A strategy is how a company competes. Its
essence is opportunity divided by capacity.
The strategic analysis looks into the process of finding a fit between
the external opportunities and internal strengths while working around external
threats and internal weaknesses (Wheelen, Hunger and Hoffman, 2015).
The S.W.O.T acronym is used to describe the
particular Strengths, Weaknesses, Opportunities and Threats- when conditions in
external environment jeopardize the reliability and profitability of the
organization’s business that are potential strategic factors for a specific company
(Ommani, 2011). It does not only result in the
identification of a corporation’s particular capabilities and resources and the
superior way in which they are used but also in the identification of
opportunities needed to enhance its competitiveness that the firm is not
currently taking advantage of due to a lack of appropriate resources (Wheelen,
Hunger and Hoffman, 2015).
SWOT analysis has various criticisms. For
example, it generates lengthy lists with no prioritization and it uses no
weights to reflect priorities (Wheelen, Hunger and Hoffman, 2015). The same
factors can also be placed into two categories. This means that virtually
everything that is a strength is also a weakness and everything that is an
opportunity is also a threat. I believe this a major weakness of SWOT analysis.
In a small fashion firm, Inferior or unproven skills, expertise, or
intellectual capital in certain areas can be a strength but as well a weakness.
A strength in the sense that it doesn’t restrict the firm to what they believe
they know but gives them the opportunity to go out into the external market
with a fresh set of eyes looking at what the consumer wants rather than what
they believe would be perfect for them. However, this can be a major weakness
as consumers usually look to an organization to lead them in trends they should
follow so low expertise or intellectual capital hinders the corporation from
being a trendsetter.
On the other hand, SWOT analysis helps in
strategic planning in different ways. One of which is to maximize a company’s
response to opportunities. This simply means that it puts a company at a
competitive advantage by making known all the opportunities there is in the
external market that they may not be aware of and aiding the company to go for
it. This benefit is highlighted more in big corporations such as Apple or
Samsung as it makes them aware of what their competitors and the consumers are
Conclusion as to the efficacy of the tools and
context in determining efficiency: more of a benefit or hindrance.
The PESTLE framework is a tool to identify external
opportunities and threats (Rastogi, Trivedi, 2016). The letters represent the
Political, Economic, Social (or Socio-economic), Technological, Legal and
Environmental opportunities and threats in the firm’s environment. This
analysis technique should be used in conjunction with other tools such as a
SWOT and other strategy tools (Wheelen, Hunger and Hoffman, 2015). The
objective of using the PESTLE Analysis is to ensure that you have identified
the important implications for your organization and that nothing key has been
PESTLE analysis can be very expensive (Rastogi
and Trivedi, 2016). The fact that the process has to be conducted regularly to
be effective can be a strain especially for small corporations such as a start-up
and because of this, often organizations do not make this investment. This
strain simply means that organizations have to restrict who is involved due to
time and cost considerations. This limits the technique’s effectiveness as a
key perspective may be missing from the discussions. Furthermore, user’s access
to quality external information is often restricted because of cost and time
needed to collate it.
On the other hand, an advantage of PESTLE is
that it provides an easy to use framework for an organizations analysis (Rastogi,
Trivedi, 2016). PESTLE is a very effective analysis and it should be used on a
regular basis within an organization to enable the identification of any
trends. The impact of a certain external factor may have more severe
consequences for a particular division or department and the PESTLE technique
can help clarify why change is needed and identify potential options.