Certified Production & Operations Manager (POM) Practice Exam

What does a SWOT analysis determine?

1. Market trends and consumer behavior.

2. Internal strengths and weaknesses, external opportunities and threats.

3. Competitive positioning and financial performance.

4. Organizational structure and human resources.

The correct answer is: Internal strengths and weaknesses, external opportunities and threats.

A SWOT analysis is a strategic planning tool used to identify and evaluate the internal and external factors that can impact an organization. It specifically focuses on four key elements: strengths, weaknesses, opportunities, and threats. The internal components, strengths and weaknesses, help organizations assess the resources and capabilities they possess as well as areas where they may need improvement. For instance, a business may have strong brand recognition (strength) but may lack sufficient funding (weakness). On the external side of the analysis, opportunities and threats provide insights into the market environment. Opportunities are favorable external factors that can be capitalized on for growth or competitive advantage, such as emerging markets or technological advancements. Threats, conversely, represent challenges posed by external factors like increased competition or regulatory changes that could hinder an organization’s performance. Thus, the primary purpose of a SWOT analysis is to create a comprehensive picture of an organization's strategic position by identifying these internal strengths and weaknesses alongside the external opportunities and threats. This holistic view aids in decision-making and strategic planning, enabling businesses to align their resources effectively with the prevailing market conditions.