A PEST analysis most commonly measures a market.
A SWOT analysis measures a business unit, a proposition or idea.
PEST is useful before SWOT – not generally vice-versa. PEST generally helps to identify SWOT factors. There is overlap between PEST and SWOT, in that similar factors would appear in each. That said, PEST and SWOT are certainly two different perspectives.
PEST assesses a market, including competitors, from the standpoint of a particular proposition or a business.
SWOT is an assessment of a business or proposition, whether your own or a competitor’s.
PEST becomes more useful and relevant the larger and more complex the business or proposition, but even for very small local businesses a PEST analysis can still throw up one or two very significant issues that might otherwise be missed.
All businesses benefit from a SWOT analysis, and all businesses benefit from completing a SWOT analysis of their main competitors, which interestingly can then provide some feedback into the economic aspects of the PEST analysis.
As stated, a SWOT analysis generally measures a business unit or proposition, whereas PEST analysis measures the market potential and situation, particularly indicating growth or decline, and thereby market attractiveness, business potential, and suitability of access – market potential and ‘fit’. The PEST analysis template is presented as a grid, comprising of four sections, one for each of the PEST headings: Political, Economic, Social and Technological.
PEST analysis can be used for marketing and business development assessment and decision-making, and the PEST template encourages proactive thinking, rather than relying on habitual or instinctive reactions.
The PEST template below includes sample questions or prompts, whose answers can be inserted into the relevant section of the PEST grid. The questions are examples of discussion points, and obviously can be altered depending on the subject of the PEST analysis, and how you want to use it.
Like a SWOT analysis, it is important to clearly identify the subject of a PEST analysis, because a PEST analysis is a four-way perspective in relation to a particular business unit or proposition – if you blur the focus you will produce a blurred picture. Common usages for a PEST might be:
- a company looking at its market
- a product looking at its market
- a brand in relation to its market
- a local business unit
- a strategic option, such as entering a new market or launching a new product
- a potential acquisition
- a potential partnership
- an investment opportunity
Be sure to describe the subject for the PEST analysis clearly so that people contributing to the analysis, and those seeing the finished PEST analysis, properly understand the purpose of the PEST assessment and implications.
PEST analysis template
Other than the four main headings, the questions and issues in the template below are examples and not exhaustive – add your own and amend these prompts to suit your situation, the experience and skill level or whoever is completing the analysis, and what you aim to produce from the analysis.
(Insert subject for PEST analysis – market, business, proposition etc)
- ecological/environmental issues
- current legislation home market
- future legislation
- European/international legislation hy1
- regulatory bodies and processes
- government policies
- government term and change
- trading policies
- funding, grants and initiatives
- home market lobbying/pressure groups
- international pressure groups
- wars and conflict
- home economy situation
- home economy trends
- overseas economies and trends
- general taxation issues
- taxation specific to product/services
- seasonality/weather issues
- market and trade cycles
- specific industry factors
- market routes and distribution trends
- customer/end-user drivers
- interest and exchange rates
- international trade/monetary issues
- consumer attitudes and opinions
- media views
- law changes affecting social factors
- brand, company, technology image
- consumer buying patterns
- fashion and role models
- major events and influences
- buying access and trends
- ethnic/religious factors
- advertising and publicity
- ethical issues
- competing technology development
- research funding
- associated/dependent technologies
- replacement technology/solutions
- maturity of technology
- manufacturing maturity and capacity
- information and communications
- consumer buying mechanisms/technology
- technology legislation
- innovation potential
- technology access, licensing, patents
- intellectual property issues
- global communications