize the opportunity given to you?
4. Threats:
 How did you consider these factors as threats top your business?
 What measures and actions will you take and imbibe in your business in order for your
business to continuously thrive in the existence ofthis threats?