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1.5. External Environment

  • STEEPLE
    • Business tool for understanding a business’ external environment
    • Looks at the market potential and situation
    • Stands for Social, Technological, Economic, Environmental, Political, Legal, and Ethical analysis (of the industry)
    • External environmental factors are analyzed in decision making and strategy development because they can heavily influence the business
    • Social
      • Attitude of society towards wide range of issues
      • Population demographics (more young/old, more women/men, etc.)
      • Roles and attitudes of people
      • Cultural and religious beliefs
      • Security and education
    • Technological
      • Use of tools and machines
      • Information technology
      • Innovations in technology
    • Economic
      • State of the economy
      • Interest and tax rates
      • Exchange rates and foreign relations
      • Inflation rates, unemployment rates, etc.
    • Environmental
      • Abundance of natural resources or raw materials
      • Threats from nature (or natural disasters)
      • Waste disposal/recycling
    • Political
      • Laws (employment, consumer, business) & policies (fiscal and monetary)
      • Changes brought about by new government
      • Possible effects of political unrest
    • Legal
      • Employment or contract laws
      • Trade unions
      • Environmental protection regulations
    • Ethical
      • Client confidentiality
      • Bribery and other forms unethical (and possibly illegal) business transactions
      • Fair competition
  • How changes in STEEPLE factors affect a business’s objective and strategy
    • Changes in trends, social norms, public opinion, views on ethics can affect the company’s products, business activities, and the way they market their products
    • Changes to legal or political factors may force businesses to change the way they operate to comply with new laws or regulations
    • Changes to technological factors could result to the company adopting newer technology or machinery to increase efficiency or keep up with industry standards
    • Changes to environmental factors could force companies to adapt to scarce raw materials, frequent natural disasters, etc.
    • Changes to economic factors (economic growth, interest rates, etc.) could affect the costs of operations of the business, spending attitude of consumers, etc.