SWOT and PEST analysis

Both SWOT and PESTEL analysis are used to evaluate the environment a company operates in. Both types of analyses are also ideally performed using group brainstorming. One significant similarity is that both SWOT and PESTEL analyses have become recognized business standards, and, thus, components of any good business plan.

While both analysis frameworks focus on the environment in which a company operates, PESTEL analysis looks at all the external environmental that may have an impact on the company. These factors may include changes in government, popular opinion, fashion trends, weather and budding technology. In contrast, SWOT analysis is concerned with identifying those environmental factors that affect the company most directly, such as increased taxes and tariffs or a new competitor.

While some similarities exist between SWOT and PESTEL, it is best practice to combine these two types of analyses. By looking at environmental factors affecting a company using two different frameworks, those factors that truly have a correlation to company performance are more easily identified. Another significant consideration regarding SWOT and PESTEL is the use of group brainstorming in identifying environmental factors. This is such an issue because, an issue that is obvious to one person, or one department, may not be obvious to another. It is for this reason that group participation is of particular value in this type of analysis.

Good decision-making requires a mixture of skills: creative development and identification of options, clarity of judgement, firmness of decision, and effective implementation. For group problem-solving and decision-making, or when a consensus is required, workshops help, within which you can incorporate these tools and process as appropriate.

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