This document provides information on conducting SWOT and PEST analyses to understand a business's internal strengths and weaknesses and external opportunities and threats. It defines each component of a SWOT analysis and provides an example. It also defines the four factors of a PEST analysis - political, economic, social, and technological - and provides questions to consider under each factor to identify opportunities and threats in the business environment.

1. BUSINESS - Study Notes on SWOT & PEST Analysis :
SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses,
and for identifying both the Opportunities open to you and the Threats you face.
Business SWOT Analysis
What makes SWOT particularly powerful is that, with a little thought, it can help you
uncover opportunities that you are well-placed to exploit. And by understanding the
weaknesses of your business, you can manage and eliminate threats that would otherwise
catch you unawares.
More than this, by looking at yourself and your competitors using the SWOT framework, you
can start to craft a strategy that helps you distinguish yourself from your competitors, so that
you can compete successfully in your market.
Strengths
 What advantages does your organization have?
 What do you do better than anyone else?
 What unique or lowest-cost resources can you draw upon that others can't?
 What do people in your market see as your strengths?
 What factors mean that you "get the sale"?
 What is your organization's Unique Selling Proposition (USP)?
(A unique selling proposition (USP, also seen as unique selling point) is a factor that
differentiates a product from its competitors, such as the lowest cost, the highest quality
or the first-ever product of its kind. A USP could be thought of as “what you have that
competitors don't.”)
Consider your strengths from both an internal perspective, and from the point of view of your
customers and people in your market.
Also, if you're having any difficulty identifying strengths, try writing down a list of your
organization's characteristics. Some of these will hopefully be strengths!
When looking at your strengths, think about them in relation to your competitors. For
example, if all of your competitors provide high quality products, then a high quality
production process is not a strength in your organization's market, it's a necessity.
Weaknesses
 What could you improve?
 What should you avoid?
 What are people in your market likely to see as weaknesses?
 What factors lose you sales?
Again, consider this from an internal and external basis: Do other people seem to perceive
weaknesses that you don't see? Are your competitors doing any better than you?
It's best to be realistic now, and face any unpleasant truths as soon as possible.

2. Opportunities
 What good opportunities can you spot?
 What interesting trends are you aware of?
Useful opportunities can come from such things as:
 Changes in technology and markets on both a broad and narrow scale.
 Changes in government policy related to your field.
 Changes in social patterns, population profiles, lifestyle changes, and so on.
 Local events.
Threats
 What obstacles do you face?
 What are your competitors doing?
 Are quality standards or specifications for your job, products or services changing?
 Is changing technology threatening your position?
 Do you have bad debt or cash-flow problems?
 Could any of your weaknesses seriously threaten your business?
Example :
A start-up small consultancy business might draw up the following SWOT Analysis:
Strengths
 We are able to respond very quickly as we have no red tape, and no need for higher
management approval.
 We are able to give really good customer care, as the current small amount of work
means we have plenty of time to devote to customers.
 Our lead consultant has strong reputation in the market.
 We can change direction quickly if we find that our marketing is not working.
 We have low overheads, so we can offer good value to customers.
Weaknesses
 Our company has little market presence or reputation.
 We have a small staff, with a shallow skills base in many areas.
 We are vulnerable to vital staff being sick, and leaving.
 Our cash flow will be unreliable in the early stages.
Opportunities
 Our business sector is expanding, with many future opportunities for success.
 Local government wants to encourage local businesses.
 Our competitors may be slow to adopt new technologies.

3. Threats
 Developments in technology may change this market beyond our ability to adapt.
 A small change in the focus of a large competitor might wipe out any market position
we achieve.
As a result of their analysis, the consultancy may decide to specialize in rapid response, good
value services to local businesses and local government.
Marketing would be in selected local publications to get the greatest possible market presence
for a set advertising budget, and the consultancy should keep up-to-date with changes in
technology where possible.
Key Points
SWOT Analysis is a simple but useful framework for analyzing your organization's strengths
and weaknesses, and the opportunities and threats that you face. It helps you focus on your
strengths, minimize threats, and take the greatest possible advantage of opportunities
available to you.
It can be used to "kick off" strategy formulation, or in a more sophisticated way as a serious
strategy tool. You can also use it to get an understanding of your competitors, which can give
you the insights you need to craft a coherent and successful competitive position.
When carrying out your analysis, be realistic and rigorous. Apply it at the right level, and
supplement it with other option-generation tools where appropriate.
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PEST Analysis is a simple and widely used tool that helps you analyze the Political,
Economic, Socio-Cultural, and Technological changes in your business environment. This
helps you understand the "big picture" forces of change that you're exposed to, and, from this,
take advantage of the opportunities that they present.
About the Tool
Harvard professor Francis Aguilar is thought to be the creator of PEST Analysis. He included
a scanning tool called ETPS in his 1967 book, "Scanning the Business Environment." The
name was later tweaked to create the current acronym.
PEST Analysis is useful for four main reasons:
1. It helps you to spot business or personal opportunities, and it gives you advanced
warning of significant threats.
2. It reveals the direction of change within your business environment. This helps you
shape what you're doing, so that you work with change, rather than against it.
3. It helps you avoid starting projects that are likely to fail, for reasons beyond your
control.
4. It can help you break free of unconscious assumptions when you enter a new country,
region, or market; because it helps you develop an objective view of this new
environment.

4. How to Use the Tool
Follow these steps to analyze your business environment, and the opportunities and threats
that it presents.
1. Use PEST to brainstorm the changes happening around you. Use the prompts below
to guide your questioning, and tailor the questions to suit the specific needs of your
business.
2. Brainstorm opportunities arising from each of these changes.
3. Brainstorm threats or issues that could be caused by them.
4. Take appropriate action.
Political Factors to Consider
 When is the country's next local, state, or national election? How could this change
government or regional policy?
 Who are the most likely contenders for power? What are their views on business
policy, and on other policies that affect your organization?
 Depending on the country, how well developed are property rights and the rule of law,
and how widespread are corruption and organized crime? How are these situations
likely to change, and how is this likely to affect you?
 Could any pending legislation or taxation changes affect your business, either
positively or negatively?
 How will business regulation, along with any planned changes to it, affect your
business? And is there a trend towards regulation or deregulation?
 How does government approach corporate policy, corporate social responsibility,
environmental issues, and customer protection legislation? What impact does this
have, and is it likely to change?
 What is the likely timescale of proposed legislative changes?
 Are there any other political factors that are likely to change?
Economic Factors to Consider
 How stable is the current economy? Is it growing, stagnating, or declining?
 Are key exchange rates stable, or do they tend to vary significantly?
 Are customers' levels of disposable income rising or falling? How is this likely to
change in the next few years?
 What is the unemployment rate? Will it be easy to build a skilled workforce? Or will
it be expensive to hire skilled labor?
 Do consumers and businesses have easy access to credit? If not, how will this affect
your organization?
 How is globalization affecting the economic environment?
 Are there any other economic factors that you should consider?
Socio-Cultural Factors to Consider
 What is the population's growth rate and age profile? How is this likely to change?
 Are generational shifts in attitude likely to affect what you're doing?
 What are your society's levels of health, education, and social mobility? How are
these changing, and what impact does this have?
 What employment patterns, job market trends, and attitudes toward work can you
observe? Are these different for different age groups?

5.  What social attitudes and social taboos could affect your business? Have there been
recent socio-cultural changes that might affect this?
 How do religious beliefs and lifestyle choices affect the population?
 Are any other socio-cultural factors likely to drive change for your business?
Technological Factors to Consider
 Are there any new technologies that you could be using?
 Are there any new technologies on the horizon that could radically affect your work
or your industry?
 Do any of your competitors have access to new technologies that could redefine their
products?
 In which areas do governments and educational institutions focus their research? Is
there anything you can do to take advantage of this?
 How have infrastructure changes affected work patterns (for example, levels of
remote working)?
 Are there existing technological hubs that you could work with or learn from?
 Are there any other technological factors that you should consider?
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