Should I Use a SWOT or PESTLE Analysis?

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Should I Use a SWOT or PESTLE Analysis?

Creating a SWOT or PESTLE analysis is essential when you are trying to see if your new business idea is feasible.

A SWOT or PESTLE analysis helps you make the right decision and to evaluate the pros and cons of your ambition. You can apply these to both large and small projects to identify areas of success or potential failure. But should you use a SWOT or PESTLE analysis? Well, this all depends on your business, and there are ways to add a PESTLE easily into your SWOT.

In this Article:

  1. What’s the Difference Between a SWOT or PESTLE Analysis?
  2. What’s a SWOT Analysis?
    1.  SWOT Analysis Strengths
    2.  SWOT Analysis Weaknesses
    3.  SWOT Analysis Opportunities
    4.  SWOT Analysis Threats
  3. What’s a PESTLE Analysis?
    1.  PESTLE Analysis Political
    2.  PESTLE Analysis Economic
    3.  PESTLE Analysis Social
    4.  PESTLE Analysis Technology
    5.  PESTLE Analysis Legal
    6.  PESTLE Analysis Environmental
  4. Conclusions

What’s the Difference Between a SWOT or PESTLE Analysis?

The main differences between a SWOT or PESTLE analysis are that a SWOT analysis focuses on actions you can take INTERNAL to your business environment, a PESTLE analysis identifies EXTERNAL factors that are mainly outside of your control.

Let’s quickly identify the differences between each.

What’s a SWOT Analysis?

A SWOT analysis applies to four areas within your business.

  1. Strengths – What do you have that is better than your competition?
  2. Weaknesses – Where do you need to improve or identify where there’s competition?
  3. Opportunities – What external trends or factors can you use to leverage your business?
  4. Threats – What could impact your business that is potentially outside of your control?

Let’s look at the SWOT analysis in a little more detail:

SWOT Analysis – Strengths

  1. What are the things that you or your business do better than anyone else?
  2. Do you have an advantage over the competition?
  3. What resources do you have that are unique?
  4. Which qualities separate you from your competition?
  5. What is your unique selling point (USP)?
  6. Do you have intellectual property, investment, capital or technology?
  7. What makes you the right person to lead this business?

SWOT Analysis – Weaknesses

  1. What does your business lack or need improving?
  2. Are your competitors better at things than you?
  3. What resources are you lacking?
  4. Which things do you need to avoid?
  5. What would make you lose or not gain any sales?
  6. What would your target market see as your weakness?

SWOT Analysis – Opportunities

  1. What vertical market have you spotted as target entry?
  2. How big is your TAM (Total Addressable Market)?
  3. What trends or market movement have you identified?
  4. What technology has/will be available to deliver your business?
  5. Identify limited competition in your focus field.
  6. Is there a need for your business?
  7. Can you gain press/Government advocacies for your business?

SWOT Analysis – Threats

  1. What emerging competition is there?
  2. Does a competitor have a close fit and be able to pivot into this similar market?
  3. Are there any negative press/social coverage that is available or could occur?
  4. What obstacles would you face?
  5. What’s your financial situation and runway?
  6. Could any of your weaknesses turn into a threat?

SWOT Key Takeaways

A SWOT analysis is a simple process that helps to analyse your business or projects strengths, weaknesses, opportunities and threats that you may face. This exercise will help strategy and focus on your strengths, help build on your weaknesses, gain an advantage in opportunities and mitigate or minimise any threats that occur.

What’s a PESTLE Analysis?

A PESTLE analysis applies to six areas outside of your business.

  1. Political – How will the current political climate impact your company? Will a particular political party influence your ability for growth?
  2. Economic – Will interest rates or financial issues affect your business or your consumers’ confidence?
  3. Social – What lifestyle, opinion, culture or demographics could change and cause business issues?
  4. Technology – Could new technology innovations disrupt your business? Does your existing IT architecture or systems work for or against you?
  5. Legal – Could any new laws, regulations or policies impact your ability to sell?
  6. Environment – Could climate change or pollution, for instance, affect your operations?

Let’s look at the PESTLE analysis in a little more detail:

PESTLE Analysis – Political

  1. Which Government policies help or hinder you?
  2. What funding grants, tax rebates or initiatives are there that you could apply for?
  3. Is there political instability that could affect your ability to do business?
  4. Will the current foreign trade policy work for you?
  5. Will current tax legislation change? How will this impact the business?
  6. Are any environmental laws being considered that could cause you issues?

PESTLE Analysis – Economic

  1. Is the economic forecast of concern?
  2. Is the exchange rate volatile to dramatic change?
  3. Are interest rates subject to change, and will that impact your financial commitments?
  4. Does your target market have disposable income?
  5. Can your consumers afford your product? 
  6. Are taxes scheduled to increase?
  7. Does any minimum wage increase affect your ability to make payroll?

PESTLE Analysis – Social

  1. What age demographic are you targetting?
  2. Is there population growth or decline in a target country?
  3. What are the current cultural trends and do you enhance them?
  4. Is there consumer confidence in your industry?
  5. What would your brand message be to your target audience?
  6. What are the current opinions in similar companies or competitors?

PESTLE Analysis – Technological

  1. What IT systems do you need to complete the task?
  2. Does your internet connectivity benefit or hinder you?
  3. Will new technology such as AI or automation impact on your business ability?
  4. What security is need to protect IP or processes?
  5. How easy could it be to copy your technology?

PESTLE Analysis – Legal

  1. Does a law in one country apply in the same way as another?
  2. What safety standards need to be adhered to?
  3. Can you patent your product in any way?
  4. Will copyrighting your logo, brand or product help protect your USP?
  5. What employment laws impact your business?
  6. Is it easy to abide by health and safety laws?
  7. What consumer protection do you need to put in place?

PESTLE Analysis – Environmental

  1. Will any materials you purchase impact on emissions?
  2. Can processes and manufacture be completed efficiently?
  3. Will climate change affect your operations?
  4. Can you promote positive business ethics and sustainability?
  5. Can you easily offset your carbon footprint?
  6. Could your product reduce emissions or increase sustainability over the competition?
  7. Will the decline in raw materials be of concern to the longevity of your business?

PESTLE Key Takeaways

A PESTEL analysis identifies and analyses critical drivers of change external to your business environment. A PESTLE presents an evaluation to consider a company objective, feature or plan. It provides insight into its ability to win over your competitors.

Conclusions

Your PESTLE analysis can actually work well for both the Opportunities and Threats section of your SWOT. If you are just completing a SWOT analysis, then pay attention to the PESTLE criteria in both of those sections to cover all of the bases.

The SWOT or PESTLE analysis can be used to kick-start strategy formulation. In a more complicated way, it is also a serious strategy tool for business, sales or marketing. 

Use a SWOT or PESTLE to get an understanding of your competitors, which, in turn, gives you the insights you need to gain a competitive advantage. When carrying out a SWOT or PESTLE analysis, be realistic and meticulous. 

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