What does SWOT analysis evaluate?

SWOT analysis serves as a strategic planning tool that assesses a company's internal and external environment by evaluating its Strengths, Weaknesses, Opportunities, and Threats.

The Strengths and Weaknesses components are focused on internal factors—attributes or resources within the organization that give it an advantage or disadvantage relative to competitors. Meanwhile, Opportunities and Threats relate to external factors—elements in the surrounding environment that could enhance or hinder the company's success.

By systematically categorizing these four aspects, businesses can formulate effective strategies to leverage their strengths, address weaknesses, seize opportunities, and mitigate threats. This holistic view is vital for making informed decisions and setting strategic objectives, which is the primary purpose of conducting a SWOT analysis.

The other options do not encapsulate the core focus of SWOT analysis. Financial statements address numerical performance rather than strategic positioning. Ethical considerations could be examined separately and do not specifically fit within the SWOT framework. Lastly, while historical performance may provide context, it does not inherently align with the prospective strategy-setting nature of a SWOT analysis.