Managers identify opportunities and threats in a SWOT analysis by scanning and analyzing the external environment (for example, economic, technological, social, political, competitive, and demographic trends).

In most textbooks and exam-style questions, the completed sentence is:

“When conducting a SWOT analysis, managers can identify opportunities and threats by examining the organization’s external environment.”

This comes from the fact that:

  • Opportunities and threats are defined as external factors outside the firm’s control.
  • Managers look at macro-environment elements like demographic, economic, technological, social, and political changes to spot these external opportunities and threats.