In the article “Planning FrameworkPhase 1: Assess”, I detailed the first step of a planning cycle that utilizes SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats) to evaluate the current state of an organization. An option is to use PEST Analysis (Political, Economic, Social and Technological) to identify additional external Opportunities and Threats.
Both SWOT and PEST methods use a list of questions as part of a structured brainstorming activity. Below are two lists of questions – one for SWOT, the other for PEST.
Refer to Planning Framework Phase 1: Assess for additional information on how to conduct a SWOT Analysis.
Questions: SWOT Analysis
Strengths
- What are our core competencies?
- What do we do well?
- What resources do we have that are unique?
- How do our customers and suppliers view our strengths? What things do they say we do really well?
- What proprietary technologies or processes do we own?
- What processes are we especially good at? Efficient at?
- What special knowledge or skills do we possess? …that our competitors don’t have?
- What patents do we have?
- In what markets are we strong / dominant?
- Which of our products are especially innovative or market-leading?
- What are our assets?
- What is our strongest asset?
- How is our business different from our competitors?
- What is our sustainable competitive advantage?
- What is our unique selling proposition?
- What exclusive relationships do we have with suppliers or distributors?
- Where do our sales and marketing teams excel?
- Can we easily get additional capital if we need it?
- Do we have a strong customer base?
- Have we developed a strong reputation in our industry?
- Are we considered a low cost option by our customers?
- Where do we get favorable distribution?
Weaknesses
- In what areas do we know we need to improve?
- What have our customers and suppliers said about our weaknesses?
- What feedback do we receive through our customer service center?
- What common complaints do hear from our customers?
- How are our products and services perceived? What negative images?
- What systems or equipment do we have that are aging, in need of upgrades or obsolete?
- How strong is our financial position? Cash flow? Debt load? Credit rating / lines of credit?
- In what areas do our employees need additional training? Where do we have skills gaps?
- In what areas do our managers need training?
- In what areas are our competitors better than we are?
- Are we dependent on a small number of major customers?
- What objections do we commonly hear from potential customers?
- Are we understaffed or overstaffed? In what areas or departments?
- How do our profit margins compare with competitors’?
- What other constraints have we created for ourselves? Hiring freezes, reducing budgets, etc.
- How well do our employees react to change? How well do we manage change? (This could also be a strength.)
- Are our costs too high
- What product or service quality issues do we have?
- In what key product lines or markets do we have too few customers?
- Where do we have poor distribution?
Opportunities
- What population demographics will benefit our business?
- What trends could positively affect our industry, markets or customer base?
- Where is there available talent that we could hire?
- What unmet needs exist in our industry or markets that we could meet?
- Could we change the packaging of our products or services to justify a higher price?
- What weaknesses do our competitors have that could take advantage of?
- Is our target market changing in a way that could benefit us?
- Are there niche markets that we’re not currently exploring
- What have our customers asked for that we don’t offer, but could?
- What other unmet needs to our customers have that we could fill?
- Could we increase market share by offering something our competitors don’t?
- Do we have technologies or process knowledge that we could leverage in other areas?
- Are there opportunities for regional / global expansion that we have not explored?
- Are there opportunities arising from regulatory changes?
- Where could we identify new partners and suppliers?
Threats
- Is there pending legislation that could impact our business?
- What new direct competitors are emerging in the near future?
- Are our employees satisfied and engaged or do we face risk of attrition?
- What happens if a major supplier fails to deliver?
- What if a natural disaster strikes? Do we have a disaster response plan?
- Where is our technical infrastructure vulnerable to attack?
- What plans do our competitors have for expanding or offering new products?
- Pandemic (or Health): What is the pandemic profile (infection rates, deaths) among our staff? Our communities?
- Pandemic (or Health): Do our workers depend on mass transit to commute?
- How would we respond to an economic downturn?
- What possible change in customer preferences could impact demand for our products or services?
- What new distribution options are available that could disrupt ours?
Questions: PEST Analysis
PEST Analysis is a good complement to SWOT that helps you identify more Opportunities and Threats. It challenges you to think about the world outside the four walls of your organization and to get outside your usual mental models.
The list below is a series of topics to review. For each one, you can frame a question like “What is likely to happen in <topic> area, and how will that impact our organization?” Your answers may be either an opportunity or a threat, or both. Example:
Question: What is likely to happen in the area of product liability litigation?
Answers: We expect a class action lawsuit will be filed in the next 6 – 9 months about one of our products. (Threat). Our law firm has deep experience in defending these cases and is already preparing a defense. (Opportunity, or even a Strength.)
Political
- Government policy
- Political stability or instability
- Bureaucracy
- Corruption
- Competition regulation
- Foreign trade policy
- Tax policy
- Trade restrictions
- Labor or employment laws
- Environmental regulations
- Copyright or intellectual property regulations
- Consumer protection laws
- Data protection laws
Economic
- Economic trends
- Growth rates
- Industry growth
- Seasonal factors
- International exchange rates
- International trade
- Labor costs
- Consumer disposable income
- Unemployment rates
- Taxation
- Inflation
- Interest rates
- Availability of credit
- Monetary policies
- Raw material costs
Social
- Changing attitudes and shared beliefs about
- Racial equality
- Money
- Customer service
- Imports
- Religion
- Cultural taboos
- Environment, “green” products and services
- Health
- Work
- Leisure
- Population growth
- Demographic changes
- Immigration/emigration
Technological
- Technology and communications infrastructure
- Legislation around technology
- Consumer access to technology
- Competitors’ technology and development
- Emerging technologies
- Automation
- Research and innovation
- Intellectual property regulation
- Technology incentives
- E-commerce
There may be occaisions where you add Legal and Environment areas, making it a PESTLE analysis.
Legal
- New or pending developments in:
- Immigration law
- Data protection law
- Anti-trust las
- Copyright and intellectual property law
- Employment law
- Consumer protection law
- Health and safety law
Environmental
- Climate change
- Weather patterns
- Renewable energy
- Air and water pollution
- Recycling
- Carbon footprint
- Endangered species
- “Green” initiatives / products