We are all familiar with SWOT and PEST analysis as techniques to use during the planning process.

Many are unsure how to use them effectively and how they fit together.

  1. Should I use SWOT or PEST or both?
  2. Once I have completed the analysis how do I most effectively incorporate the results into the overall planning process?

The Business Tools Store has produced a Strategic Planning Workbook that allows the novice and expert alike to use both PEST and SWOT in a complementary fashion and to use the results to identify appropriate strategies.

The workbook identifies relevant objectives, and defines action items to achieve the selected objectives.

It further assigns metrics, timelines and executive ownership to all actions, thus ensuring follow through from the PEST and SWOT analysis to “on the ground” implementation.

A PDF version is available FREE to download, while a fully editable Word version can be purchased.

PEST analysis is used to analyze the external macro-environment. PEST stands for Political, Economic, Social and Technological; the four categories under which the external environmental factors are classified.

SWOT analysis is used to analyze the external micro-environment and the internal environment. SWOT stands for Strengths, Weakness, Opportunities and Threats; the micro external environment being analyzed for threats and opportunities, while the internal environment is analyzed for strengths and weaknesses.

How does PEST Analysis and SWOT Analysis Compare?

PEST analysis is appropriate for the big picture external macro environment analysis within which SWOT analysis provides an analysis of the external micro and internal environment and as such it is usual to complete the PEST analysis initially and to use the results as a backdrop and framework within which the SWOT analysis is then carried out.

PEST analysis usually involves factors over which the organization has very little influence, e.g. inflation rate, trade restrictions, population growth projections.

On the other hand, SWOT analysis deals with factors over which the organization can have a measure of control and influence in developing and executing the strategic plan, e.g. further developing and exploiting the organization’s strengths and taking action to minimize the impact of external threats or take advantage of identified opportunities.

The techniques are most effective when the PEST analysis is completed first and the output of the PEST analysis provides an informed view of the external macro environment within which strengths, weakness, opportunities and threats are assessed.

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