What is the simple but powerful tool for sizing up a company's strengths, weaknesses, opportunities, and threats?

• A. Dynamic capability
• B. SWOT analysis
• C. Core competence
• D. Benchmarking

Answer: (B)

SWOT analysis is a simple but powerful tool for sizing up a company's strengths, weaknesses, opportunities, and threats. It presents internal factors—strengths and weaknesses—and external factors—opportunities and threats—in a clear, four-quadrant view, giving a concise snapshot that guides strategic thinking. Because it requires relatively little data and is easy to communicate across teams, it quickly surfaces where the company can play to its advantages, where it needs to improve, what market openings to pursue, and what risks to guard against.

In practice, you gather input on what the company does well, where it falters, external market trends and openings, and potential risks. Then you translate those insights into actions: leverage strengths to capitalize on opportunities, shore up weaknesses to defend against threats, or adjust strategy to better fit the external environment.

Other concepts don’t fit as a single diagnostic tool for this purpose: dynamic capability focuses on a firm’s ability to adapt over time, not a one-shot assessment; core competence points to distinctive strengths but isn’t a framework for weighing internal versus external factors; benchmarking compares performance against others rather than outlining internal/external conditions and strategic options.