What is a SWOT analysis commonly used for?

A SWOT analysis is a strategic planning tool that helps organizations identify their internal strengths and weaknesses, along with external opportunities and threats. This framework is widely utilized in business settings as it provides a clear overview of the current situation of a company, enabling decision-makers to formulate strategies based on that comprehensive understanding.

By examining strengths, organizations can leverage these advantages in their strategic planning. Identifying weaknesses allows them to address and mitigate vulnerabilities. Opportunities give insight into potential areas for growth, while understanding threats helps organizations prepare for challenges they may face in the business environment. This holistic approach makes the SWOT analysis a vital component of strategic decision-making and long-term planning.

In contrast, assessments of financial performance, tracking employee performance, and analyzing market share trends focus on specific operational aspects rather than providing a broad strategic overview like SWOT does.