SWOT analysis examines a firm’s strengths, weaknesses, opportunities, and threats. It can help managers identify capital budgeting projects that will allow the firm to exploit its competitive advantages or prevent others from exploiting its weaknesses. Strengths and weaknesses arise from the firm’s internal abilities, or lack thereof. Opportunities and threats represent external conditions that affect the firm, such as competitive forces, new technologies, government regulations, and domestic and international economic trends. Strengths give the firm a comparative advantage in the marketplace. Perceived strengths can include good customer service, high-quality products, strong brand image, customer loyalty, innovative R&D efforts, market leadership, and strong financial resources. Managers must continue to develop, maintain, and defend these strengths through prudent capital investment policies or else they will diminish and shareholder wealth will decline as new and existing competitors take advantage of the weakening firm. A firm’s weaknesses give its competitors the opportunity to gain advantages over the firm. Once weakness are identified, the firm should select capital investments to mitigate or correct them. For example, a domestic producer in a global market can try to achieve global economies of scale (that is, achieve ‘‘global scale’’) by making investments that will allow it to export or produce its product overseas. Such a move also may make it easier for the firm to raise money in the future, as it may be able to raise funds in several different financial markets instead of just in its home country.