PESTLE vs. SWOT In contrast to a SWOT, PESTLE encourages you to think about the wider environment and what might be happening now and in the future which will either benefit or be of disadvantage to the organization, individual etc. You can use results from PESTLE for SWOT – OT (opportunities and threats) part but PESTLE can be used also separately. OTs come always from PESTLE and other analyses – a kind of radar which picks up trends and developments in the external environment which can be used to inform longer term planning and strategy making You cannot do SWOT without any macro and microenviroment analyses done before!

Issues of concern The main problem with these external PESTLE factors is that they are continuously changing Therefore PESTLE analysis should include a thorough analysis of what is affecting the organization or a project Now, and what is likely to affect it in the Future – not in general but focused! The result of a PESTLE analysis is usually a list of positive and negative factors that are likely to affect a project However, by themselves, theses factors they mean very little It is important to bear in mind, that PESTLE analysis requires careful Application of results All factors must be carefully evaluated and their impact mu be clearly expressed – see example in other file “Importance” - Increasing > - Unchanged = - Decreasing <

HELPS FREDICT analysis (common to PESTLE) G. Clarke FACTORS importance 1-10 probability impact - 5+5 sum historical economic language political sociál financial rules of international trade environmental demographic infrastructural cultural technological

The microenvironment consists of the actors in the firm’s immediate environment that affect its capabilities to operate effectively in its chosen markets.

Model of 5 competitive forces (Michael Porter) Threat of and opportunity from: (intense) segment rivalry new entrants substitute products 4. buyers’ bargaining power 5. suppliers’ bargaining power

Understanding the competitors Image and Positioning Objectives and Commitment Size, Growth & Profitability Current and Past Strategies Strengths and Weaknesses Competitor Actions Organization and Culture Exit Barriers Cost Structure Figure 3.3

Rivalry Between Established Competitors The extent to which industry profitability is depressed by aggressive price competition depends upon: Concentration (number and size distribution of firms) Diversity of competitors (differences in goals, cost structure, etc.) Product differentiation Excess capacity and exit barriers Cost conditions Extent of scale economies Ratio of fixed to variable costs

Source: http://pics1.imagezone.org/key/%20Strategic%20Group%20Mapping

Example of results of macro, micro and company analyses combination Source: Schmid and Grosche, 2008, Managing the international value chain in the automotive industry