The planning or identification phase examines areas of opportunity or change that could offer profitable investment. Over time, managers define and redefine the firm’s mission, or ‘‘vision,’’ and the strategies they will use to accomplish that mission. This long-term plan provides a foundation for the following 5 to 10 years of operation planning for the firm. The longterm plan is operationalized, or implemented, in the annual capital budget. To develop the capital budget, managers must find investment opportunities that fit within the overall strategic objectives of the firm. In addition, they must consider the firm’s position within the various markets it serves and the likely plans of its competitors. Attractive capital budgeting projects are those that take the firm from its present position to a desired future market position. Two popular and well-known methods that managers use to identify potentially attractive capital budgeting projects are the business strategy matrix andSWOTanalysis.