When to Use SWOT and PESTLE Analysis?
When starting or running a business, project, or company, it is crucial to know about those factors that can impact them. Internal and external factors are highly vital in this process. There is no shortage of strategic planning tools. From SWOT to PESTLE, you can use any tool to learn about your business. However, both these tools are used frequently for strategy planning. When to use SWOT and PESTLE Analysis? Here is our brief answer for our readers.
What is SWOT?
SWOT stands for strengths, weaknesses, opportunities, and threats.
Strengths:
It represents those advantages that you have over other companies or businesses.
Weaknesses:
It represents disadvantages of your company when compared with others.
Opportunities:
This represents external trends that you can utilize to leverage your company.
Threats:
It represents external negative points that can create problems for your business. They affect your business negatively.
In SWOT, weaknesses are also considered liabilities. By conducting SWOT analysis, you can find out those internal and external factors that can work for or against you. The biggest advantage of SWOT is that it also highlights external factors of your business or project, which could create a huge difference in the failure or success of your business. It is very easy to create and conduct a SWOT analysis.
By exploiting all the resources and information, you can conduct SWOT analysis and run your business successfully. It helps to uncover specific problems that you can mitigate easily. It would be great for you and your business to use a SWOT analysis with your team members. In this regard, brainstorming could help you as it allows you to gather relevant factors for each section of SWOT analysis.
SWOT and PESTLE Analysis
What is PESTLE?
Before starting or launching a new business or project, you should conduct thorough market research. If you find it a difficult task, then PESTLE analysis is here to help you.
Political:
Political factors like regulations, the influence of a political party, global issues, laws, and legislations have huge impacts on your company. They are very serious factors that you must take into consideration.
Economic:
Economic factors like stock markets, customer confidence, taxes, inflation, and interest rates are crucial to evaluate.
Social:
Any changes in purchasing trends, lifestyle, norms, publicity, media, events, and advertising fall in this category.
Technological:
The impact of the latest technology on your business, existing technology infrastructure, manufacturing, communications, licensing, and other similar factors are technological factors.
Legal:
Any potential changes in legislation, foreign trade policy, or everything in between can affect your company’s business performance.
Environmental:
Whether local or global, environmental issues like climate change, waste management, carbon emission, and pollution are considered as environmental factors.
Unlike SWOT analysis, PESTLE analysis mainly focuses on external businesses that are outside of your control. The above-mentioned factors of PESTLE affect the business and can decrease your business growth. However, it also aids in finding new growth opportunities.
Comparison Between SWOT and PESTLE Analysis:
There is no doubt about it that both methods are widely used for strategic planning. They are highly useful for giving complete insight to run your business efficiently. So, comparing them will not be a great way.
There is one disadvantage of PESTLE. It doesn’t analyze the internal factors of your project. It just only analyses the external factors of your business. So, if you want to fully analyze your business, you must take the help of SWOT analysis.
On the other hand, SWOT analysis equally analyses your business’s internal and external factors. Strengths and weaknesses are internal factors, whereas opportunities and threats are external factors in a SWOT analysis. So, it provides a deep and detailed analysis of your company.
Working as a Team for the Success of a Business:
If you are conducting a SWOT or PESTLE analysis, but your team is not in the same room, then it would be difficult to collect information and brainstorm. There is a chance that you will miss important factors. This thing is not ideal for your project or business. It is imperative to work as a unit or team and collaborate with each other. The leader of the project can draw PESTLE or SWOT diagram to make things easier. Collaborate with relevant departments or people to get the right and correct information. In this way, you can reduce the chance of error.
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