PESTLE and SWOT analyses

These are tools used to find out the current status and position of an organisation or individual in relation to their external environment and current role. They can then be used as a basis for future planning and strategic management.

The PESTLE analysis should be used to provide a context for the organisation’s/individual’s role in relation to the external environment. It covers Political, Economic, Social, Technological, Legal and Environmental factors. Depending on which elements are included it can also be referred to as STEP, STEEP, PESTEL, PESTLE or LEPEST. Recently it was even further extended to STEEPLE and STEEPLED, including education and demographics.

The process underpins many other analytical techniques, such as Scenario Planning. The factors can be at macro (e.g. World-, EU- or UK-wide) or micro (e.g. institutional or individual) level. Depending on the scope and scale of the exercise being undertaken, you may want to consider for each factor:

  • Which of the below are of most importance now?
  • Which are likely to be most important in a few years?
  • What are the factors influencing any changes?

Political What are the key political drivers of relevance?

Worldwide, European and Government directives, funding council policies, national and local organisations’ requirements, institutional policy

Economic What are the important economic factors?

Funding mechanisms and streams, business and enterprise directives, internal funding models, budgetary restrictions, income generation targets

Social What are the main societal and cultural aspects?

Societal attitudes to education, particularly in relation to government directives and employment opportunities. Also general lifestyle changes, changes in populations, distributions and demographics and the impact of different mixes of cultures

Technological What are current technology imperatives, changes and innovations?

Major current and emerging technologies of relevance for teaching, research or administration

Legal Current and impending legislation affecting the role

European and national proposed and passed legislation

Environmental What are the environmental considerations, locally and further afield?

Local, national and international environmental impacts, outcomes of political and social factors

John Burke introduces PESTLE and SWOT

You will tend to find a lot of crossover – for example policies under political factors leading to legal and environmental factors. You do not need to worry too much about pigeon-holing issues into the right category – the framework simply helps you think about the context as a whole.

Now you have the PESTLE context you can use this output to map out a SWOT analysis. SWOT stands for:

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats

A traditional SWOT analysis would take the context of the PESTLE and analyse how these factors may emerge/impact.

This may be an interesting exercise but often doesn’t lead to anything apart from four lists that are filed away and forgotten.

A SWOT analysis should be a useful tool for planning and marketing strategy. Identify your strengths and weaknesses first because they may suggest some of the opportunities and threats later. There is a tendency for people to play the ‘opposites game’ whereby an opportunity might be identified and then a converse threat that ‘it might not be taken up’. This is not a threat, threats have to exist now in the present – this is a RISK associated with taking that opportunity and this should be recorded in the risk register. Our Risk Management infoKit explores this whole area in more depth.

A better way to map this output more directly into a project plan and/or strategy is to use a 3×3 grid, arranging your strengths, weaknesses, opportunities and threats in the labelled boxes. Then come up with some ‘mini strategies’ in the four boxes in the bottom right corner of the matrix, addressing the questions outlined. Having done this you can use the top left box to either translate the strategies into a task list for a project plan or come up with a strategy or mission statement for whatever topic was the subject of the SWOT analysis.

Enhanced SWOT Analysis
Enhanced SWOT Analysis

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Published: 5 April 2008 | Last updated: 6 February 2014