In a SWOT analysis, the “strengths” and “weaknesses” are internal factors (within the organisation), while “opportunities” and “threats” are external factors (arising from outside the organisation). The documentation is explicit: strengths and weaknesses are found within the organisation, whereas opportunities and threats arise from outside and can often be identified using external analysis tools (for example PESTLE or Porter’s Five Forces).

Applying that rule to the options:

A (high-quality locally sourced ingredients) is an internal capability and therefore aligns with a strength.

D (lower staff morale) is an internal people/culture issue, therefore a weakness.

B (being asked to collaborate on distribution) is an external development that could create growth or access advantages, so it is more consistent with an opportunity.

C (a large chain bakery entering the area) is a change in the external competitive environment that could reduce the bakery’s market share, pricing power, and customer footfall. That fits the definition of a threat because it originates outside the bakery and could negatively affect performance.

Therefore, the correct external threat is C.