In this highly competitive business and marketspace, insight is required into the various internal and external factors influencing strategic planning. Analytical tools like SWOT, PESTEL, and MOST enable businesses to build a holistic view of the surroundings that could guide intelligent strategic decisions. This blog helps us explore how these business analysis tools may be combined to enhance the business analysis process and support strategic planning.
Business Analysis Tools Overview
SWOT Analysis
SWOT is an abbreviation for Strengths, Weaknesses, Opportunities, and Threats. It helps a business to be well aware of its inner strengths and weaknesses, as well as all the outer opportunities and threats that might affect the success of doing business.
Strengths: These are the internal factors that provide the business with an inner edge with respect to competitiveness. It refers to the power of the brand or the talent present within the business or organization.
Weaknesses: These are the internal factors that happen to be a limitation for expanding or growing the business. They incorporate outdated machinery, limited manpower, etc.
Opportunities: External factors available to the business for growth which may consist of newly found markets or emerging social trends.
Threats: External issues that might negatively affect the business, for example, economic downturns or new regulations.
PESTEL Analysis
PESTEL Analysis looks at six primary external factors: Political, Economic, Social, Technological, Environmental, and Legal. These categories facilitate an easy understanding of the broader environment that is affecting the operations of a business.
Political: Government policies, regulations, and political stability.
Economic: Economic trends, inflation rates, and consumer spending patterns.
Social: Societal trends, consumer preferences, and demographic changes.
Technological: Technological advancements and innovations impacting the industry.
Environmental: Sustainability issues and the environmental impact of business activities.
Legal: Adherence to industry regulations, laws, and legal standards.
MOST Analysis
MOST Analysis aligns a business's strategic goals with its practices through Mission, Objectives, Strategy, and Tactics.
Mission: The primary purpose of a business.
Objectives: Measurable goals that are derived from the mission.
Strategy: The ways to achieve the objectives.
Tactics: Specific actions that have to be executed for strategies to achieve the objectives.
Integration of SWOT, PESTEL, and MOST: Step by Step
Step 1: SWOT Analysis
Carry on with SWOT Analysis in order to analyze your business's inner strengths and weaknesses and identify external opportunities and threats for your company.
Strengths and Weaknesses List: Find out the strengths and weaknesses of your business. These are inner factors acting as advantages or disadvantages.
Define Opportunities and Threats: Determine external factors that impact the business to be either opportunities or threats.
Example: A Neighborhood Restaurant
Strengths:
These are features found to be strong within the business.
Strong local reputation, fresh ingredients, and customers loyal to the business.
Weaknesses:
These are features that are considered to be weak areas within the business.
Seating capacity is at a minimum, food is more expensive.
Opportunities:
These are external factors that the business can leverage to its advantage.
More demand for local food, the addition of delivery service.
Threats:
These are external factors that pose a threat to the business.
Increased competition from restaurants that are new to the area, and increased ingredient prices.
The restaurant can now easily tell where it is strong and what must be worked on to become more impressive, providing an overall look at the internal and external factors for direction.
Step 2: PESTEL Analysis
PESTEL Analysis can now be used to assess the external macro-environmental factors that can influence your business.
Examine Political Factors: How government policies affect small businesses.
Evaluate Economic Factors: What economic factors or consumer spending in the community may need to be addressed?
Analysis of Social Trends: Demand for home-made and sustainable food.
Technological Advances Review: Mobile ordering and delivery applications.
Environmental Consideration: Sustainability awareness and waste reduction.
Legal Compliance: Food-related health and safety laws.
Application: At the Local Restaurant
Political: Small business restaurant-friendly policies at the local level.
Economic: Disposable income in the region is on the rise, and people are eating out more.
Social: Green dining interests are on the rise.
Technological: Scope for taking orders and delivering food digitally.
Environmental: Raised awareness about food wastage and sustainable sourcing.
Legal: Compliance with safety standards of food products as well as labour laws.
On this basis, external factors are more candidly understood. This lets the restaurant go ahead with the decision-making process in terms of increasing services or increasing sustainability.
Step 3: MOST Analysis for Strategic Positioning
As the last step, consider MOST Analysis for converting the outputs from SWOT and PESTEL into strategic positioning.
Define the Mission: Clearly state what the organization will accomplish.
Set Objectives: Outline measurable, specific objectives based on the SWOT and PESTEL analysis.
Develop Strategies: Develop strategies to meet the objectives that have been mentioned.
Plan Tactics: Include actions that the firm needs to take in order to successfully implement the tactics.
Example: Of the Local Restaurant
Mission:
Offers quality, sustainable dining experiences.
Objectives:
Increase the market share through more customers.
Decrease the food wastage level by 25% in the next year.
Strategies:
Launch online ordering and delivery services.
Partner with local farms for sustainable sourcing.
Tactics:
Organize a social media campaign that encourages people to adopt sustainable practices.
Develop a customer loyalty program based on eco-friendly initiatives.
When the analysis from SWOT and PESTEL is combined with the MOST, the restaurant creates a distinctive route to success that is in alignment with its mission and values.
Why Use All Three Tools Together?
Analysis of All These Factors Together: All these analyses together provide the overall picture of the business environment. Now, while SWOT delivers the analysis regarding internal and external factors that have a direct influence on the business, PESTEL analyzes the wider macro-environmental factors, and MOST analysis makes sure that strategies remain in line with the business objectives.
Balanced Perspective: Each tool gives a different perspective. SWOT gives one an overview of the whole outline of the strengths and weaknesses, opportunities, and threats. PESTEL provides a deeper look at the external influences, while MOST ensures that the strategies are aligned with the mission so nothing gets omitted.
Better Decision-Making: This combination of tools together allows better decision-making. With the use of SWOT and PESTEL, main focus areas and potential risk analyses can be done; meanwhile, MOST ensures that decisions align with long-term goals.
Improved Agility: It enables the company to be agile. By often reviewing SWOT and PESTEL, you would be aware of internal and external variations, and through MOST, strategies then channel on changing business goals.
Optimal Resource Utilization: With the use of SWOT for specific areas, PESTEL to screen the environments externally, and MOST in accord with business objectives, the companies can use their resources wisely with optimum results.
Practical Application: SWOT, PESTEL, and MOST Together in Market Expansion
Scenario: Extend the Market Scalability
A local restaurant intends to expand to new nearby localities. Here is how SWOT, PESTEL, and MOST come into play in aiding the desired strategy:
SWOT Analysis
Strengths: Good brand image, fresh produce from local soils.
Opportunities: Probable emergence of new sources with high demand for local dining.
PESTEL Analysis
Social: Consumer interest in greater sustainable dining.
Economic: Consumer expenditure is rising in neighbouring regions.
MOST Analysis
Mission: Extend sustainable dining to new communities.
Objectives: Increase the frequency of customers and partnerships with more local farms.
Strategy: Sustainability with more options.
Tactics: Run targeted ads. Partner with local influencers.
Result: The restaurant plans to expand in new markets by using all of its strengths, knowing the challenges it might face, and aligning with its very own mission.
Ready to Use a Holistic Approach to Your Business Planning?
As we have seen in this blog, with the integration of SWOT, PESTEL, and MOST analysis, a business will more probably have a very strong framework to approach strategic planning. It helps businesses understand internal strengths and external influences and then align their strategies with a mission for more effective planning and growth.
Book a discovery call to explore how we can help you or your team become more innovative.
Comments