The paper analyzes the factors that influence the definition of strategic guidelines when determining the country's defense capabilities. For the purposes of the research, SWOT analysis was used, while external factors were defined using PEST analysis. Through SWOT analysis, factors that influence or could influence the capabilities of conducting defense operations were analyzed. The selected internal factors include the Armed Forces of the Republic of Croatia, its geographical location and transport infrastructure. The external factors included in the SWOT analysis were taken from the PEST analysis of the environment. The included external factors are classified into four categories according to the acronym PEST: political-legal dimension, economic dimension, social dimension and technological dimension. The conducted SWOT and PEST analysis created a TOWS matrix in order to clearly see the results and form future strategies for improving defense capabilities By comparing the long-term development plans of Slovenia, Hungary, Serbia and Croatia, a cross-section of the main activities of the armed forces of the mentioned countries was obtained. The studied capital projects clearly determine the direction in which the observed countries will go in terms of equipping their armed forces. The analysis of the budget allocations for defense in terms of absolute amount and percentage in GDP clearly showed the tendencies in the last few years. All four countries in the observed period are increasing their defense allocations and investing significant funds in the modernization of the armed forces. The analysis of the percentage of GDP allocated for defense issues provides information on whether the countries are fulfilling their international obligations. By comparing the data obtained from the SWOT analysis and the analysis of the long-term development plans of Slovenia, Hungary, Serbia and Croatia, it was found that the strongest component of the armed forces in all the mentioned countries is the land army. Using the AHP method, an example is given of how, based on clearly defined criteria, a means can be selected to be introduced into the land army. Infantry fighting vehicles (Puma, Lynx, Marder, CV 90 and Bradley M2A2 ODS) were considered as potential alternatives for the selection of the Armed Forces of the Republic of Croatia. The criteria for comparing the alternatives are the price of the combat vehicle, firepower, armor protection, mobility and compatibility. The AHP method yielded a sub-optimal solution when choosing between several different alternatives. The aim of the paper is to encompass the key components that make up a country's defense capability, such as demography, topography, level of industrialization, transport and maritime infrastructure. The aim of the analyses conducted is to point out the shortcomings that need to be improved and the strengths that need to be maintained. The capabilities for the defense of a country are the key to its survival and should be carefully considered and analyzed.