Fundamentals of Management, 8th ed

Good Strategies

SWOT Analysis

To formulate strategies that support the mission

Those that support the mission and

• exploit opportunities and strengths

• neutralize threats

• avoid weaknesses

Internal Analysis

Strengths

(distinctive

competencies)

Weaknesses

Threats

External Analysis

Opportunities

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F I G U R E 3 . 2

SWOT Analysis

SWOT analysis is one of the most important steps in formulating strategy. Using the

organization’s mission as a context, managers assess internal strengths (distinctive

competencies) and weaknesses as well as external opportunities and threats. The

goal is then to develop good strategies that exploit opportunities and strengths,

neutralize threats, and avoid weaknesses.

SWOT

An acronym that

stands for strengths,

weaknesses,

opportunities, and

threats

organizational

strength

A skill or capability

that enables an

organization to

create and

implement its

strategies

Chapter 3: Planning and Strategic Management

7 3

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purpose of SWOT analysis is to discover an organization’s distinctive competencies so

that the organization can choose and implement strategies that exploit its unique organi-

zational strengths.