What SWOT Analysis Is
Every business, at some point, needs to take stock of where it stands before deciding where to go next. SWOT analysis is the tool built for exactly that.
A SWOT analysis is a strategic planning tool used to identify the internal strengths and weaknesses of a business, and the external opportunities and threats it faces in its environment.
The four letters map neatly onto two dividing lines. The first is internal versus external: strengths and weaknesses come from inside the organisation, while opportunities and threats arise from the world outside it. The second is positive versus negative: strengths and opportunities are favourable, weaknesses and threats are not.
Those two distinctions matter because they lead to different kinds of action. Internal factors are largely within management's control and can be changed over time. External factors cannot be controlled, only anticipated and responded to.