The Difference Between Swot And Pest Analyses

Oftentimes, SWOT and PEST analysis are the two methodologies in strategic planning that are often misused. It is perhaps because of the fact that both analyses focus on the environmental factors that affects the company, particularly in profitability. Before you will be able to understand the similarities and differences between SWOT and PEST analyses, you must know first how each framework works individually.

First of all, SWOT and PEST have different meanings, which is obvious to their acronym. Let us start with the SWOT Analysis first.

The SWOT Analysis is defined as a strategic planning method that assesses the internal and external factors of the company. The acronym stands for Strengths, Weaknesses, Opportunities and Threats. The internal factors are everything regarding the company’s strengths and weaknesses, which basically sum up what they are capable of and their weak points. On the other hand, the external factors are the opportunities and threats that could possibly face the organization as they go for their target marketplace.

SWOT and PEST analyses are pretty much the same, only that PEST Analysis, on the other hand assesses the Political, Economical, Social and Technological factors that can affect the company. This assessment is mostly focused on the external factors.

With the given definitions, it is safe to say that SWOT and PEST analyses both conduct the same assessment but remember that PEST Analysis focuses on environmental attributes that might affect the company directly. Of course, external factors affect the company straightly as well like tariffs and competitions but if you will look closely on both SWOT and PEST analyses, you will see the obvious difference in assessment focus.

If SWOT analyses focuses on things that might affect a company directly, PEST Analyses focuses on the external factors that might have an impact on the organization. These impacts can be government changes, fashion trends, popular opinion, weather and calamities and the likes.

To simplify it, the obvious difference between SWOT and PEST analyses is that, PEST Analysis takes a good look on a national and global level, while SWOT just looks on a specific company level. A lot of strategic planning methods are developed because sometimes, the factors that can affect an organization may seem not noticeable. In conducting the different analyses, brainstorming is usually the key, as what one person sees may not be seen by others. It is highly recommended that SWOT and PEST analyses are combined when performing the strategic planning process because by looking at a company’s affecting factors using two frameworks, all the attributes will then be easier to see and the organization will be able to determine the underlying things that could either make or break them in their target marketplace.

Always remember, that there is a sequence in using SWOT and PEST analyses. It is often recommended that organizations conduct a PEST Analysis for before any other strategic planning methodology. Right after conducting PEST, the organization can then proceed into performing a SWOT Analysis. Once both analyses are done, it would be smart to include other strategic planning methods too like Porter’s five processes and the likes.

By: Sam Miller

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