#197 What is a SWOT and PESTLE?

A crucial part of Implementing any ISO Standard is addressing your risks and opportunities. 

This is a key part of Clause 4 Context of the organisation, which expresses and explicit need to review and assess what internal and external factors could help and hinder in achieving your business goals.

While ISO Standards don’t define a definitive method of doing so, many have adopted the practice of carrying out a SWOT and PESTLE analysis.  

Today Ian Battersby explains what a SWOT and PESTLE analysis is, the key questions you should be asking and the importance of continually reviewing and updating the results as your management system matures.   

You’ll learn

·      What is a SWOT analysis?

·      What is a PESTLE analysis?

·      Examples of questions you should be asking during a SWOT and PESTLE

·      How often should a SWOT and PESTLE be conducted?

·      Examples of SWOT and PESTLE in practice

 

Resources

·      Isologyhub

 

In this episode, we talk about:

[00:30] Join the isologyhub – To get access to a suite of ISO related tools, training and templates. Simply head on over to isologyhub.com to either sign-up or book a demo.

[02:05] Episode summary: Ian Battersby will be explaining what a SWOT and PESTLE exercise is, it’s role in fufilling key requirements in Clause 4 of any ISO Standard, and the key questions you should be asking during the exercise.  

[02:30] What is a SWOT and PESTLE analysis? – This is one is the tools you can use to look at various factors that affect your organisation.

SWOT standards for:

·      Strengths

·      Weaknesses

·      Opportunities

·      Threats

PESTLE standards for:

·      Political

·      Economical

·      Social

·      Technological

·      Legal

·      Environmental

And in recent years, people have added ethical into PESTLE too. Whether that’s on its own or integrated within the other elements is up to the organisation and how they want to run the exercise.

Both analysis are fundamental in helping organisations understand the benefits and pitfalls of a project, management system implementation included.

[05:05] Where in the Standard is there a need for a SWOT and PESTLE? – Clause 4 in all ISO Standards is known as ‘Context of the organisation’, which you need to establish early on in order to set the foundations for building your management system.

Context is the world in which an organisation works, it is the considerations of the internal and external factors that affect what you do.

SWOT and PESTLE, while not specifically referenced in the Standard, is a highly recommended tool as it directly assesses multiple internal and external factors and can fulfil the requirements of any ISO Standard.

[06:20] Addressing Context of the Organisation – Clause 4, Context of the organisation states:

“The organisation shall determine external and internal issues that are relevant to its purpose and its strategic direction, and that affects its ability to achieve the intended results of its management system.

The organisation shall monitor and review information about these external issues.”

There are also 3 additional notes:

#1: Issues can include positive and negative factors or conditions

#2: Understanding the external context can be facilitated by considering issues arriving from legal, technological, competitive, market, cultural, ect

3#: Understanding the internal context can be facilitated by considering Issues related to values, culture, knowledge and performance of the organisation.

 

So, there’s a lot to consider!

[08:10] How SWOT and PESTLE address Context of the Organisation – Taking a look at SWOT, strengths and weaknesses would refer to factors internal to your organisation, while the opportunities and threats would be external.

Depending on the focus of your management system, you may also want to complete this exercise through a certain lens. That could be information security, health & safety or environmental.

The Standard requires you to align your management system with the strategic direction of the organisation, so even if you are viewing this exercise through a certain lens, don’t do so in complete isolation.

[09:55] How to conduct a SWOT and PESTLE – The people involved in completing this exercise are important, not just the questions you ask.

Senior management should be included as they will have key insight to the strategic direction of the business.

You should also include operational managers or other functional managers as they will have more context for how things actually work in practice.

The point of a SWOT and PESTLE is to ascertain where you stand in terms of your risks and opportunities, and issues relating to resources, people, information, process, technology, equipment, laws, markets, environment, finance, economy ect from both an internal and external lens.

This will give you a solid foundation to build your management system on, which will ultimately help you achieve your intended outcomes and lead to a cycle of continual improvement.

[11:55] Considerations for Strengths – Strengths is an internal factor. Questions you could ask include:

·      What do we control through good processes?

·      What are we known for?

·      What does our marketplace and competitors say about us?

·      What are we good at?

·      What assets do we have?

·      What resources and knowledge do we have readily available?

·      What's the strength in our products and in the processes for delivering those products and the people that run those processes and deliver those products, their skills, their knowledge, their strengths, their weaknesses and their expertise?

·      What areas in our organisation are already at a high standard and don't necessarily need improvement?

 

·      Do we have objectives and targets that we measure against, i.e. KPIs, metrics, success factors and service level agreements, that demonstrate we're good?

[13:10] Considerations for Weaknesses – Weakness is another internal factor, one that you have to be brutally honest conducting. Questions you could ask include:

·      What could you improve?

·      Where is money being spent poorly, or being lost?

·      What do your competitors do better than you?

·      What resources / knowledge / people / expertise do you lack?

·      What processes do you lack?

·      Where can your products or services be improved?

·      What are the constraints on your ability to meet changes in market need or demand?

·      What does your customer feedback look like?

·      Do your suppliers meet your requirements or the requirements of your clients?

[14:45] Considerations for Opportunities – Opportunities are considered an external factor. Questions you could ask include:

·      What new opportunities are available in your market?

·      What data do you have available on market trends, and how can you leverage that?

·      How changes in compliance requirements in your specific industry or your locality might provide you with opportunity to gain an edge?

·      What are past identified opportunities that we’ve not acted on?

·      What is the competition not taking advantage of that you could?

·      How can you increase customer satisfaction based on both positive and negative feedback received?

[16:00] Considerations for Threats – Threats are also considered an external factor, they are obstacles for you achieving your goals. Questions you could ask include:

·      What new environmental effects may affect you? Note: there is a new climate change amendment added to many commonly adopted ISO Standards, so this is something you will need to address.

·      What competitors are a threat to you?

·      Are other competitors taking advantage of markets that you have not accessed?

·      Why might competitors be getting ahead?

·      Are the habits of customers changing, and if so, how?

·      Are there other interested parties other than customers who present obstacles to you?

·      Are there any foreseeable resource issues? i.e. loss of experienced staff, lack of relevant talent in the pool of available people ect

·      Are you adapting to changes in the world?

[16:00] PESTLE: Addressing political factors – When you’re looking at political factors affecting your intended outcomes, consider the following:

·      What is happening politically in your environment? - That could be international or local on scale

·      What is the impact of policy or tax?

·      What is the impacts of employment trends / trade restrictions / tariffs?

·      What is the impact of unemployment rates on your organisation?

·      What is the impact of workforce shortages that may affect you?

·      Is there any form of Government intervention in your specific market?

·      Would this government intervention be considered an opportunity or threat? i.e. offering grants

[19:20] Join the isologyhub and get access to limitless ISO resources – From as little as £99 a month, you can have unlimited access to hundreds of online training courses and achieve certification for completion of courses along the way, which will take you from learner to practitioner to leader in no time. Simply head on over to the isologyhub to sign-up or book a demo.

[21:25] PESTLE: Addressing economic factors – When you’re looking at economic factors affecting your intended outcomes, consider the following:

·      What is the impact of interest rates / exchange rates / inflation?

·      What is economic policy doing to you and your industry and your clients?

·      What are the impacts on wage rates / minimum wage changes /affordable living cost of living?

[21:50] PESTLE: Addressing social factors – When you’re looking at social factors affecting your intended outcomes, consider the following:

·      What's the impact of changes in the cultural landscape?

·      What’s the impact of the expectation of people?

·      What’s the impact on working people’s lives and what their expectations are for working life in general? i.e. working hours and career aspirations

·      What is the and the emphasis on ethics, safety, Environmental Protection and data privacy for your clients / workforce / suppliers?

 

[22:50] PESTLE: Addressing technology factors – When you’re looking at technological factors affecting your intended outcomes, consider the following:

·      What is happening technology wise which impacts on what you do?

·      How does this affect the equipment you use? i.e. automation, the age of your equipment ect

·      What's the impact of emerging technology?

·      How you decide on the costs and benefits of investing in new technology?

·      How do you use your website / blogs / social media to interact with your marketplace?

·      Have you got intellectual property you need to protect? i.e copyright pins that need consideration.

[23:40] PESTLE: Addressing legal factors – When you’re looking at legal factors affecting your intended outcomes, consider the following:

·      How does the law affect how you do business? i.e company law, health & safety law, HR law, trade law?

·      What changes in legislation have occurred recently that you need to have considered?

·      How do you horizon scan for changes in legislation that affect you in your market?

·      What's the impact on employment on imports, exports, labour departments?

·      Have you considered other compliance obligations, such as certification to certain standards?

[24:50] PESTLE: Addressing environmental factors – When you’re looking at environmental factors affecting your intended outcomes, consider the following:

·      How do environmental aspects impact you, and how does the way you operate affect the environment? This includes consideration for air, water, land, natural resources, flora, fauna.

·      How do changes in the energy and utilities markets affect you?

·      How does your organisation fit in with any carbon reduction targets that your Government may have in place?

·      Are you required to create a carbon reduction plan?

·      Do you need to comply with certain environmental reporting requirements? i.e. here in the UK we have schemes like ESOS and SECR

[24:50] PESTLE: Addressing ethical factors – This one is optional, but many are choosing to include it as part of their PESTLE now. When you’re looking at ethical factors affecting your intended outcomes, consider the following:

·      How do you stay on the right side of the law with respect to the use of money?

·      Have you considered human rights / labour / children in the workforce / slavery / health & safety and well-being of local populations?

·      What charitable contributions do you make as an organisation?

[27:15] Assigning significance  – The next part of a SWOT and PESTLE requires you to assign significance to the various factors affecting your organisation.

So, make sure you document every factor and how those factors affect your ability to achieve what you intend. Ensure that this all remains in alignment with the strategic direction of the business, as ultimately, you want your Management System to help drive those goals forward.

[30:25] Frequency of a SWOT and PESTLE: This isn’t just a one-off exercise. You should be continually monitoring these internal and external factors, and only updating the exercise during a management review meeting will do you a disservice.

This is an ever-changing world, it’s the one in which you operate, and you need to ensure you’re keeping up with it.

You could look at various factors in monthly or even weekly meeting with the appropriate parties, and see if circumstances have changed.

[31:25] Examples of why you should continually update your SWOT and PESTLE: Ian recounts an experience he had with a client where they had failed to disclose where they had switched to a digital system for competence related documentation, but it had not met their needs and so they needed to return to manual documentation.

This switch made finding the required documentation for internal audits difficult. None of this was recorded in their SWOT and PESTLE.

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