What does a SWOT analysis evaluate?

• A. The investment climate and opportunities
• B. A company's strengths, weaknesses, opportunities, and threats
• C. The economic impact of financial regulations
• D. The performance of stock market trends

Answer: (B)

A SWOT analysis evaluates a company's strengths, weaknesses, opportunities, and threats, providing a comprehensive overview of its current situation. By dissecting these four components, companies can better understand their internal capabilities (strengths and weaknesses) as well as external factors that may affect their performance (opportunities and threats).

Strengths refer to the attributes that give the company a competitive advantage, such as a strong brand, a loyal customer base, unique technology, or effective leadership. Weaknesses highlight areas where the company may be at a disadvantage compared to competitors, such as lack of resources, limited market reach, or poor customer service.

Opportunities are external factors that the company can exploit to its advantage, such as emerging markets, changes in consumer preferences, or technological advancements. Threats, on the other hand, are external challenges that could negatively impact the company's performance, including increasing competition, regulatory changes, or economic downturns.

This analysis helps organizations develop strategic plans, maximize their strengths, improve on weaknesses, seize opportunities, and prepare for potential threats, making it a vital tool for business planning and decision-making.