What is the purpose of a SWOT analysis in strategic planning?

A SWOT analysis plays a critical role in strategic planning by providing a structured framework for identifying and evaluating both internal and external factors that can affect an organization's success. This method involves analyzing internal strengths and weaknesses alongside external opportunities and threats.

Identifying internal strengths allows an organization to leverage its advantages in the market, such as skilled personnel, strong brand reputation, or efficient processes. Recognizing weaknesses helps address potential vulnerabilities that could hinder organizational performance, like lack of resources or skills gaps.

Simultaneously, assessing external opportunities enables organizations to spot advantageous trends, market gaps, or areas for expansion. Conversely, analyzing threats helps organizations prepare for challenges such as increased competition, regulatory changes, or economic downturns.

By articulating these components, a SWOT analysis provides a holistic view that guides strategic decisions, prioritizes goals, and formulates actionable plans. This understanding is why the second option is the most accurate reflection of the purpose of a SWOT analysis in strategic planning.