A SWOT analysis is a structured planning method used to evaluate strengths, weaknesses, opportunities and threats involving a business or project. The analysis identifies internal and external factors that are helpful or harmful to the objective. Strengths and weaknesses are internal factors, because they pertain to the internal characteristics of the venture. Opportunities and threats are of an external origin, because they pertain to outside factors that can be exploited.
Once an objective of the business or project is determined, the internal and external factors that can impact the objective are identified using a two-by-two matrix. The two columns of the chart are labeled "Helpful" and "Harmful." The two rows of the chart are labeled "Internal Origin" and "External Origin."
The Helpful/Internal element box is designated for the strengths of the venture, while Harmful/Internal is for weaknesses. Helpful/External is for opportunities and Harmful/External is for threats. Strength elements include characteristics of the business or project that give it an advantage over others, while weaknesses include characteristics that place the business or project at a disadvantage compared to others.
Opportunities include external elements the business or project can exploit to its advantage, while threats include external elements that can cause problems for the business or project. As explained by BusinessNewsDaily, external factors typically reference things the decision-makers are unable to control. A complete SWOT analysis allows decision-makers to consider whether the objective is attainable. If not, the objective can be amended, or a different objective may be put into place. A new SWOT analysis must be performed with any change in objective.