Importance of SWOT and PEST Analysis

An organization contains a dynamic process of interactions involving many moving parts. Changes in personnel, budget, policy framework, personnel capabilities, operations, and procedures in one part of an organization can affect what occurs in other parts of the organization.

An effective method of mapping this dynamic process is the use of SWOT analysis and PEST analysis, which gauge internal and external factors affecting the success or failure of the organization.

• The strengths and weaknesses of an organization, as well as the opportunities and threats (SWOT) placed in a matrix provide an easily viewed statement of criteria for meeting the organization’s goals.
• Political and economic factors, viewed along with social and economic factors (PEST), provide the strategic planner another matrix to view the criteria for success in relation to external factors that tend to be out of the control of the organization.

Conducting both analyses allows the planner an opportunity to consider all factors relevant to the success of the organization.