SWOT / PESTLE,Analysis is the art of creation through destruction.” PS. Baber, Cassie Draws the Universe There is no discussion on whether strategic planning is important or not. Everybody seems to agree on its significance, but the question remains, how to do that. In the next section, you'll see an overview of 2 most commonly used methods of analysis, which provide insights on an examined enterprise and on its surroundings. SWOT What is SWOT and why it can help you? SWOT (standing for Strengths, Weaknesses, Opportunities & Threats) isa technique of assessment, of indefinite origin, used in a process of strategic planning, It helps you to understand the potential behind your Startup, as well as take a closer look at what could go wrong, Often presented as a matrix. Itis common to subdivide it into two categories - but you'll see right away that they are strongly interconnected: Internal factors (Strengths & Weaknesses) Strengths are features of an enterprise, which represent a certain advantage on a competitive landscape. As this definition states it, itis clear that it isa relative value, meaning it requires comparison with characteristics of other projects in the same sector, in order to be a basis for good reasoning, Fe. loyal customers, a well-known brand, or a unique solution/technology.Weaknesses could be seen as Strengths... of your competitors, These are traits of your Startup that don't really keep pace with a present market situation, and as Strengths, they should also be seen as a relative value. Fee. lousy customer service, delays in deliveries, or high level of debt External factors (Opportunities & Threats) Opportunities are (often very complex) assumptions of what could be used in the advantage of an enterprise. Simply put, they represent ideas on how to either generate more Strengths or overcome certain Weaknesses. Fe. law regarding environmental protection changes and now utilizing machines that emit CO, becomes illegal - so there is a possibility for quickly taking a share of the emerging market in renewable energies Threats are things that could potentially harm a company. As you may anticipate, they are the opposite of Opportunities - they can evolve into being a Weakness or, when treated properly, even be turned into a Strength. Fe. you observe newcomers on your market, who can capture a share of your clients - if they will turn out to provide higher quality than you Itis worth noticing, that because of the overlapping of these external factors and their fair hypothetical nature - some traits or situations could be seen both as an Opportunity for something great to happen or a Threat that will backfire when misused. Fe. testing new technologies in production may lead to optimization and improvement, as well as to the conclusion that the effect of R&D has no business application (say, because it's too expensive) and become a waste of precious time.CONCLUSION SWOT isa powerful tool for teams working on a business-strategy - it allows us to lay out the big picture and a general vision, and also take a closer look at details. It unifies your team’s idea about what sort of value does your Startup represent and what traps it could fall into. It can be applied both to a whole enterprise and to its more detailed components, such as marketing strategy or production. While using SWOT it is important to remember, that external and internal factors which are considered in it, represent an idea about how an organization looks like in a specific moment in time - meanwhile these elements are constantly and rapidly changing, therefore should be updated regularly. It is also employing arather qualitative (descriptive) approach, so in order to make sure it is well- based, one needs to withdraw himself from hasty conclusions and try to gather as much real, quantitative data as possible. It has also been pointed out, that SWOT focuses only on WHAT these things are, but provides no insights on HOW to facilitate a strategy (meaning, fe. how to avoid a specific Threat from materializing). Anyway, it is worth trying out - you can find a template for it here. RECOMMENDED READS Pickton, D., & Wright, S. (1998). What's SWOT in strategic analysis? Strategic Change. Object Oriented and Multi-Scale Image Analysis: Strengths, Weaknesses, Opportunities and Threats - A Review. Journal of Computer Science 4 (9): 706-712. Jan 2008.PESTLE PEST analysis is a way of investigating the company’s surrounding environment. It has evolved into several versions of itself, each one adding an intriguing dimension to the overview. Originally it stood for Political, Economic, Socio-cultural and Technological factors that affect an enterprise. While working on a business strategy or market analysis, this division provides a fairly holistic perspective over your Startup. As mentioned before, it is being used in several forms. Since that is giving us a bigger picture of what could also be analyzed, let's look at the variations of these ingredients: Legal as in PESTEL, PESTLE, SPELIT or SLEPT. Environmental (or Ecological) as proposed in PESTEL, PESTLE, DESTEP or STEPE. Ethics & Demographics as in STEEPLE, STEEPLED or PESTLEE. Intercultural as in SPELIT. Military, Social, Information, Infrastructure, Physical Environment and Time, used in military applications in the form of PMESII-PT.This variety shows us that each organization is different, and one should seek an analysis that is tailored to the nature of his enterprise. Since we're devoted to providing you a pragmatic knowledge that you can utilize, we will bring some examples on PESTLE which we perceive as a standard and most popular version ~ but feel free to experiment and read more into the possibilities in “recommended reads” section. Political - fe. taxes, approach towards your initiative, or programs of local authorities. Economic ~ fe. welfare of customers, economic cycle, or currency's strength. Social - fe, public opinion, religious movements, or lifestyle traits. Technological - fe. developing technologies, demand for progress, or background for R&D. Legal - fe. copyrights law, changeability of a legal system, or tax law. Environmental - fe. customers’ awareness, impact on the environment, or legal acts on environmental protection.CONCLUSION Obviously, many areas will overlap, but analyzing the environment, in which your Startup is trying to flourish - while taking into account these different dimensions - has proven to be an effective way for setting the ground for a business strategy. Some say it is an improved version of SWOT, and as in it, one should pay attention not to oversimplify information and to base the analysis on the real data (basing it solely on assumptions will likely make it useless). Similarly, considered factors are very fluent so this type of analysis shall be conducted regularly and quite often (depending on how rapidly is the environment transforming). An often brought up advantage over SWOT is that PESTLE provides a more functional and structured way of viewing the situation. As always, we advise you to try it out. You can do it here. RECOMMENDED READS Rashain Perera, The PESTLE Analysis Brigitte Feys & SOMINUTES, PESTLE Analysis: Understand and plan for your business environment (Management & Marketing Book 28)