In recent decades, many companies has used SWOT and PEST analysis as useful techniques to identify its status and its environmental influences. SWOT stands for Strengths, Weaknesses, Opportunities, Threats; PESTLE stands for Political, Economic, Sociological, Technological, Legal, Environmental. This essay will mainly focus on the similarities and differences between a SWOT analysis and a PEST analysis and elaborate the reason why a company can use a PEST analysis.
SWOT analysis and PEST analysis also need people to be involved to acquire multiple perspective since one person’s view could be insufficient. However, both analyses require appropriate sources of information and it could be costly and time consuming and the data is possibly based on assumptions.
Differences of these two analysis could be its objective. A PEST analysis mainly focus on measuring a market; a SWOT analysis focus on measuring a business project or idea. For example, PEST analysis will only identify the external factors such as current economy, unemployment rate, national election and population's growth rate. On the other hand, SWOT analysis mainly analyze both internal and external factors such as unique resources which companies have, weaknesses, government policy which related to its field and competitors' objective.
Many businesses benefit from SWOT analysis and PEST analysis. PEST analysis plays an important role in determining the current market. If a company wants to consider what external influences are significant and any changes which are important for its future, a company could use PEST analysis as a useful technique to analyze.