The diagram is divided into four boxes. The first is Strengths: A strength is a competence, a valuable resource or any other positive attribute that an organisation uses to take advantage of opportunities or to counter threats arising from the external environment. Therefore, a strong order book, product pipeline and staff with current skills and knowledge would be examples of strengths.

the second is Weaknesses: A weakness is a lack of a competence, resource or attribute that an organisation needs to take advantage of opportunities or to counter threats arising from the external environment or to perform better than its competitors. For example, over reliance on old products or processes can be a weakness as can a lack of skilled employees, insufficient knowledge of customer preferences, or financial resources.

the third is Opportunities: Opportunities are changes in the external environment that an organisation identifies for their use and benefit to create new options for growth or profit. For example, changes in technology have provided new opportunities for marketing and communication with customers. Another example might be changes in tax law that may make investment in new technologies more cost effective and, thereby, provide more customer choice.

the fourth is Threats: Threats have the potential to damage an organisation’s performance. They often arise from competitors activities or other external factors outside the control of the organisation. Threats may include changes in legislation or regulation, changes in technology that the organisation finds it difficult to adopt or trends in consumer tastes or habits. Competitors may reduce prices on similar products or introduce new products.