A healthcare organization, even one that is extremely successful, will fail in time if it continues to operate as it has done in the past. The reason one can be confident in this statement is that the environment in which healthcare organizations operate is continuously changing. In addition to the external environment, changes occurring inside the organization can also significantly affect its ability to meet its mission. This chapter helps the reader to distinguish between internal and external analyses and to develop a sample strength, weaknesses, opportunities, and threats (SWOT) analysis. It defines distinctive competencies. Things that the organization does particularly well are known as distinctive competencies super strengths that can be leveraged to gain a competitive edge in the marketplace. The chapter helps the reader to understand how a political, economic, social, technological, environmental, legal (PESTEL) chart can be used to categorize information about the external environment.