A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). The SWOT analysis provides information that is helpful in matching the firm's resources and a capability to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection.
Contributed by: iSixSigma.com