In a SWOT analysis of a corporate entity, which of the following correctly classifies internal organizational factors versus external environmental factors?

[ A ]Internal factors: Macroeconomic inflation and central bank repo rates; External factors: Company employee salaries.

[ B ]Internal factors: Strengths (e.g., proprietary patents, strong balance sheet) and Weaknesses (e.g., high customer concentration, high fixed costs); External factors: Opportunities (e.g., regulatory tailwinds, geographic expansion) and Threats (e.g., economic recession, technological disruption).[ CORRECT ]

[ C ]Internal factors: National election outcomes; External factors: Company factory machine maintenance schedules.

[ D ]All four quadrants of SWOT represent uncontrollable external macroeconomic variables with zero internal firm factors.

Takeaway

Option B is correct: Internal factors: Strengths (e.g., proprietary patents, strong balance sheet) and Weaknesses (e.g., high customer concentration, high fixed costs); External factors: Opportunities (e.g., regulatory tailwinds, geographic expansion) and Threats (e.g., economic recession, technological disruption).

Derivation

The SWOT Matrix cleanly separates internal firm attributes from external market conditions: Internal factors (Strengths & Weaknesses) are endogenous to the company and controllable by management—such as financial solvency, proprietary technology, cost structures, talent, and customer concentration. External factors (Opportunities & Threats) are exogenous and emanate from the macroeconomic, regulatory, demographic, or competitive environment—such as policy reforms, economic recessions, supply chain shocks, and technological shifts. This tests SWOT taxonomy. The common error is classifying internal risks (like customer concentration) as external threats.

Why the others fail

A — Internal factors: Macroeconomic inflation and central bank repo rates; External factors: Company employee salaries.

Macro inflation and repo rates are external macroeconomic factors, while employee salaries are internal corporate expenses.

C — Internal factors: National election outcomes; External factors: Company factory machine maintenance schedules.

National elections are external political factors, while internal plant maintenance is an internal operational factor.

D — All four quadrants of SWOT represent uncontrollable external macroeconomic variables with zero internal firm factors.

SWOT explicitly balances two internal quadrants (Strengths, Weaknesses) with two external quadrants (Opportunities, Threats).