Analysis as a method of scientific research, which is based on the study of components, elements of the studied systems, is an important tool for identifying entities, patterns, trends, economic and social processes, economic activities at all levels (a country, sector, region, enterprise, private business, family) and in different economic sectors (industrial, social). Moreover, it can help any organization to identify potential dangers and challenges.
Thus, this paper introduces and explains the nature and use of SWOT analysis, PESTEL analysis and Porter’s Five Forces analysis in forecasting. It observes and discusses how budgeting would benefit Jengo Ltd.’s planning and control of its inventory, recruitment and cash management activities, and explores how a balanced scorecard approach to measuring performance would benefit Jengo Ltd.
The nature and use of SWOT, PESTEL and Porter’s Five Forces analyses
This is a widespread fact that any analysis serves as an initial starting point for forecasting, planning, and monitoring of economic entities and processes occurring in them. An economic analysis is aimed at justifying a scientific point of any decision and action in the economic, social and economic policies and contributing to choosing the best options.
Generally speaking, SWOT analysis is a method that is aimed at identifying and evaluating the following categories: strengths, weaknesses, opportunities, and threats.
“SWOT analysis, which inquires into strengths, weaknesses, opportunities, and threats (SWOTs), is the traditional means of searching for insights into ways of realizing the desired alignment”ť (Ansoff, 1965; Andrews, 1987; Porter, 1991; Mintzberg, Ahlstrand, and Lampel, 1998 cited in Valentin, 2001, p. 54).
The acronym SWOT was first coined by Kenneth Andrews at a business policy conference in 1963. Originally, SWOT analysis was based on scoring and structuring of knowledge about the current situation and trends.
Firstly, the methodology of SWOT analysis identifies the internal strengths and weaknesses of any firm or organization, as well as external opportunities and threats. Secondly, it establishes the links between them.
Porter’s Five Forces
Talking about Porter’s Five Forces, it is possible to say that this is a framework, which is aimed at analyzing the competitive conditions prevailing in the market and evaluating the importance of each of five forces. This model allows us to determine how attractive this or that branch of the company is.