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What Is the Role of Opportunities in SWOT Analysis?

Opportunities is one of the four factors looked at in a SWOT analysis.
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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 26 March 2014
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The opportunities in Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis refer to the characteristics in the internal and external environment of a business that serve as an advantage. SWOT analysis is a type of complete analysis for both the good and bad parts in a business, with the aim of converting the result of analysis for strategic business planning. The opportunities in SWOT analysis include aspects like an identified unfulfilled need in the market, areas of expertise, favorable governmental policies and regulations, opportunities afforded by new technology, and a new market.

An unidentified need in the market is one of the opportunities in SWOT analysis that can be converted by a shrewd investor into huge profits. For instance, if an investor identifies that there is an unfulfilled need for a fast food restaurant in a business district, this serves as an opportunity the investor can exploit to his or her benefit. The fact that there is a need for such a place is strengthened by the fact that the investor will have the only fast food place in that particular market sector. This eliminates undue competition, resulting in a maximization of profits. A related opportunity would be if a competitor in a market suddenly weakens due to bad business policies or closes down entirely. This opens the door for other businesses in the same market to fill the vacuum left by the former competitor.

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Favorable government policies serve as opportunities in SWOT analysis. Such favorable policies could be in the form of incentives from the government to manufacturers or producers of certain types of goods. An example of products that some governments offer incentives and tax breaks for include the manufacture of energy-saving devices like solar products and other alternative energy products. They also offer incentives for green products like hybrid cars. Some governments may lift trade barriers on the importation or exportation of certain products and even reduce import or export duties on them. These are all opportunities that businesses can exploit to their advantage.

A new market is a component of the opportunities in SWOT analysis. When a business discovers a new market, it can quickly move in and make the most of the opportunity before other competitors. For instance, businesses in the developed countries may invest in unexplored or barely-tapped territories located in third-world countries. Some fast food restaurants could capitalize on the inadequate number of standard fast food restaurants in some of these countries as part of the capitalization on opportunities.

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