A PEST analysis most commonly measures a market; a SWOT analysis measures a business unit, a proposition or idea.

A PEST analysis most commonly measures a market; a SWOT analysis
measures a business unit, a proposition or idea.
Generally speaking a SWOT analysis measures a business unit or proposition,
whereas a PEST analysis measures the market potential and situation, particularly
indicating growth or decline, and thereby market attractiveness, business potential,
and suitability of access - market potential and 'fit' in other words. PEST analysis
uses four perspectives, which give a logical structure, in this case organized by the
PEST format, that helps understanding, presentation, discussion and decision-
making.
PEST analysis can be used for marketing and business development assessment and
decision-making, and the PEST template encourages proactive thinking, rather than
relying on habitual or instinctive reactions.
Here the PEST analysis template is presented as a grid, comprising four sections,
one for each of the PEST headings: Political, Economic, Social and Technological.
The free PEST template below includes sample questions or prompts, whose
answers are can be inserted into the relevant section of the PEST grid. The
questions are examples of discussion points, and obviously can be altered depending
on the subject of the PEST analysis, and how you want to use it. Make up your own
PEST questions and prompts to suit the issue being analysed and the situation (ie.,
the people doing the work and the expectations of them). Like SWOT analysis, it is
important to clearly identify the subject of a PEST analysis, because a PEST analysis
is four-way perspective in relation to a particular business unit or proposition - if you
blur the focus you will produce a blurred picture - so be clear about the market that
you use PEST to analyse.
A market is defined by what is addressing it, be it a product, company, brand,
business unit, proposition, idea, etc, so be clear about how you define the market
being analysed, particularly if you use PEST analysis in workshops, team exercises or
as a delegated task. The PEST subject should be a clear definition of the market
being addressed, which might be from any of the following standpoints:
•
a company looking at its market
•
a product looking at its market
•
a brand in relation to its market
•
a local business unit
•
a strategic option, such as entering a new market or launching a new product
•
a potential acquisition
•
a potential partnership
•
an investment opportunity
Be sure to describe the subject for the PEST analysis clearly so that people
contributing to the analysis, and those seeing the finished PEST analysis, properly
understand the purpose of the PEST assessment and implications.

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(insert subject for PEST analysis - market, business,
proposition, etc.)
political
economic
•
ecological/environmental issues
•
home economy situation
•
current legislation home market
•
home economy trends
•
future legislation
•
overseas economies and trends
•
European/international legislation
•
general taxation issues
•
regulatory bodies and processes
•
taxation specific to
•
government policies
product/services
•
government term and change
•
seasonality/weather issues
•
trading policies
•
market and trade cycles
•
funding, grants and initiatives
•
specific industry factors
•
home market lobbying/pressure groups
•
market routes and distribution
•
international pressure groups
trends
•
wars and conflict
•
customer/end-user drivers
•
interest and exchange rates
•
international trade/monetary issues
social
technological
•
lifestyle trends
•
competing technology development
•
demographics
•
research funding
•
consumer attitudes and opinions
•
associated/dependent technologies
•
media views
•
replacement technology/solutions
•
law changes affecting social factors
•
maturity of technology
•
brand, company, technology image
•
manufacturing maturity and
•
consumer buying patterns
capacity
•
fashion and role models
•
information and communications
•
major events and influences
•
consumer buying
•
buying access and trends
mechanisms/technology
•
ethnic/religious factors
•
technology legislation
•
advertising and publicity
•
innovation potential
•
ethical issues
•
technology access, licencing,
patents
•
intellectual property issues
•
global communications
More on the difference and relationship between PEST and
SWOT
PEST is useful before SWOT - not generally vice-versa - PEST definitely helps to
identify SWOT factors. There is overlap between PEST and SWOT, in that similar

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factors would appear in each. That said, PEST and SWOT are certainly two different
perspectives:
PEST assesses a market, including competitors, from the standpoint of a particular
proposition or a business.
SWOT is an assessment of a business or a proposition, whether your own or a
competitor's.
Strategic planning is not a precise science - no tool is mandatory - it's a matter of
pragmatic choice as to what helps best to identify and explain the issues.
PEST becomes more useful and relevant the larger and more complex the business
or proposition, but even for a very small local businesses a PEST analysis can still
throw up one or two very significant issues that might otherwise be missed.
The four quadrants in PEST vary in significance depending on the type of business,
eg., social factors are more obviously relevant to consumer businesses or a B2B
business close to the consumer-end of the supply chain, whereas political factors are
more obviously relevant to a global munitions supplier or aerosol propellant
manufacturer.
All businesses benefit from a SWOT analysis, and all businesses benefit from
completing a SWOT analysis of their main competitors, which interestingly can then
provide some feed back into the economic aspects of the PEST analysis.
© Alan Chapman 2005-08.
This is a free resource from www.businessballs.com

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