Strategic Management Practice Exam

The strategic method that focuses on analyzing internal and external factors for decision-making is SWOT Analysis. This approach involves assessing the strengths and weaknesses of an organization (the internal factors) while also evaluating the opportunities and threats present in the external environment. By integrating these analyses, decision-makers gain a comprehensive understanding of both the internal capabilities and external market conditions that can impact strategic planning and operational effectiveness.

SWOT Analysis is particularly effective because it enables organizations to leverage their strengths and take advantage of opportunities while simultaneously addressing weaknesses and mitigating threats. This holistic view empowers organizations to develop strategies that are both realistic and ambitious, aligning available resources with market realities.

While PEST Analysis focuses specifically on external factors like Political, Economic, Social, and Technological influences, it does not incorporate internal evaluation, which is a crucial aspect of strategic decision-making. Market Analysis and Competitive Analysis, although valuable in examining respective markets and competition, do not provide the thorough internal-external evaluation that SWOT Analysis offers. Therefore, the correct emphasis on both internal and external factors makes SWOT Analysis the appropriate choice in this context.