In strategic management, what is primarily evaluated using SWOT analysis?

SWOT analysis is a critical strategic management tool used to evaluate both internal and external factors that can affect an organization's success. The primary focus of SWOT analysis encompasses understanding the organization’s strengths and weaknesses (internal factors) as well as the opportunities and threats present in the external industry environment.

By assessing the external environment, SWOT analysis helps organizations identify market trends, competitive dynamics, regulatory changes, and other contextual factors that can impact strategic decision-making. This external focus is essential, as it allows businesses to align their internal capabilities with market demands and adapt to changes in their industry effectively.

While financial performance, personal goals of management, and customer satisfaction are important aspects of an organization’s overall strategy, they do not encapsulate the broad evaluation that SWOT analysis provides regarding the external industry environment, which is pivotal for fully understanding how to position the organization strategically for future growth and sustainability.