Pestle and swot analyses

Any company should look beyond market and industry boundaries at the wider external environment and its impact on the company’s position. These are factors that the company cannot control but that can have a significant impact on the company.

Directors need an overview of the whole business environment in order to control the influences on their industry, their markets, their company and their actual and potential customers. This type of analysis is often known as PESTLE (political factors, economic conditions, socio-cultural trends, technological developments, legal issues and environmental issues).

Table 1 shows some typical areas of influence that the company may need to investigate in order to find out whether the factors will affect the business positively or negatively.

Political Issues • Regulations: safety, quality, labeling • Government policies • Taxation Economic issues • Inflation, labor costs • House prices, labor mobility • Energy prices • Unemployment • Party political stance on particular issues Social issues • Lifestyle changes • Consumer attitudes • Demographic factors: age, wealth, geographical distribution

Technology Issues • New materials • New manufacturing processes • Information technology • New inventions Legal issues • National and international legislation • Import and export regulations Environmental issues • Popular attitudes to aspects of the environment • Pressure group activity • Media coverage

PESTLE areas will help determine the most appropriate areas for marketing research. Having explored the relevant PESTLE factors, marketing planners can use this information to examine trends and identify the likely impact of each factor on the business over the planning period.

The SWOT analysis (strengths, weaknesses, opportunities, threats) is a useful marketing tool because it can be used to crystallize the key issues that arise from the marketing audit. It can act as a stepping stone between the audit and the later stages of marketing planning.

A company operating in a single market may only need to complete one SWOT analysis. If the company is operating in complex and diverse markets, it may need to split the business by market sector and complete a SWOT analysis for each one.

Internal factors

Strengths	Weaknesses
Company serves high growth markets Well–known company name 20% share of market with main product Higher gross margins than main competitors. Low staff turnover Highly qualified management team Products perceived as high quality High tech/efficient production facility	Low penetration in export markets Main products easy to copy High level of company borrowing Distribution – location of production facility No succession plan for managers retiring soon Resistance to planning/change Inflexibility in production facility High fixed costs

External factors

Opportunities	Threats
Investigate/penetrate key export markets Merge with/take over main competitor Relocate production/distribution facility Invest more in new product development Advertise main product to defend/Increase market share Launch secondary products into new market sectors Raise company profile through stronger branding Poach key managers from competitors	Cheap imported copies of products Increase in fuel costs Aggressive competitor pricing policies eroding margins. Bad publicity for products Increase in interest rate Technology changes – product obsolescence Recession – reduction in customer buying power Exchange rates increasing raw material price

Exercise 9. Read the text once again and express the contents of every passage in one sentence.

Exercise 10. Fill in the gaps in this passage with the words under the line; learn the new words to expand vocabulary on the topic.

Company performance

1.It’s a pleasure to say that in the changed … our company has continued its excellent performance. First of all it is due to the changes in …. We are growing and doing well also due to the … in technology that is new inventions and new materials. Our turnover increased by 10%, and our … rose by 5%. So we can say that we are a very successful ….

business, profits, taxation, changes, circumstances

2. We are a highly competitive …. We have increased our market … to 25%. Due to it our … has increased too and is now at the height of $10. Increased production and strong demand on the market had a positive effect on our cash flow, so we are able to finance a new …. We also moved our new … to the central part of Brighton.

office, project, share price, share, business

Exercise 11. Make the presentation of the PESTLE analysis for your company.

Exercise 12. Write a letter to your friend who is conducting SWOT analysis for the company; tell him what kind of analysis it is.

Exercise 13. Read the report and write your own one. Remember: