SWOT Analysis Vs PEST Analysis and When to Use Them

When planning a project it is important to learn about the internal and external factors that can affect the project. There are some excellent strategic planning methods that you can use analyze all these factors. SWOT analysis and PEST analysis are two of the most frequently used planning methods. Below is a brief introduction to both methods and a comparison of SWOT analysis vs PEST analysis.

What is SWOT Analysis ?

SWOT when broken down simply means analyzing the:

  • Strengths – The advantages you have over the competition concerning this project.
  • Weaknesses – The disadvantages you have internally compared with your competitors.
  • Opportunities – Current external trends which are waiting to be taken advantage of.
  • Threats – External movements which may cause a problem and have a negative impact on your business.

Sometimes SWOT is referred to as SLOT, where weaknesses are names as liabilities. By working through each of these points it is possible to identify any internal disadvantages or advantages which could benefit or hinder the outcome of a planned project. In addition to evaluating the state internally this method is also able to identify the external factors which could also make a difference to the success or failure of a project. Creately has an excellent collection of SWOT analysis templates which you can download for free or modify online.

Click here for more SWOT analysis templates by Creately >>

SWOT analysis template available at Creately

One of many SWOT analysis templates available at Creately ( click to use at template )

Using the Information

By knowing this information it can be possible to plan a successful project that is ready to work around certain problems effectively and to avoid failure. It is a good idea and excellent practice to work through the SWOT Analysis with your team in the early stages of project planning. Brainstorming is a great way of introducing all the relevant internal and external factors for each section of the analysis.

What is PEST Analysis ?

PEST stands for the analysis of the external factors which is beneficial when conducting research before beginning a new project or to help conduct market research. These factors are:

  • Political – Laws, global issues, legislation and regulations which may have an effect on your business either immediately or in the future.
  • Economic – Taxes, interest rates, inflation, the stock markets and consumer confidence all need to be taken into account.
  • Social – The changes in lifestyle and buying trends, media, major events, ethics, advertising and publicity factors.
  • Technological – Innovations, access to technology, licensing and patents, manufacturing, research funding, global communications.

Pest can also be known as PESTLE which includes other factors such as:

  • Legal – Legislation which have been proposed and may come into effect and any passed legislation’s.
  • Environmental – Environmental issues either locally or globally and their social and political factors.

Unlike SWOT this strategy is more directly aimed at the external macro environmental factors that might be affecting the position of your business, the reasons behind growth or decline in the market and also identify new directions for the business as a whole. Creately has some excellent PEST analysis templates for you to get started instantly.

PEST analysis template available at Creately

PEST analysis template available at Creately ( click to use as template )

Related Reading : SWOT analysis vs GAP analysis

Advantages and Disadvantages of SWOT Analysis Vs PEST Analysis

The advantage and disadvantages of SWOT analysis is that it is simple to come up with a list but far too easy to miss important external factors. Coming up with the results of each factor is not enough, for the SWOT to be successful it is essential to carry out further analysis of all the possible threats and disadvantages to make sure that they have been planned for in advance.
The advantages and disadvantages of PEST analysis is that while the external factors are looked at closely there are no internal evaluations carried out. Due to the advantages and the disadvantages of using either one or the other methods it is a good idea to combine the two to help provide you with the best analysis. It is good practice to perform the PEST and then use the results in the opportunities and threat section of the SWOT.

SWOT analysis vs PEST analysis

It is best practice to do the PEST analysis and include the results in opportunities and threats section in SWOT analysis

Working as a Team for the Benefit of a Project

When teams are not in the same building it can be difficult to get together and brainstorm effectively about a project. This could lead to vital information getting neglected, thus damaging the project. You can easily avoid this issue by using the collaboration facilities provided by Creately. The project manager can start drawing the SWOT and PEST analysis and invited other team member to contribute to the diagram. This allows for a larger contribution made from all relevant departments and team members which reduces the possibility of important information being missed.

The results which have been recorded on your Creately SWOT template can then be used to plan a project carefully and overcoming problems which could cause significant issues to the positive outcome of the project. Being prepared for all eventualities is vital in business, which is why SWOT and PEST analysis is so important.

Remember it is never enough to simply have the information to hand, what is vital is the way that the analysis is used in order to boost profits, make sure a project is successful and to identify areas of opportunity which could transform the business for the better.

References

Pestle and Swot Analysis [Accessed 23/02/12]

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About the Author

About Nishadha

Software engineer turned tech evangelist. I handle marketing stuff here at Creately including writing blog posts and handling social media accounts. In my spare time I love to read and travel. Check out my personal blog Rumbling Lankan where I write about online marketing stuff.

18 thoughts on “SWOT Analysis Vs PEST Analysis and When to Use Them

  1. To me , the conventional SWOT AND PESTAL analysis still captives me more than any other because of its wide range and robust factors subsumed as internal and external determinants of a project or marketing plan.

  2. hi… interesting to see this b/p/t diagram. Is it a standard or well acknowledge analysis tool. Couldn’t find anything on this on net. Any pointer for how it is used and details about it…

  3. Easily the best graphical analysis of SWAT and PEST that I have read in the last few years. For anything to do with the understanding of SWAT or PEST this will be my reference guide. Thank you for this.

  4. I think SWOT/PEST strategy is not only best for projects but also in business. If someone apply this strategy in business, I am sure they will never face any failure in their lifetime…Very well elaborated post on this topic, i must say.. No one will get this information on any other blog or forum..

  5. please help me friends, i want to learn PESTEL AND SWOT ANALYSIS, IAS Lectures notes for ACCA. I can’t buy the book and attend tuition . please share some of notes for me to learn them.If one can , pls send them to my mail (nayzawsoe22@gmail.com)

  6. Greetings Mr. Silva

    I am a doctoral student writing my dissertation entitled “A PHENOMENOLOGICAL STUDY OF LEADERSHIP TOOLS FOR ENVIRONMENTAL SUSTAINABILITY”. Presently I am preparing my proposal for approval from the IRB.
    Within the content I have used your figure 2 (p.239) from your 2011 article “SWOT analysis vs PEST analysis and when to use them”.
    Would you grant permission to use this figure in my dissertation? I would be most grateful.
    Sincerely
    Barbara Barnes Plourde
    1109 Magnolia Street
    New Smyrna Beach, FL 32168
    (386) 428 6560

  7. Respected Mr.Nishada,
    I am truely amazed by the explanation provided in the article.I work for a utility sector andi have been named as a team member to prepare the invitation for SOWT and PESTLE analysis. I am clueless and would like to know from were do i need to start and any references or guidance you could provide me.

    Sincere Rgds,
    SheeGad

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