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SWOTing the PEST

By: Cathy Hagan, Certified Business Analyst

By paying attention to external Political, Economic, Sociocultural, and Technological factors (PEST), entrepreneurs can use the results to develop a game plan using their company’s own unique Strengths, Weaknesses, Opportunities, and Threats (SWOT).  PEST factors are often out of management’s control, but that’s not a good excuse for ignoring them.  By identifying trends in these areas, the business leader can evaluate how his or her business can capitalize on a new business opportunity or combat a possible threat.  From here, a SWOT analysis relates the external opportunities and threats to the internal strengths and weaknesses of the organization. 

Scanning the environment can be as simple as keeping up with industry trends through industry associations, conducting a regular internet search, or “mystery shopping” the competition.  Does the rapid growth in the Hispanic population present any opportunities or threats?  What role will changes in online buying have?  Is there an advantage in “going green”?  And what about the economy, healthcare reform, etc.?

A strength is anything that gives your company a competitive advantage.   A weakness can be the absence of or the downside of a strength.  The best scenario is when internal strength meets external opportunity.  The worst is when weakness meets threat.  But what if a weakness meets an opportunity?  It might be worth your time and effort to turn that weakness into a strength or at least do as much as you can to overcome it.  And when strength meets threat, you may be strong enough to fight the threat head-on. 

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