SWOT analysis is generally performed once the initial situation analysis has been performed, and the organisation wishes to confirm what the most important factors are and how they relate to each other in a strategic framework. As such, SWOT analyses are often used in marketing plans as they help companies to explain why they have chosen a specific strategy. SWOT itself stands for the Strengths and Weaknesses of the company and the Opportunities and Threats which exist in the market. SWOT is thus often used by a company to determine what its most important resources are, and what are the most important environmental factors affecting it. In particular, external analyses such as PESTEL will tend to produce a large amount of information. As such, SWOT analyses are required to filter out the least important factors and help the company focus on its key strategic issues. By understanding their key strength and weaknesses and the key opportunities and threats in the marketplace, a company can use its strengths to capitalise on its best opportunities, as well as avoiding damaging threats and correcting any critical weaknesses.
The internal analysis can be seen as an audit of the firm’s resources and capabilities, and how they compare to a benchmark set of resources. These resources include factors such as operational efficiency and capacity; existing financial resources; market share and brand strength; employee skills and knowledge; and any critical natural resources the company controls. The SWOT analysis allows companies to judge which of their resources will be strengths which will enable them to reach their objectives; and which are weaknesses and may need to be improved, developed or added to.
As discussed above, the PESTLE model is a method for analysing the external macro-environment that a firm finds itself in. PESTEL can also be written as PEST, SLEPT, STEEPLE, EPISTEL and a variety of other acronyms. The extra “E” in STEEPLE.