What does SWOT analysis assess for a firm?

SWOT analysis is a strategic planning tool used to identify and evaluate the internal and external factors that can impact the success of a firm. The acronym stands for Strengths, Weaknesses, Opportunities, and Threats.

Strengths and weaknesses are internal factors; strengths refer to the resources and capabilities that give the firm a competitive advantage, while weaknesses are areas where the firm may be lacking or vulnerable. Opportunities and threats, on the other hand, are external factors; opportunities involve potential scenarios that could benefit the firm if acted upon, while threats represent external challenges or obstacles that could negatively affect the firm’s performance.

By systematically analyzing these four components, a firm can formulate strategies that leverage its strengths, address its weaknesses, capitalize on opportunities, and mitigate threats. This comprehensive approach aids in informed decision-making, enabling the firm to chart a path that aligns with its goals and the market environment.

In contrast, the other options focus on more specific areas. Employee satisfaction is a crucial aspect of organizational health but does not encompass the broader strategic analysis that SWOT provides. Financial stability against competitors could be a result of insights gained from a SWOT analysis but isn't the direct focus of the assessment itself. Market segmentation strategies, while vital for marketing efforts, do not pert