Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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What is the purpose of SWOT analysis in an organization?

To minimize costs
To analyze internal and external environments
To improve employee satisfaction
To increase brand visibility

The correct answer is: To analyze internal and external environments

The purpose of SWOT analysis in an organization is fundamentally about analyzing both internal and external environments. This strategic planning tool allows organizations to evaluate their Strengths and Weaknesses (internal factors) alongside Opportunities and Threats (external factors). By identifying these four components, an organization can understand its current situation and make informed decisions for growth and improvement. The internal analysis helps the organization leverage its strengths and address weaknesses, while the external analysis provides insights into the opportunities available in the market and potential threats from competitors or market changes. This comprehensive overview equips decision-makers with the necessary insights to develop strategic plans that align with their organization's objectives and market conditions. Other options focus on specific outcomes or areas, such as cost management, employee satisfaction, or brand visibility, but they do not capture the broader importance of a SWOT analysis as a tool for strategic evaluation and decision-making.