Module 3: PESTLE Analysis and SWOT Analysis
PESTEL Analysis and SWOT Analysis
SWOT and Pestle analysis is a strategic analysis tool that feeds important information into the business strategy formulation
process. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. SWOT is used to determine the current position of an
organization. The first two components pertain to internal factors and the latter two concern external issues. Pestle (or PEST) is an
acronym for Political, Economic, Social, Technical, Legal and Environmental analysis. Pestle is a tool for assessing the external context
of an organization (Bee, 1998).
Pestle can be used alone or in combination with SWOT. If combined, Pestle analysis is done first to provide a context for
SWOT analysis (Basu, 2004). Pestle analysis delineates the broad environmental context that affects the business and the changes
that occur in this context. SWOT analysis then interprets these findings to determine organizations' strengths and weaknesses, and
opportunities and threats (Needham et al., 1999).
Significance of Pestle
Classical management theories failed to consider the environment vis-à-vis the organization and viewed organizations as
closed, mechanical systems. Modern theory regards organizations as open systems. Organizations, like individuals, have needs.
These needs are satisfied through contacts with the wider environment. The open systems view stresses the importance of
organizations' interactions with customers, competitors, suppliers, labor unions, government agencies, and the contextual or general
environment (Morgan, 2006). Pestle is a tool that helps scan the broader environmental context.
Significance of SWOT
SWOT analysis is a focusing device or framework in the process of formulating a business strategy. A strategy helps the organization
build upon its achievements, plan and monitor progress. An effective strategy should utilize unique strengths to distinguish the business
from competitors. It should exploit links with the environment to fulfill organizational needs and be in harmony with the environmental
changes. A strategy should strive to achieve a vision that defines the long-term success of the business. This may entail addressing
weaknesses (Needham et al., 1999).
SWOT
• Strengths
These are the strengths within your organization. What exactly is it about you and your business that is better than
the competition? Examples might include quality products, advanced technology, advanced knowledge and a long-established
business. Identifying the strengths of your current business or a new venture can improve the efficiency of your sales and
marketing efforts – it helps you to visualize the unique selling point of your business which helps you write better sales copy,
create better sales letters, make more successful sales calls and develop smarter marketing campaigns.
• Weaknesses
Be realistic about what is weak about your business. Are you less advanced than the competition or do you produce
lesser quality products? Understanding what is weak about your business can help you to negate these shortfalls, you might
produce lesser quality products BUT you are cheaper. Having an awareness of your weaknesses allows you to be smarter
with your marketing messages, it helps you to determine which promotional battles to fight and which ones to avoid. For
example, the British supermarket chain Morrissons doesn’t profess to being the cheapest supermarket, but instead it chooses
to compete on produce quality and freshness. Only pick fights your business can win.
• Opportunities
Consider the external opportunities that exist in your market. Has a new law been introduced making your service
compulsory? Has there been renewed interest in products like yours? Is a big event coming to town (London 2012 Olympics
for example)?
• Threats
Consider the external threats that might have an impact on your business. Is bank funding in short supply? Will the
recession affect your sales? Will the shop next door to you closing affect your business? Will clients need less consultants in
the recession or more?
Having completed a SWOT analysis. Ask yourself the following questions:
• How can you capitalize on your strengths?
• How can you improve your weaknesses?
• How can you exploit the opportunities available to you?
• How can you negate the risks?
• Now you have a tangible plan or a set of objectives that you can influence and improve your sales and marketing.
Here’s an example using a SWOT Matrix
SWOT Analysis of Jollibee
STRENGTHS (Internal, Positive Factors) WEAKNESSES (Internal, Negative Factors)
1. Strong Brand Recognition 1. Price Perception
2. Wide Customer Base 2. Operational Issues
3. Filipino Taste Preference 3. Limited Healthier Options
4. Extensive Branch Network 4. Overreliance on the Philippine Market
5. Efficient Marketing Strategies
OPPORTUNITIES (External, Positive Factors) THREATS (External, Negative Factors)
1. International Expansion 1. Rising Competition
2. Evolving Filipino Middle Class 2. Economic Downturn
3. Digital Innovations 3. Health Trends
4. New Product Development 4. Supply Chain Disruptions
Name: _______________________________________
Activity: SWOT Analysis
Instructions:
Review the PESTLE Analysis you completed yesterday on your chosen business. Using your PESTLE insights, fill out a
SWOT Analysis table. For each element of SWOT, include a short justification (1-2 sentences) that connects it to specific
factors from your PESTLE analysis.
STRENGTHS (Internal, Positive Factors) WEAKNESSES (Internal, Negative Factors)
OPPORTUNITIES (External, Positive Factors) THREATS (External, Negative Factors)
