OM Lesson 4 PESTEL and SWOT Analysis

LESSON 4:
SWOT AND PESTEL

ANALYSIS
SWOT Analysis
 first tested by Albert
Humphrey in the 1960s and
1970s.
• Strengths
• Weaknesses
• Opportunities
• Threats
• To come up with excellent strategies to
survive the competition in the industry.
SWOT Analysis
 SWOT analysis works efficiently during
the planning stage.
 It is an analysis and evaluation for
learning the internal and external factors
that can affect the business operation.
 SWOT analysis aims to help the
organization match its available
resources against its competitors.
SWOT Analysis
 Analysis and evaluation of the internal
and external factors as the team goes on
a brainstorming.
Analysis of:
• what we have
• what we don’t have
• what we need
• what we should do
• what we shouldn’t do
Strength
 The advantages or the

internal attributes that
support the positive
result.
 The edge that you have
over the competitors.
Weaknesses
 The disadvantages or
the internal
characteristics that
work against a
successful outcome
compared to the
competitors.
Opportunities
 Current external factors

or trends that can be
used to be taken
advantage.
Threats
 Current external factors

which may cause a
problem to cause a
negative impact and can
jeopardize the business.
PESTEL Analysis
 created by Francis Aguilar,
a Harvard professor
 He used PEST Analysis as a
scanning tool.
 It gives an overview,
summary, or outline of the
environmental forces that
the company has to
consider to understand
better the market growth.
PESTEL Analysis
 refers to the factors that

describes a framework of macro-
environment or the
uncontrollable external factors
used in doing an environmental
scanning for market research as
part of strategic management.
 Political
 it is how the government intervenes in
the economy which may have a direct
effect on the business.
 the range of possible outcomes can vary
considerably depending on election
results.
Factors:
- Government Policy
- Foreign trade policy
- Tax policy
- Labor law
- Terrorism and military considerations
 Economic
 relate to the broader economy and tend
to be expressly financial in nature.
 directly impacts on the organization
and its profitability.
Factors:
- Economic growth
- Exchange rates
- Interest rates
- Inflation rates
- Disposable income of consumers
- Unemployment rates
 Social
 refers to shifts or evolutions in the ways that
consumers approach life and leisure, which
in turn can impact commercial activity.
 This helps a marketer to further understand
consumer needs and wants in a social
setting.
Factors:
- Population growth rate
- Age distribution
- Health consciousness
- Lifestyle attitudes
- Cultural barriers
- Organizational image
 Technological
 considers the rate of technological
innovation and development that
could affect a market or industry.
Factors:
- Producing goods and services
- Technological change
- Target market communication
- Automation
- Potential copyright infringement
- Increased training to use innovation
 Environmental
 recognize that changes to our
physical environment can present
material risks and opportunities for
organizations.
Factors:
- Weather
- Climate
- Climate Change
- Environmental Policies
- Geographical location
 Legal
 are those that emerge from changes
to the regulatory environment,
which may affect businesses within
a specific sector.
Factors:
- Licenses and permits
- Discrimination laws
- Advertising standards
- Consumer protection laws
- Health and safety laws
- Safety standards
PESTEL Analysis
• It guides the direction of change within
the business environment.
• It helps to see the big picture of the
environment.
PESTEL Analysis
• It contributes to avoid starting projects
that are likely to fail for reasons beyond
the control of the business firm.
• Loosen up unconscious assumptions

when wanting to venture in a new
country or city. Breaking stereotypes
(using internet as basis for
reviews/feedback).

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LESSON 4:

SWOT AND PESTEL

 The advantages or the

 Current external factors

 Current external factors

 refers to the factors that

• Loosen up unconscious assumptions

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