What is SWOT Analysis?

Last Updated March 12, 2019

SWOT analysis is a business analysis process that ensures that objectives for a
project are clearly defined and that all factors related to the project are
properly identified. The SWOT analysis process involves four areas: Strengths,
Weaknesses, Opportunities and Threats. Both internal and external
components are considered when doing SWOT Analysis, as they both have the
potential to impact the success of a project or venture.

SWOT Analysis
The following is a brief summary of SWOT Analysis components:

1. Strengths
Strengths in SWOT analysis are the attributes within an organization that
are considered to be necessary for the ultimate success of a project.
Strengths are resources and capabilities that can be used for
 competitive advantage. Examples of strengths that are often cited
include:
o Strong brand names
o Good reputation
o Cost advantages of proprietary know-how
2. Weaknesses
The factors within the SWOT analysis formula that could prevent
successful results within a project are Weaknesses. Weaknesses include
factors such as an abundance of rivalry between departments, a weak
internal communication system, lack of funding and an inadequate
amount of materials. Weaknesses can derail a project before it even
begins. Other Weaknesses include:
o Weak brand name
o Poor reputation
o Ineffective and high cost structure
3. Opportunities
Opportunities are classified as external elements that might be helpful in
achieving the goals set for the project. These factors could involve
vendors who wish to work with the company to help achieve success,
the positive perception of the company by the general public, and
market conditions that could make the project desirable to the a
segment of the market. Additional Opportunities include:
o Arrival of new technology
o Unfulfilled customer needs
o Taking business courses (training)
4. Threats
These external factors could gravely affect the success of the project or
business venture. The possible threats that are critical to any SWOT
analysis include a negative public image, no ready-made market for the
final product and the lack of vendors who are able to supply raw
materials for the project. Some other threats include:
o Trend changes
o New regulations
o New substitute products
PEST & PESTEL Analysis
Ovidijus Jurevicius | February 13, 2013 Print

PEST is a political, economic, social, technological analysis used to assess the market for a
business or organizational unit.

Definition
PEST analysis

is an analysis of the political, economic, social and technological factors in the external
environment of an organization, which can affect its activities and performance.
[1]

PESTEL model

involves the collection and portrayal of information about external factors which have, or
may have, an impact on business.
Understanding the tool
[2]

PEST or PESTEL analysis is a simple and effective tool used in situation analysis to identify the
key external (macro environment level) forces that might affect an organization. These forces
can create both opportunities and threats for an organization. Therefore, the aim of doing PEST
is to:

 find out the current external factors affecting an organization;

 identify the external factors that may change in the future;
 to exploit the changes (opportunities) or defend against them (threats) better than
competitors would do.

The outcome of PEST is an understanding of the overall picture surrounding the company.

PEST analysis is also done to assess the potential of a new market. The general rule is that the
more negative forces are affecting that market the harder it is to do business in it. The difficulties
that will have to be dealt with significantly reduce profit potential and the firm can simply decide
not to engage in any activity in that market.