SWOT is a widely used tool in business to aid in decision-making and problem-solving. It's valued for its ability to help you assess yourself and your circumstances, and to help you identify and understand the impact of external forces. It stands for "strengths, weaknesses, opportunities and threats," but there are other tools that assess many of the same areas.
PEST stands for the "political, economic, socio-cultural and technological" environment of a situation, and helps users see the big picture. PEST is a three-step process: first, you brainstorm each of the four components; then, you list all of the factors that apply to each component; and finally, you use the information to reach a conclusion. With its emphasis on considering the overall environment, PEST helps you assess and respond to external variables such as national and international economic factors.
The "Entrepreneur" magazine article "The CORE Assessment" says it's both possible and necessary to anticipate your company's potential for financial success and in helping you achieve your goals. A CORE assessment accomplishes this by pointing you in the direction or directions you need to take. This tool assesses a company's capital investment, ownership involvement, risk factors and exit strategy, to evaluate its needs and map out a long-term plan. With a CORE assessment, you look at factors like how much start-up money the business needs, if the business owners will be active in day-to-day operations and whether it's the kind of business someone else can take over when you leave.
Porter's Five Forces
Like SWOT, this tool helps you assess strengths and weaknesses, by uncovering where the power lies in a situation. It outlines five primary external factors: supplier power, buyer power, competitive rivalry, threat of substitution and threat of new entry. The tool is often used to evaluate the potential to generate profits in a given industry, and to understand the balance of power in a situation.
Unlike many tools, which assess overall factors influencing a situation, risk analysis takes a more in-depth look at the potential risks you face. You start by listing any possible threats, from financial to political to natural disasters. Next, you estimate how likely the threat is and how damaging it could be. Finally, you outline ways to manage or minimize the risk. In an "Entrepreneur" magazine column, consultant Stever Robbins says a risk analysis is crucial for any business, especially when putting together its business plan. Robbins also outlines five major risk areas to evaluate: product risk, market risk, people risk, financial risk and competitive risk.
- process flow image by Christopher Hall from Fotolia.com