SWOT and PESTEL Analysis
For starters, what is a SWOT analysis and how is it different from a PESTEL analysis? Whilst the two are both commonly used in an attempt to understand the state of a business and what it has going for/against it, the two different methods of analysis find this information through different methods.
The SWOT analysis stands for Strengths, Weaknesses, Opportunities and Threats. This form of analysis is commonly used to determine where the strengths and weaknesses are in a business, potentially including the combined strengths and weaknesses of the entire staff-base and resources available, what opportunities are available in the area to put the business in an advantageous position and what threats could potentially hinder the growth or profit of the business. This analysis can be used both to determine how effective a business could be in terms of its positive areas and its weaker areas, such as a business having lots of hard-working employees but with a generally poor location with few potential clients in the area. On the other hand, a SWOT analysis can also be performed on an individual rather than a business - this is something I'll be showing off later in the task.
In comparison to this, the PESTEL analysis stands for Political, Economic, Social, Technological, Environmental and Legal.
The Political side of the PESTEL analysis goes into detail about how the government and the business' country can impact the way their business operates: tax policies, foreign trade, potential corruption within the government and so on.
The Economic portion of the analysis talks about how a certain country's economy may impact the effectiveness and ability to perform of a business. Factors relating to the economic section include the economic growth of a country, inflation rates, interest and the general disposable income of consumers. Most importantly, it also goes into detail about how the purchasing power of a particular economy could impact your business.
The Social aspect of the PESTEL analysis gives us information about what kind of demographics and cultures are present within the area that the business is operating. This leads to having to consider aspects such as the population's growth rate, the general age distribution of a location and potential cultural barriers.
The Technological dimension of PESTEL details how recent innovations in technology and general research/development could impact your business, whether positively or negatively. These potential impacts include the level of automation in the tech available to you, how innovative your area is, changes in technology and so on.
The Environmental part of the analysis talks about how environmental factors could impact your business and how it's going to operate in the current climate. This includes things such as the local area's weather, potential impacts on the environment from use of fossil fuels, how to limit impacts on climate change from your business and so on.
Finally, the Legal section of the PESTEL analysis goes into more detail than the Political aspect about specific laws and how they could impact your business' daily operations. This includes the effects of specific laws such as discrimination laws, health/safety laws, copyright laws and also employment or consumer protection laws. After all, it's important for a business to follow the law.
All of these aspects combined work together to build an effective analysis of the general environment a business has to work in, and what it can do to work with potential opportunities (e.g. from technological boons or advantageous demographics in the area) and how it'll deal with harmful aspects of the climate (e.g. laws that could get in the way of specific plans, cultural barriers, etc.)
Unlike the SWOT analysis, it's impossible to perform a PESTEL analysis on an individual, making it solely useful for analyzing the efficacy of a business in a certain climate/environment and how the factors of that environment could impact the business' performance and finances.
PESTEL Analysis
Unfortunately, it'll be impossible for me to perform a PESTEL analysis at this point of development in the course. As mentioned above, it's not feasible to perform a PESTEL analysis on myself, and I haven't got a solid enough idea of my business at the moment to perform an analysis on that. In order to provide an example of a PESTEL analysis, however, I'll instead go into a general analysis of how the local environment could potentially impact a very general business within the UK.
For starters, we must consider the Political climate. The UK has some very specific tax laws depending on the kind of business that you're running - in this scenario, I'll be focusing more on a Small Business rather than a larger company, as that's the kind of business I'll be developing throughout the course. Firstly, a small business will have to pay Corporation Tax on their profits over the financial year - this is set at 19% of your profits. Following up from this is your Income Tax, which is paid on your own income - the amount of your income tax will vary depending on the profit you make from the business. There's also a National Insurance Tax that certain directors of limited companies are going to have to pay, along with VAT added onto the cost of goods and services (assuming your annual turnover is above £85,000).
Naturally, Brexit is going to have a rather large impact on the Political aspect of a business' functions, due to the foreseen effects it will have on trade with the EU. According to documents provided by the official UK government websites, agreements have been made between the UK and the EU in order to minimize the barriers and blocks that would make trade far more difficult, although there are going to be new customs laws that could slightly extend the process of trade with any EU partners. With this in mind, procuring resources and selling goods to clients and partners from the EU could become slightly more difficult than it has been in the past, particularly for physical goods such as pieces of art or prints.
Moving onto the Economic aspect of the analysis, England is lucky to have a generally decent economy when compared to some of the poorer countries around the world. Whilst the economy has been having some shakes and issues due to Brexit and the repercussions of trade between the UK and the EU (most notably petrol shortages and supply issues), England is still quite high up with a GDP of $2.708 according to data from the Worldbank. This places England around 5th in the world in terms of GDPs, only being below Germany, Japan, China and the US. According to further stats from Statista.com, the average disposable income of young adults (the usual demographic for creative ventures in my opinion) is around £37,000. This is an extremely good figure for someone running a creative venture, as that amount of money is perfect to spend on any number of different creative ventures, no matter how expensive their pricing; most art commissions or writing commissions or even photography sessions will cost barely anything compared to this, attracting potential clients interested in the arts based on price alone.
Next up is the Social side of the analysis. According to Wikipedia, England has a slightly higher number of women than men, although this is a hardly important difference, as the two are very close together. Additionally, according to a population pyramid from the 2011 census, the largest age demographic in England is in the 40-45 age range, although there's a very nice number of 20-30 year olds as well, suiting a very large range of people that could be interested in a number of creative products including prints for older folks to decorate their homes and personalized art commissions for the younger generations. Most importantly, however, the primary language used within England is obviously English, providing very few cultural barriers for a business run by someone born in the UK. With all this in mind, creating any kind of creative venture within the UK should have a wide number of potential demographics to target for a range of different possible business ideas.
For the Technological aspect of the PESTEL analysis, the UK is especially lucky. According to statistics coming from the International Telecommunication Union in 2015, the UK was the fourth most technologically developed country in the entire world, only behind Iceland, Denmark and South Korea. Considering how many technological advancements the UK has managed to develop and how well the country is doing both economically and technologically, getting resources to run any number of businesses will be especially simple within England. Printers are easily available for businesses such as art and photography, there are tons of cameras on market with several photography companies having bases in the UK including Canon and there's a huge number of UK-based services for film equipment and prop renting for those interested in the film side of business.
When thinking about the environmental side of a PESTEL analysis, the UK is a northern region, although nowhere near as cold as somewhere like Canada or Iceland. While it can get decently cold in Autumn and Winter, it doesn't snow very often which means getting things delivered around the country will be less inconvenient (less snow means less ice on the roads to drive over!). Additionally, the UK has a number of different landscapes available for those who need nature to inspire them - fields and forests, beaches and mountains, there's a number of different environments for people like natural artists and landscape photographers. The UK also has access to a wide range of more environmentally friendly energy sources, with plenty of sunny days to provide solar energy, a lot of wind for wind farms and oceans all around for hydro-electric power where necessary.
Finally, the UK has a number of different laws that businesses will have to consider when they get up and running, especially for creative businesses. The UK has very strict discrimination laws, protecting discrimination against age, gender, sex, sexuality, religious standing, disability, race and more. This means that a business can't refuse service to a customer on the basis of these things, and shouldn't treat any of their employees as lesser or pay their employees less due to one of these reasons. The UK also has very strong copyright laws which will greatly benefit a wide number of creative entrepreneurs in England - your work is given automatic copyright protection if it falls into one of the following categories:
- Original literary/artistic work
- Original non-literary work such as web design
- Sound/Music
- Film & TV
- Broadcasts
- Layout of written publications
These different categories should protect almost every potential creative enterprise that could be created, protecting their products and work under the copyright laws. The law also means that a business is unable to copy the work of others, individual or not, and use it for their own commercial purpose - no copying the art of someone else for your own profit. England also has strong health & safety guidelines for people in the workplace, protecting them from injury under the guidance and information of the workplace's supervisor/manager.
To conclude the PESTEL analysis, creative businesses aiming to set up within England have an extremely wide range of opportunities available to them, owing to the very high economic power of the country, the wide array of technology available, the variety of landscapes around to inspire/lack of potentially harmful weather, laws protecting the original work of the writers and a good range of demographics to get clients for businesses. The only real issue to consider when running a business in England is the arguments over Brexit and potential impacts it may have on trade with countries from the EU, making acquiring certain resources from these countries or making business with people in EU countries slightly more difficult.
Personal SWOT Analysis
Finally, I have conducted a SWOT analysis of myself and my strengths, weaknesses and what potential opportunities and threats there are for me, from the lens of running a creative business. Seeing as I know the general area of my business - writing and proofreading - I know what kind of strengths and weaknesses to consider for the analysis.
Additionally, something I only learnt after conducting the SWOT analysis, is that my potential business idea has a perfect gap in the local market. There are no proofreading services within Gorleston or even Great Yarmouth, and the closest proof-reading service is located on the outskirts of Norwich. Not only is this business rather far away from my local area, but they also specialize in mystery, crime, drama and thriller - genres that I would not be specializing my business in. This provides another opportunity onto my SWOT analysis, giving me even more opportunity to make my business a success.
