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What is SWOT Analysis? How does it help the Entrepreneur?

  • SWOT is an acronym for Strength, Weakness, Opportunity and Threat.
  • It is a structured planning method that evaluates the four elements of an organization or a business venture.
  • An entrepreneur classifies the environmental scan into two divisions, Internal and External scanning.
  • Internal Analysis is done by ruling out the Strengths and Weakness of a product or service provided.
  • An external analysis is done by ruling out the Opportunity and Threat of a product or service in the environment.
  • Strengths: characteristics of the business or project that give it an advantage over others
  • Weaknesses: characteristics of the business that place the business or project at a disadvantage relative to others
  • Opportunities: elements in the environment that the business or project could exploit to its advantage
  • Threats: elements in the environment that could cause trouble for the business or project
  • Identification of SWOTs is important because they can inform later steps in planning to achieve the objective.
  • Users of SWOT analysis must ask and answer questions that generate meaningful information for each category to find their competitive advantage.

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