PEST and SWOT: Do They Work Together?
Every business requires continuous evaluation and assessment. Why? The reason is quite simple! Business owner and top managers should be aware of all problems, advantages, strengths and weaknesses in the company, otherwise it is very difficult to make any plans and design ambitious strategies. The problem is that strategy is about solving problems already before they showed up. It is impossible to solve new problems without having solved existing ones. Continuous examination and evaluation of company is a must, of course if such a company wants to unprotected to success.
There are two types of examination that are extremely popular with all businesses and industries – PEST and SWOT. Each of them has own advantages and disinctive features. But perhaps the most noticeable advantage is that PEST and SWOT examination give top managers and business owners the most complete information on company position in internal and external business ecosystem. Now let’s analyze each examination kind to better understand its principles.
PEST stands for political, economic, social and technological. These are factors that have a direct impact on company performance and plans. consequently, politics is said to greatly influence all spheres of our lives, including economy. already seemingly unimportant statements and declarations made by political leaders may save far reaching consequences for big (and often small) business. Politics and economics are interrelated. Although many world leaders say that politics and economy function separately, this is not so. The second factor is economic. Every business must take into account economic situation of the country or countries it is operating in. Proper economic examination is a must before implementation of a new strategy or set afloat of a new product. Social factors play a crucial role in business development, as business is a social occurrence. That is why in order to be a part of the society business need to take into account social trends. The last factor is technological. All industries use the latest technologies in their work. consequently, in order to unprotected to success research and innovation is a must.
SWOT stands for strengths, weaknesses, opportunities and threats. The company locates its strong and ineffective points in order to use competitive advantage to conquer markets. When finding out company strengths it is important to locate only those that really contribute to competitive advantage but not those factors that only seem advantageous. It is also important to be realistic and be able to let in own weaknesses. additionally, it is not enough just to locate weaknesses but also find solutions to problems.
As to opportunities and threats it should be mentioned that the company must use own strengths to take advantage of opportunities obtainable in the market. The same concerns threats. You need to understand threats and look for solutions already before these possible threats harm your company. This is a part of strategic planning. SWOT examination is recommended for companies that are going to implement newly adopted strategies. This is like having a roadmap before you get into car and excursion. SWOT examination will certainly help business owner and top managers better understand their companies.