Why is a SWOT analysis useful in strategic planning?

• A. It helps in budgeting for the financial year
• B. It identifies strengths, weaknesses, opportunities, and threats related to a project or business
• C. It outlines the company's employee benefits
• D. It determines marketing strategies

Answer: (B)

A SWOT analysis is a powerful tool in strategic planning because it provides a comprehensive framework for evaluating the internal and external factors that can impact a project or business. By identifying strengths, weaknesses, opportunities, and threats, organizations can gain valuable insights into their current situation and develop strategies that leverage their strengths, address their weaknesses, capitalize on opportunities, and mitigate threats.

This structured approach allows decision-makers to assess their internal capabilities relative to external market conditions, which is crucial for informed strategic planning. It fosters a clearer understanding of where the organization stands in relation to its competitors and the market environment, enabling it to identify potential paths for growth or necessary adjustments in strategy.

While budgeting for the financial year, outlining employee benefits, and determining marketing strategies are important aspects of business operations, they do not encompass the holistic view that SWOT analysis provides regarding overall strategic positioning and planning. This makes the correct answer particularly relevant to the context of strategic planning.