Strengths and weaknesses are essentially internal to the organization whilst threats and opportunities are essentially external issues confronting a company. These set the scene to help identify possible strategies by building on strengths, resolving weaknesses, exploiting opportunities and avoiding threats.

Strengths & Weaknesses

Strengths and weaknesses are internal and relate to matters concerning resources, programs and organization in key areas. These include:

• Sales - marketing - distribution - promotion - support;
• Management - systems - expertise - resources;
• Operations - efficiency - capacity - processes;
• Products - services - quality - pricing - features - range - competitiveness;
• Finances - resources - performance;
• R&D - effort - direction - resources;
• Costs - productivity - purchasing;
• Systems - organization - structures.

The objective is to build up a picture of the outstanding good and bad points, achievements and failures and other critical features within the company.

Threats & Opportunities

The threats and opportunities confronting a company can exist or develop in the following areas:

• The company's own industry where structural changes may be occurring (Size and segmentation; growth patterns and maturity; established patterns and relationships, emergence/contraction of niches; international dimensions; relative attractiveness of segments)
• The marketplace which may be altering due to economic or social factors (Customers; distribution channels; economic factors, social/demographic issues; political & environmental factors)
• Competition which may be creating new threats or opportunities(Identities, performances, market shares, likely plans, aggressiveness, strengths & weaknesses)
• New technologies which may be causing fundamental changes in products, processes, etc. (Substitute products, alternative solutions, shifting channels, cost savings etc.)

It is here that Porter’s 5 forces can be a real aid to analysis:  

Michael Porter provides a framework that models an industry as being influenced by five forces. The Strategic Plan seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates.