Lesson aims
- Explain different changes in the external environment that firms operate in.
- Identify each component of the STEEPLE analysis.
- Explain the purpose of STEEPLE analysis.
- Prepare a STEEPLE analysis of a given organisation and situation.
- Use STEEPLE analysis to examine the impact of the external environment on a firm.
- Evaluate the impact on a firm's objectives and strategy of a change in any of the STEEPLE factors
STEEPLE Analysis
A STEEPLE Analysis is a useful tool or framework used to examine a business’ external environment. It is often used in conjunction with, or builds on, a SWOT analysis to assess and therefore better recognise and understand, opportunities and threats facing a business. This allows a business to develop a strategy for how best to deal with these external threats and opportunities. Being an early adaptor and having first mover advantage can be key to set a business apart from its competition. If any of the assessed external factors change, a business may need to adapt its strategy.
STEEPLE stands for social, technical, economic, environmental, political, legal and ethical factors.
STEEPLE Analysis.docxPolitical
- Current taxation policy
- Future taxation policy
- The current and future political support
- Grants, funding and initiatives
- Trade bodies
- Effect of wars or worsening relations with particular countries
Economic
- Overall economic situation
- Strength of consumer spending
- Current and future levels of government spending
- Ease of access to loans
- Current and future level of interest rates, inflation and unemployment
- Specific taxation policies and trends
- Exchange rates
Sociological
- Demographics
- Lifestyle patterns and changes
- Attitudes towards issues such as education, corporate responsibility and the environment
- Social mobility
- Media views and perceptions
- Ethnic and religious differences
Technological
- Relevant current and future technology innovations
- The level of research funding
- The ways in which consumers make purchases
- Intellectual property rights and copyright infringements
- Global communication technological advances
Environmental
- The level of pollution created by the product or service
- Recycling considerations
- Attitudes to the environment from the government, media and consumers
- Current and future environmental legislative changes
Ethical
- Corruption
- Pricing policies
- Unfair labour practices
- Marketing products that may not be in consumers’ best -interests
Legal
- Legislation in areas such as employment, competition and health & safety
- Future legislation changes
- Changes in European law
- Trading policies
- Regulatory bodies
Case study
The Norwegian government is studying the feasibility of building several floating underwater tunnels to facilitate transportation in coastal regions where fjords make road travel slow and difficult. The project would increase accessibility to the northern part of the country and would obviate the need to pass through numerous villages along the way.
Comment on how the underwater tunnel would change the business environment for the following organisations:
- Small retail shops along the coastal road network
- An outdoor adventure travel company located in northern Norway
- Ferry boats operating along the coast
- Lumber companies
- Oil companies
The video provides a description of the project.
Task
- To what degree are businesses limited in how much they can 'know' about the external environment?
- Work in pairs to create a PEST/STEEPLE analysis for one of your case study businesses. Present your findings to the class and discuss any differences in findings.
Review
- Using a PEST/STEEPLE framework, analyse the potential advantages and disadvantages to foreign firms of locating in China. [10 marks]
