SWOT and PESTLE are planning tools which have stood the tests of time due to their simplicity and effective output. When developing a marketing strategy, both tools allow an organisation to gather information on fundamental areas of the business as well as the market in which it operates, which in turn aid critical strategic decisions.
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. The SWOT analysis considers internal factors of a company – what it can and can’t do well, together with external factors – what and/or who in the market could affect the company, such as competitors and the wider business environment.
By determining these facts, a business is better placed to identify whether or not it is in a good position to take advantage and achieve its objectives (due to its strengths and opportunities), or whether there are obstacles which need to be addressed before objectives can be achieved (due to its weaknesses and threats). To gain a genuine idea of strengths and weaknesses, it is important to research a wide range of key players such as customers, suppliers, business partners, employees and heads of departments. Both positive and negative feedback must be considered to give a real picture of the company and its operations, especially compared with all potential competitors.
The same key players can be consulted when gathering information regarding the threats and opportunities. They should be able to give insight into people, organisations and competitors which may affect and have an impact on the business.
Threats and opportunities can also be determined by gaining some market analysis of the wider business environment. This is where the PESTLE tool comes into its own. The acronym ensures a company considers vital external factors which can have huge influences over the business. PESTLE is an acronym for Political, Economical; Social, Technological, Legislative & Environmental.
Any one of the above could have significant effects on a business if there were any major changes, which in turn will affect how a company operates, delivers, prices, promotes and develops its products and services. New laws, cultural trends, a recession, green issues, new technology, a change in political party could all influence both what and how a company functions and therefore must be considered when planning any strategic decisions.
SWOT: Some considerations…
Strengths: (Internal factors / Positive attributes)
- What are we good /best at?
- What are our USPs (unique selling points) which give us competitive advantage?
- What specific skills does the current workforce have that can give help meet company objectives?
- Do we currently have good resources in order to deliver company objectives?
- What are our relations with key influencial players eg suppliers, partners, alliances?
Weaknesses: (Internal factors / Negative attributes)
- What are we bad/worst at?
- Do we have limited skills/expertise?
- Do we have limited resources/technology?
- Where do we lack good relations with key players?
- How / where does the competition beat us?
Opportunities: (External factors / Positive attributes)
- What changes in the external environment can we exploit?
- What weaknesses in our competitors can we use to our advantage?
- What new technology might become available to us?
- What new markets might be opening to us?
- What new laws have allowed us to operate in a new way?
- What new trends have allowed us to exploit our product / service?
Threats: (External factors / Negative attributes)
- How could our competition exploit and hurt us?
- What new laws might damage our interests?
- What social changes might threaten us?
- Will the economy affect our pricing policy?
- Could new technology mean we get left behind?
When carrying out a SWOT and PESTLE analysis it is crucial that all facts and gathered information, via formal research or informal feedback, is documented and collated together. It is at this point that a company needs to identify critical factors, make strategic decisions and formulate a plan of action with measured controls in place. Exploit the strengths and opportunities and protect and build on threats and weaknesses. This should provide the solid foundations and give direction and position to a company and its business proposition.