Strategic Business Analysis: SWOT, PESTEL, and Porter's Five Forces

This report provides a detailed overview of three crucial strategic business analysis models: SWOT, PESTEL, and Porter's Five Forces. It defines each model, explaining the components of SWOT (Strengths, Weaknesses, Opportunities, and Threats), PESTEL (Political, Economic, Social, Technological, Environmental, and Legal factors), and Porter's Five Forces (Threat of New Entrants, Threat of Substitutes, Bargaining Power of Customers, Bargaining Power of Suppliers, and Competitive Rivalry). The report emphasizes the importance of these tools in evaluating both the internal and external factors influencing a business, identifying competitive advantages, and informing strategic decision-making. It highlights how these models help organizations design effective strategies, assess market environments, and achieve their business objectives. The analysis underscores the significance of these tools in organizational research and management for achieving business targets.

Running Head: IMOPRTANCE OF SWOT, PESTEL AND PORTER’S FIVE FORCES ANALYSIS
Imoprtance of SWOT, PESTEL and Porter’s Five Forces Analysis
Student’s Name
University
Author’s Note:

1IMOPRTANCE OF SWOT, PESTEL AND PORTER’S FIVE FORCES ANALYSIS
Executive summary:
Strategic analysis of the business environment provides organization with accurate
comprehension of their competitive advantages. There are several strategic analysis
techniques developed and utilized over the years. SWOT, PESTEL and Porter’s Five Forces
Model are some of the tools that help organizations in evaluating and analysing the macro
and micro elements of the business environment. Then following paper produces an account
of the definition and importance of the aforementioned analytic models.

2IMOPRTANCE OF SWOT, PESTEL AND PORTER’S FIVE FORCES ANALYSIS
Table of Contents
Introduction................................................................................................................................3
SWOT Analysis.........................................................................................................................3
Importance of SWOT analysis...............................................................................................4
PESTEL Analysis.......................................................................................................................4
Importance of PESTEL..........................................................................................................4
Porter’s Five Forces Analysis....................................................................................................4
Importance of the analytic tool..............................................................................................5
Conclusion..................................................................................................................................5
References..................................................................................................................................6

3IMOPRTANCE OF SWOT, PESTEL AND PORTER’S FIVE FORCES ANALYSIS
Introduction
Strategic analysis in business means the process of conducting research in the
environment where an organization operates. It helps identifying strategic needs and solution
to those problems. Apart from technological tools, it often involves certain theoretical
framework such as SWOT and PESTEL Analysis, Porter’s Five Forces model, STEER,
Heptalysis etc. (Wright, Paroutis & Blettner, 2013)
The aim of the present paper is to critically discuss the three important business
analysis models namely, SWOT, PESTEL and Porter’s Five Forces Model and evaluate their
importance in determining business needs.
SWOT Analysis
SWOT analysis is one of the most important strategic business analysis models. This
staregic analysis or matrix is planning technique that enables the identification of the
strength, weakness, opportunities and threats present to the business. The strategic
technique works in analysing the business environment by stating the following aspects of the
business
1. Strength: Strengths specify the characteristics of the business or organization that
provides competitive advantage over other organizations.
2. Weakness: Weakness identifies the drawbacks or disadvantages that the business
contains and has scope for further development.
3. Opportunities: Opportunities signifies those scopes that the business can exploit to
increase its functionality and performance to its advantage.
4. Threats: Threats point out the problem areas that can pose as problematic to the
business and has to be dealt with caution. (Rothaermel, 2013)

4IMOPRTANCE OF SWOT, PESTEL AND PORTER’S FIVE FORCES ANALYSIS
Importance of SWOT analysis
The importance of SWOT analysis is that it provides the evaluation of the business
environment specifying the internal and external factors that may influence the possible
outcome. More specifically, SWOT analysis is the key technique to identify the competitive
advantage of the organization. (Wright, Paroutis & Blettner, 2013)
PESTEL Analysis
PESTEL is the acronym for the political, economic, social, technological,
environmental and legal factors influencing a business or organization. This analytic tool is
mostly effective in identifying the external factors, more specifically the environmental
factors that affects the business. (Rothaermel, 2013)
Importance of PESTEL
PESTEL analysis helps to evaluate the potential of the business strategy in terms of its
alignment and effectiveness. It also provides an overview of the external influences to obtain
a holistic nature of the business environment. It influences organizational planning, product
designing and development, marketing strategy as well as organizational change initiatives.
(Wright, Paroutis & Blettner, 2013)
Porter’s Five Forces Analysis
Porter’s Five Forces Model is an important tool to evaluate the competitive forces of
the organization that shapes the business strategy, policy and execution. This perspective was
developed by Michael E. Porter in 1979 (Rothaermel, 2013). He addresses the structure as the
list of the microelements that influences a business. The key aspects of the model is as
following.
1. Threat of New Entrants

5IMOPRTANCE OF SWOT, PESTEL AND PORTER’S FIVE FORCES ANALYSIS
2. Threat of Substitutes
3. Bargaining Power of the Customers
4. Bargaining Power of the Suppliers
5. Competitive Rivalry
Importance of the analytic tool
The significance of the Five Forces model lies in its potential to identify the
competitive forces that influences the profitability of the business. Thus, it is an important
tool to figure out the competitive advantage over others. (Wright, Paroutis & Blettner, 2013)
Conclusion
Strategic business analysis tools, therefore, are of great importance to organizations.
To achieve their targets, companies need to accurately design its design, pricing framework,
policies, strategies and executions. These analytic tools supplies them with the necessary
evaluation of the micro and macro level elements of environment in which the business
operates. Thus, enabling the organizations to devise accurate business strategies, these tools
serve instrumental purpose in organizational research and management.

6IMOPRTANCE OF SWOT, PESTEL AND PORTER’S FIVE FORCES ANALYSIS
References
Rothaermel, F. T. (2013). Strategic management: concepts. New York, NY: McGraw-Hill
Irwin.
Wright, R. P., Paroutis, S. E., & Blettner, D. P. (2013). How useful are the strategic tools we
teach in business schools?. Journal of Management Studies, 50(1), 92-125.