SWOT vs PEST Analysis: Which Should You Use?

SWOT vs Pest Analysis

Today we will explore what is PEST analysis definition, SWOT and PEST Analysis!

“Get the habit of analysis – analysis will in time enable synthesis to become your habit of mind.”

Frank Lloyd Wright

Before dive deep into SWOT, let’s get Macroeconomy out of our way, in other words let’s see what PEST Analysis definition is, how it is utilized in the workplace and how you can apply it to your own organization.

What is Pest Analysis?

PEST Analysis is defined as the Strategic Framework applied in the workplace to understand and evaluate External Environment, Risks, Threats and Opportunities for Your Business.

When we say PEST Analysis, we mean the Macroeconomic, in other words, Macro External Factors. To see what we mean here, let’s try to understand the degree of impact with the illustration below.

swot vs pest analysis

We wanted to include this one for you to see what it is we’re really talking about. We are talking about not Internal or External Factors of your Organization; we are zooming out… It’s all about Macro External Factors this one, to rearticulate, think about all the events around you that You or Your Organization does not have any force upon. Such as the upcoming election? Such as the level of Unemployment? Such as the Population Growth Rate? Such as the new developments in the AI?

Yes. P-E-S-T. Political, Economic, Sociocultural, and Technological Factors respectively.

“Central banks don’t have divine wisdom. They try to do the best analysis they can and must be prepared to stand or fall by the quality of that analysis.”

Mary Kay Ash

Below, we are going to explore these letters one by one. And we are going to follow a different road map this time. We are going to include examples of these factors below them and then we are going to examine them further. What we think would be beneficial while following this map would be to think about the state or states of your organization, and which of these states relate to the PEST Analysis.

While doing so, you will have already conducted a premature version of the infamous PEST Analysis, and while doing so, you will have a wider view of the world and the place of your organization in it.

Let’s begin! 

PEST Analysis Definition: Letter by Letter

pest analysis definition-min


1.P for Political

  • Government Type and Stability
  • Freedom of press, rule of law and levels of bureaucracy and corruption
  • Regulation and de-regulation trends
  • Social and employment legislation
  • Tax policy, and trade and tariff controls
  • Environmental and consumer protection legislation

If your Organization is a National one, knowing the P of your organizational structure might be beneficial. For an instance, if there is an upcoming election like we discussed above, there might be changes in the tax policies or for an instance your country may apply regulations or embargo on the country you are benefiting from the workforce of. For these reasons zooming out as much as you can will help you locate your organization in these structures.

2. E for Economical

  • Stage of Business Cycle
  • Current and Project Economic Growth, Inflation and Interest Rates
  • Unemployment and labor supply
  • Labor costs
  • Levels of disposable income and income distribution
  • Likely impact of technological or other change in the economy
  • Likely changes in the economic environment

E is for economical. What is the development level of the country your organization is located in? What are the labor costs? Are people able to afford their basic needs? What does your organization offer to the employees? Is it enough to meet their needs? Does the status of economy predict growth in your field of business?

Economy is the map of a country. It’s like that magic sphere of the witch. By looking at the economy, it is possible to foresee the future and the future of your organization. For this reason, it matters to pay attention to the E of PEST Analysis.

3. S for Social

  • Population growth rate and age profile
  • Population health, education and social mobility, and attitudes of these
  • Population employment patterns, job market freedom and attitudes to work
  • Press attitudes, public opinion, social attitudes & taboos
  • Lifestyle choices and their attitudes
  • Sociocultural changes

If there is a sudden need or wish to get married and have children nationwide, you should think about how this is going to be an impact for your organization. These soon-mother-to-be employees will need a certain amount of time to take care of themselves, give birth to healthy babies, and begin to raise them in a safe environment. Or say that your marketing strategies were designed for a conventional audience, but now that conventional audience is changing sides and becoming more open-minded. Your campaigns might feel offensive to them now if you do not update your brand image and marketing strategies as soon as possible. That’s why you should pay serious attention to the S of PEST Analysis.

4. T for Technological

  • Impact of emerging technologies
  • Impact of internet, reduction in communication costs and increased remote working
  • Research and development activity
  • Impact of Technology transfer

Technology is developing in the speed of light. You have no control over it. No one does. So, the best way to move forward is to be prepared to Change in any not minute, but second. If a Quantum AI is invented… We might be wishing the humanity well because this AI will not only be able to do the simple but also the complex tasks and therefore might eradicate human force in the workplace once and for all. From the good side of the cup though, until that happens, you should do your best to implement the latest innovations in Technology to your workplace to keep your organization running as efficient as possible. That is the reason T of PEST Analysis will always matter.

For this reason, when your Organization is developing a new product or is planning to expand in another state, we highly recommend the use of PEST Analysis. PEST Analysis also does wonders when the Organization is on the verge of deciding on or updating their Corporate Strategies.

That’s all we have to say about PEST Analysis definition here. Let’s see what SWOT Analysis is

SWOT Analysis Definition

swot analysis definition-min

Why do we use SWOT Analysis? We use SWOT Analysis to Identify Internal and External Conditions of our Organizations. SWOT Analysis can also be used for Personal Career Analysis. Conducting SWOT Analysis is an essential skill as the already-competitive market is getting more and more competitive not only day by day, but in the blink of an eye. That’s how fast all it is. It does not matter whether the organization you are in is big or small. In every circumstance, there are Strengths, Weaknesses, Opportunities and Threats. And you have to be conscious of your SWOT at all times in order to not fall back in the big game, or the marketplace.

S for Strengths

What do you have that your competitors don’t?

So you have a technology. It’s new and it’s efficient. Bravo!

Do your main competitor got their hands on the same technology? So long! It’s not one of your strengths anymore. Be Creative, Be Complex, Strategize. What do you offer to your clients that your competitors don’t? Are your marketing strategies more effective? How so? Find what you are good at and find a better way do to it.

Innovate. Innovate. Innovate.

Make it Better. Make it Stronger.

W for Weaknesses

What don’t you have that your competitors do?

Consider the exact opposite of our example above. What if your competitors had that technology and you or your organization were the one that couldn’t afford it? What then? Well, technically it makes their work more efficient than yours in any case. For this reason, you have to list that as a “W” in your SWOT Analysis.

Why does it matter to know your weaknesses?

To transform your weaknesses in time into Your Strengths.

O for Opportunities

Is there a particular lead you can follow to increase or improve your gains?

So, leading on from the Technology case, what if you were the first to recognize the applicability of that technology? Then it would become an O for you, an Opportunity you can benefit from. You should always be looking for opportunities whether you are conducting the Analysis for a Project, an Organization or Your Career Journey.

Opportunities are like Buoyancy. They lift you. For this reason, always keep an eye open to spot emerging opportunities for you, your project or your business!

T for Threats

What is of danger to Your Organization?

Has a new, hungry competitor emerged in the marketplace? Do they implement a more efficient, therefore faster or more productive means of technology? Will they be around for long? Is their means of business more sustainable and more profitable than you?

T, Threats, is not about being in constant paranoia. It’s about always keeping your eye open. Be conscious. Market is growing and changing in the speed of light. There is no guarantee you will make the same profit the coming year if your competitor decides to innovate and change the entire game!

In sum, Keep Your Eye Wide Open!

Let’s Review what we discussed about SWOT vs PEST Analysis!

We learned that these analyses were utilized in corporate structure planning, developing new strategies, or launching a new product. It might also be utilized while expanding in another country, to analyze your own career journey and so much more! We learned that SWOT was made of 4 components, letters: Strengths, Weaknesses, Opportunities and Threats. Furthermore, we learned that PEST Analysis was performed to identify the Macro External factors in the business environment and its components were Politics, Economy, Society, and Technology. By analyzing these components, we could predict the future of a project, organization, or our own! We also reminded ourselves to always keep our eyes open to these Internal and External Factors AT ALL TIMES!

And that’s all about SWOT and PEST Analysis Definition.

Thank you for reading!

Have you conducted a SWOT or PEST Analysis?

What for?

Let us know in the comments below!

Hungry for more on SWOT and PEST Analysis Definition?

See this Case Study on NIKE (2009)

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