It is an analytical tool available to companies to determine how external factors influence their operations and make them more competitive in the market. This method looks at the factors in a nation or marketplace, and examines how those factors affect the consumer:. PESTLE analysis allows managers, marketing, and financial experts to examine specific factors outside of money when making decisions about the company's services or products.
This may include examining customer demographics , culture, and buying patterns. Or they may choose to look at the environment and how it plays into consumer reach. Adverse weather conditions, how the customer views sustainability, and even environmental policies at the local or national level can affect the future of the brand. Results from PESTLE analysis allow the company to make specific choices when planning the company's future, from how the brand should be presented, to any changes within the structure of the company's organization, to the development of new products.
It's primarily used to identify both threats and opportunities due to external influences. Porter's 5 Forces is a tool to analyze an organization's competitive environment. The five forces are:. Harvard Business Review. Tools for Fundamental Analysis. Business Essentials. Top Stocks. Company Profiles. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content.
Create a personalised content profile. PEST would inform marketers of political red tape, economic slowdowns, sociological or cultural hindrances, and if the new market lacks the technological capabilities to perform business.
It can also suggest which areas would be best to infiltrate, taking into account political and economic structures. For example a company looking to expand into a particular state might discover through PEST analysis that the state offers incentives to attract out-of-state companies and that it has the economic resources to make expansion more cost-effective.
Marketers trying to assess the feasibility of a product are most likely to use SWOT analysis. This is because SWOT provides a micro-analysis — an in-depth and introspective assessment — which is essential when considering the launch of a new product. PEST analysis, which provides a macro-analysis — focusing on the whole socioeconomic picture — is not helpful in this situation.
For example a local shirt-maker looking to market a new style of shirts would most likely benefit from using SWOT analysis to assess its position against the local competitors. Scenario planning - a technique that builds various plausible views of possible futures for a business.
Critical success factor analysis - a technique to identify the areas in which a business must succeed in order to achieve its objectives. Using this model, you can build a strategy to keep ahead of these influences. Printer-friendly version. Five Forces model. Invest NI's business growth tutorial. You can apply these to both large and small projects to identify areas of success or potential failure.
A SWOT analysis applies to four areas within your business. A SWOT analysis is a simple process that helps to analyse your business or projects strengths, weaknesses, opportunities and threats that you may face. This exercise will help strategy and focus on your strengths, help build on your weaknesses, gain an advantage in opportunities and mitigate or minimise any threats that occur. It provides insight into its ability to win over your competitors. In a more complicated way, it is also a serious strategy tool for business, sales or marketing.
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