Which strategic planning technique is used to assess the internal and external environment in which a company operates, identifying strengths and weaknesses (internal) and opportunities and threats (external)?

Which strategic planning technique is used to assess the internal and external environment in which a company operates, identifying strengths and weaknesses (internal) and opportunities and threats (external)?

• A. SWOT analysis
• B. PEST analysis
• C. Balanced Scorecard
• D. Gap analysis

Answer: (A)

Situational analysis that looks at internal strengths and weaknesses alongside external opportunities and threats is best addressed by SWOT analysis. It provides a concise view of what the organization does well, where it may be vulnerable, and what external conditions could create opportunities or pose risks. By laying out these four elements, leaders can decide where to play, what to protect, and how to allocate resources to capitalize on opportunities while mitigating threats. PEST analysis, in contrast, examines macro-environmental external factors—political, economic, social, and technological—without systematically assessing internal capabilities. The Balanced Scorecard focuses on translating strategy into a set of performance measures across multiple perspectives, serving as a performance management tool rather than a pure environmental scan. Gap analysis compares current performance to a desired target to identify what needs to change to reach goals, not a comprehensive internal/external situational assessment.

Situational analysis that looks at internal strengths and weaknesses alongside external opportunities and threats is best addressed by SWOT analysis. It provides a concise view of what the organization does well, where it may be vulnerable, and what external conditions could create opportunities or pose risks. By laying out these four elements, leaders can decide where to play, what to protect, and how to allocate resources to capitalize on opportunities while mitigating threats.

PEST analysis, in contrast, examines macro-environmental external factors—political, economic, social, and technological—without systematically assessing internal capabilities. The Balanced Scorecard focuses on translating strategy into a set of performance measures across multiple perspectives, serving as a performance management tool rather than a pure environmental scan. Gap analysis compares current performance to a desired target to identify what needs to change to reach goals, not a comprehensive internal/external situational assessment.