Competitive strategy begins with the iterative assessment of the external environment and the organization's internal capabilities. This process of looking outside as well as inside is known to strategic planners by the acronym "SWOT": Strengths, Weaknesses, Opportunities, and Threats. This chapter addresses three of the most important areas in which a company's internal strengths and weaknesses should be evaluated and presents a nine-step method for conducting your evaluations. This chapter is excerpted from Harvard Business Essentials: Strategy.