Understanding the environment your business operates in is a key part of planning, and will allow you to discern the threats and opportunities associated with your area of business. A PEST analysis helps you to identify the main opportunities and threats in your market:
- Political and legal changes such as new regulations
- Economic factors such as interest rates, exchange rates and consumer confidence
- Social factors such as changing attitudes and lifestyles, and the ageing population
- Technological factors such as new materials and growing use of the internet
You also need to understand your own internal strengths and weaknesses. For example, the main strengths of a new business might be an original product and enthusiastic employees. The main weaknesses might be the lack of an existing customer base and limited financial resources.
A SWOT analysis combines the external and internal analysis to summarise your Strengths, Weaknesses, Opportunities and Threats. You need to look for opportunities that play to your strengths. You also need to decide what to do about threats to your business and how you can overcome important weaknesses.
For example, your SWOT analysis might help you identify the most promising customers to target. You might decide to look at ways of using the internet to reach customers. And you might start to investigate ways of raising additional investment to overcome your financial weakness.
Your marketing objectives