SWOT Analysis is a strategic planning technique used to assess the internal and external environment in which a company operates and competes.  Internal environmental factors are classified into strengths and weaknesses, while external environmental factors are classified into opportunities and threats.

Each is identified as follows:

• Strengths (internal factor):  The company’s resources or capabilities that give it a competitive advantage within its market or industry.
• Weaknesses (internal factor):  Areas where the company lacks certain resources or capabilities that prevent it from taking advantage of available opportunities or make it vulnerable to other environmental factors.
• Opportunities (external factor):  Industry or market factors that may result in company profit and growth.
• Threats (external factor):  Factors that may have a negative impact on the company’s profit, growth, or position within its industry or market.

A company should usually focus their effort on quadrants 1 and 4 first.  Quadrant 1 delivers the most amount of gain for the least amount of effort since it takes advantage of existing strengths of the company.  Quadrant 4 will likely require a lot of effort, but if left unattended, could result in detrimental outcomes for the company.