It can be difficult to assess both the pros and cons of a potential investment, but SWOT analysis is a powerful framework that can be used at the very start of that analysis. SWOT stands for strengths, weaknesses, opportunities, threats, and it's a simple way to broadly understand a new business. In the following video, health care analyst Max Macaluso illustrates SWOT analysis using Dow component Merck (MRK -0.04%) as an example.