apply a SWOT/STEEPLE analysis in a given context (AO2)
Choose 1 of the 4 options below and then share:
BONUS: Find related news articles, explain what STEEPLE factor they are, and how they impact your company.
Option 1: You
1) Complete a SWOT and STEEPLE analysis of yourself.
2) After your analysis, what recommendations do you have for yourself?
Option 2: Business
1) Complete a SWOT and STEEPLE analysis of a business of your choice.
2) After your analysis, what recommendations do you have for the business?
PESTLE Analysis - SWOT and Business Analysis Tools
Option 3: Country (Challenging)
1) Choose any country
2) What are its main industries?
3) What sectors of the economy are they and what impact has this had on their natural environment?
4) Complete a SWOT and STEEPLE analysis of the country and provide recommendations for a sector they should expand into.
Example of SWOT for OIC member countries: https://www.sesric.org/publications-detail.php?id=578
Option 4: SWOT and STEEPLE of McDonalds in China
1) What sectors of the economy is China in?
2) Complete a SWOT and STEEPLE analysis of McDonalds and analyze their expansion strategy.
The purpose of a SWOT analysis in business is to help organizations assess their internal and external environment by identifying key factors that can affect their success. It stands for:
Strengths: Internal factors that give the business a competitive advantage.
Weaknesses: Internal factors that may hinder the business's success.
Opportunities: External factors the business can exploit to grow or improve.
Threats: External factors that could pose challenges or risks to the business.
The main objective of a SWOT analysis is to support strategic decision-making by helping businesses understand their current situation, anticipate future challenges, and identify areas where they can capitalize on opportunities or improve. It is widely used for business planning, problem-solving, and evaluating new initiatives.
Strengths (Internal)
Strengths – The things that the organization does well or better in comparison to its competitors
e.g. brand recognition, reputation, market share, cost leadership, profitability, quality, staff retention, well-trained staff, and customer loyalty.
Weaknesses (Internal)
Weaknesses – The things that the organization does not do so well in relation to its competitors
e.g., low productivity, high staff turnover, outdated technology, liquidity problems, high fixed costs, poor employer-employee relations, skills gap in the organization, over-reliance on a product or particular market, or a poor corporate image.
Opportunities (External)
Opportunities – External factors that provide openings (prospects) for an organization to succeed
e.g., new technologies, favourable demographic trends, economic recovery, and new prospects in overseas markets.
Threats (External)
Threats – External factors that hold back the business, preventing it achieving its organizational goals
e.g. detrimental weather conditions / seasonality factors, changing habits and tastes, increased competition in the industry, price wars, oil crises, natural disasters, the outbreak of infectious diseases, political constraints, environmental laws, greater regulation of the industry, media exposure, and economic recession.
The chart below, from Statista, shows the number of Netflix and Amazon Prime Video subscribers in selected countries in 2024.
SWOT Analysis factors to consider:
Connection between SWOT Components
The purpose of a STEEPLE analysis in business is to evaluate the external macro-environmental factors that can influence a company’s strategic decisions and operations. It is an acronym for:
Social: Trends in society, demographics, lifestyle changes, and cultural attitudes.
Technological: Technological advancements and innovations that may impact the business.
Economic: Economic conditions such as inflation, unemployment, and economic growth.
Environmental: Environmental and ecological concerns like sustainability and climate change.
Political: Political factors, government policies, regulations, and stability.
Legal: Laws, regulations, and legal considerations that affect the business.
Ethical: Ethical considerations, corporate social responsibility, and business ethics.
The main goal of STEEPLE analysis is to provide a comprehensive view of external influences that may impact a business. This helps organizations identify opportunities and threats in their external environment and align their strategies accordingly. It is particularly useful for long-term strategic planning and risk management.
Mobile technologies have created many opportunities for e-commerce
Technological factors are not necessarily or always positive. They can create huge barriers to entry into certain industries, thereby limiting the degree of competition on the market. This limits choice for customers, who are likely to be charged a higher price as a result. However, by far the largest threat of technological factors is technological failure, caused by power cuts or due to fraudulent hacking.
Social
Social factors in a STEEPLE analysis are those related to people, their lifestyles and their beliefs (or values). Social factors that affect the level of economic activity in a country include cultural influences, demographics of the population, religious beliefs, society's views on ethical behaviour, and social attitudes towards discrimination (against women, ethnic minorities and other possibly disadvantaged groups).
Examples of social factors in a STEEPLE analysis include (although these will vary from country to country):
An ageing population, i.e. the average age of the population increases. This has implications for recruitment and different spending patterns.
Many more women are choosing to have children at an older age. This is partly so that they can pursue their professional careers and also because of the increasing costs of raising children.
Changes in the net migration rate – this measures the difference between immigration (when people enter a country to live and to work) and emigration (when people leave a country to work and live abroad), i.e. it indicates changes in the physical movement of people in and out of a country.
An increase in the retirement age – this has an impact on staffing costs, recruitment and retention, and different spending habits. Retirement age, selected countries.
Technological
In the context of the corporate world, the technological environment refers to the changes and developments in machinery and equipment developed for business operations and their growth and evolution. Changing technology has always played an important role in the external business environment.
Personal computers become popular in the 1980s. Mobile (cell) phones become popular in the 1990s. Smartphones were launched to the mass market in the 2000s. The last decade has seen an increase in the use of 3-D printed products and wearable technologies, such as smartwatches. The advancements in Internet technologies have created many opportunities for businesses involved in e-commerce.
Other examples include:
Lean production technologies that improve operation efficiency, quality and productivity in the manufacturing sector.
Technological advances have led to increased use of automation in car manufacturing.
Unemployment in certain industries as technology and automation create opportunities for capital-intensive production methods.
By contrast, employment opportunities have also been created, such as the need for coders and app developers.
The increasing use and reliance on social media for marketing purposes. For example, almost all large companies use Facebook, LinkedIn and Twitter as part of their marketing. TripAdvisor is used by marketers in the travel and tourism industry. OpenRice is a popular website used to promote food and restaurants in many South East Asian countries. Instagram is used by businesses to showcase their product range and other aspects of their marketing.
Social media has also revolutionised recruitment for many organizations, such as the popularity of LinkedIn to headhunt workers for specific jobs.
Mobile technologies have created many opportunities for e-commerce
Technological factors are not necessarily or always positive. They can create huge barriers to entry into certain industries, thereby limiting the degree of competition on the market. This limits choice for customers, who are likely to be charged a higher price as a result. However, by far the largest threat of technological factors is technological failure, caused by power cuts or due to fraudulent hacking.
Economic
Economic factors in a STEEPLE analysis refer to the determinants of an economy's performance. Changes in economic factors that affect the external business environment can be explained by the business cycle (also known as the trade cycle). The level of economic activity is measured by gross domestic product (GDP) in an economy. GDP measures the total value of national output, per time period (usually one year).
The business cycle (also called the trade cycle) shows the level of economic activity, over time
The different phases in the business cycle include:
Boom (expansion) – when spending, employment and prices rise due to an increase in economic activity in the economy.
Peak – a high point in the business cycle, before a recession sets in as booms are not sustainable in the long run; prices are high, thus causing a fall in the economy’s competitiveness.
Recession – a decline in economic activity, leading to lower employment and falling business and consumer confidence levels.
Slump (or trough) – the bottom/lowest point in the business cycle, with mass-scale unemployment and falling prices; government intervention is likely to occur to rectify the situation. As Harry S Truman (the 33rd President of the United States, 1884-1972) said, “It’s a recession when your neighbour loses his job; it’s a depression when you lose yours.”
Recovery – when economic activity and employment start to rise following a slump.
Interrelated factors that cause fluctuations in the level of economic activity* in an economy include changes in:
The level of consumer and business confidence – improved confidence levels will have a positive impact on economic activity in the economy.
Costs of production – higher costs will typically cause prices to increase. This is likely to deteriorate the economy’s international competitiveness and level of economic activity.
The exchange rate – a currency appreciation means that export prices rise relative to import prices. This will tend to reduce the international competitiveness of the economy as exporters will generally find it more difficult to sell their products due to the higher prices.
The interest rate – higher interest rates make borrowing more expensive for households, so they tend to spend less. In addition, higher interest rates reduce the incentive to invest in the economy due to the higher costs of borrowing money. Hence, higher interest rates tend to constrain economic activity.
The inflation rate – the higher the inflation rate, the higher prices are in general. Hence, higher rates of inflation in the economy tend to reduce its international competitiveness, thereby reducing the level of economic activity.
Case Study: Hyperinflation in Germany, Venezuela, Zimbabwe and Hungary
History has recorded some staggering rates of hyperinflation, leading to the collapse of the economy or even the currency. Examples include Weimer, Germany (1923) when prices soared so quickly that people used wheelbarrows to carry their cash!
More recently, in 2019, hyperinflation left Venezuela in a major economic crisis as average price levels exceeded 1.3 million per cent! However, this is still relatively low compared with Zimbabwe which recorded an inflation rate of an incomprehensible 231,000,000% in July 2008. This was caused by the government’s gross mismanagement of the economy between 2003 and 2009. Zimbabwe had fuelled inflation by printing banknotes with a denomination value of 100 trillion Zimbabwean dollars (ZWD100,000,000,000,000)! This meant the currency became literally worthless, so was eventually abandoned (and replaced with the US dollar).
However, the largest denomination banknote ever officially issued for circulation was in 1946 by the Hungarian National Bank for 100 quintillion pengő (100,000,000,000,000,000,000, or 1020; or “100 million trillion”). In July 1946, Hungary’s daily inflation hit a world record rate of 207%. This meant that prices doubled every 15 hours! Today, Hungary’s highest denomination banknote is a modest 20,000 forint (the currency that replaced the pengo). As a member of the European Union (EU) since May 2004, the long-term goal of the Hungarian government is to replace the forint with the euro.
Environmental
Environmental factors in a STEEPLE analysis refer to the ecological aspects of business activity that can have positive as well as negative impacts on organizations. Green technologies and environmental aspects of business are increasingly important for businesses. There is a growing expectation from customers, employees, and other stakeholder groups for businesses to act in the best interest of the environment. For example, depletion of the world’s scarce resources, especially non-renewable resources, is not a sustainable business practice. An increasing number of businesses are adapting renewable energy sources for their operations, such as solar power. Similarly, many more producers are using cradle to cradle design and manufacturing.
The ecological environment has direct impacts on the operations of a business. For example:
Global warming and climate change have led to more stringent government policies to protect the environment. For example, in 2017, car manufacturers were informed that that British government would ban all diesel and unleaded petrol cars from 2040.
Adverse weather conditions can cause huge disruptions to businesses. For example, businesses tend to struggle when there are floods, tsunamis, torrential rainstorms, droughts, heat waves, hurricanes or heavy snowfalls. Hand car wash businesses really struggle when it rains!
Flooding can have devastating effects on business operations
Adverse weather has negative impacts on businesses
Sept 2010 - Major flooding hits Kaohsiung, Taiwan, costing the economy $211m.
Dec 2010 - Snowstorms hit the whole of the UK, causing major disruptions to all businesses during the festive season.
Feb 2011 - A shattering 6.3-magnitude earthquake hits Christchurch, New Zealand.
Feb 2011 - South Korea experiences its heaviest snowfall in a century, bringing the country to a standstill.
Feb 2011 - Cyclone Yasi hits Queensland, Australia – the country’s worst ever storm.
Mar 2011 - Devastating 9.0-magnitude earthquake hits Japan (the worst in Japanese history), followed by a destructive tsunami.
Nov 2013 - Super typhoon Haiyan (Yolanda) hits the Philippines with winds of up to 275 km per hour and waves as high as 15 metres.
Aug 2014 - A 6.5-magnitude earthquake in Zhaotong, China, damaged or destroyed almost 155,000 homes and 268 schools, plus roads and other infrastructure. Around 230,000 people were displaced.
Apr 2015 - A 7.8-magnitude earthquake struck Nepal, damaging or destroying nearly 900,000 buildings, and leaving almost 1 million children out of school. This was Nepal’s deadliest disaster on record, taking the lives of almost 9,000 people.
May 2015 - A severe and prolonged heat wave hits southern India, with temperatures reaching 118 degrees Fahrenheit and claiming 2,000 lives.
Sept 2018 - Super Typhoon Mangkhut became Hong Kong’s most devastating typhoon, causing havoc across the economy and causing schools to close for up to a week.
Aug 2020 - Hurricane Laura wiped out electricity for 500,000 households and businesses. The 150 mph winds left behind major damage to property and people's livelihoods.
Nov 2020 - Hurricane Goni brought catastrophic winds and rain to the Philippines, affecting an estimated 20 million people in the country. Strong winds of up to 175 kmph were recorded, marking Hurricane Goni the world's strongest storm in 2020 - a year that was plagued by the devastating and widespread impacts of the coronavirus pandemic. Around 400,000 homes were destroyed or damaged, according to the International Federation of Red Cross and Red Crescent Societies.
April 2024 - The UK recorded its wettest Arpil since records began in 1871. The BBC reported that the UK economy failed to grow in April as the particularly wet weather put off shoppers and also slowed down construction projects.
Political
The political environment in a STEEPLE analysis refers to the role that governments play in business operations. It affects business operations in an array of facets. Examples include, but are not confined to, the following:
The degree of political stability in a country has a large impact on business and consumer confidence levels. For example, prolonged political conflict within a country is likely to threaten prospects of foreign direct investment. The UK’s decision in 2016 to pull out of the European Union (the decision known as “Brexit”) has caused huge instabilities to British businesses and the UK economy.
Restrictions on international trade, such as the use of quotas (quantitative limits) on the number of imported goods that can be sold in the domestic economy. The government might also impose tariffs (import taxes) in order to protect domestic jobs. Another example is the use of subsidies to help domestic firms be more competitive. For example, the governments of the European Union provide subsidies to their farmers. The Hong Kong and Chinese governments provide subsidies to protect their domestic film industries. However, this makes it more difficult for MNCs trying to sell their goods in overseas markets.
Different tax laws or changes in the tax system have a significant impact on business operations. For example, many MNCs are attracted to countries where migrant workers do not pay any income tax, such as in Bahrain, Brunei and Kuwait. Similarly, MNCs can be attracted to countries that do not impose sales taxes, such as in Saudi Arabia, Gibraltar and Hong Kong SAR.
Governments are huge establishments that also function as an organization. They are major consumers of goods and services in domestic and international markets. This can provide many opportunities for businesses.
Case Study - Mass demonstrations in France
Nationwide protests in France took place following the government's plans to introduce a 75 per cent income tax rate in 2012 for individuals earning incomes in excess of €1million ($1.09m per year). However, the proposals were overturned, with some analysts arguing that the government would actually receive more tax revenues by cutting tax rates. This is because lower income taxes can create greater incentives to work and also help to reduce tax avoidance and tax evasion. Mass demonstrations began in Paris in November 2018 due to protests against the government for its perceived unfair tax system.
Political turmoil in Hong Kong
Read this article from the South China Morning Post about the political turmoil that caused Hong Kong’s tourism to fall by 40% in the summer of 2019. Pro-democracy demonstrators and ant-government protestors caused havoc for businesses such as Hong Kong Disneyland and temporary closure of Hong Kong International Airport.
Discussion points
How many stakeholder groups can you identify from the article?
Apart from businesses directly involved in tourism, which other businesses were most affected by the protests?
What contingency plans can businesses make in order to minimise the impact of political crises?
Legal
Legal factors in a STEEPLE analysis refer to the laws that affect the way in which businesses operate as well as how customers behave. Changes in the legal systems or laws have a direct impact on business operations, including the production and sale of certain goods and services. Examples of legal factors in a STEEPLE analysis include:
Legal procedures for the growth and expansion of businesses, such as laws about setting up a sole trader business or share issues on a stock exchange.
Minimum quality standards must be met in order to protect consumers and the general public. The Volkwagen Scandal is an example of how quality standards can have major implications on a firm’s operations, corporate image and profits.
Consumer protection laws safeguard the interests of consumers. These laws include trade descriptions (such as rules in labels and packaging), and weights and measures.
Employment laws*, such as changes to the National Minimum Wage, maternity and paternity leave, maximum working hours, statutory sick leave, health and safety at work, and anti-discrimination laws.
Intellectual property rights (IPRs) help to protect the intellectual ideas and creations of businesses. These laws cover copyrights, trademarks and patents.
Laws on environmental protection and climate change can change the way in which a business operates and on foreign direct investment.
Some products are deemed so harmful that they are banned or have age limits imposed (such as the purchase of alcohol or tobacco). In some countries, such as Australia, cigarette advertising is totally banned, including on cigarette packets.
Case Study - Findus' Food Fiasco
In February 2013, frozen food supplier Findus had to withdraw all its beef lasagne products from British supermarkets after authorities determined that 100% horse meat was found in some of its products. This contravened the UK’s Trade Descriptions Act.
The firm’s website states:
“For over 50 years, Findus has stood as one of Britain's best loved names in food. Using only the best ingredients and a generous pinch of imagination in our recipes, we'll help you prepare great tasting and effortlessly good food straight from your freezer.”
Case Study - Culture and the Legal environment
In May 2012, international pop music star Lady Gaga had her concert banned in Indonesia. Authorities deemed her style too inappropriate for Indonesians.
Lady Gaga’s world tour of her Born This Way Ball concert was outlawed in Jakarta due to major concerns from Islamists and local community leaders. More than 50,000 tickets had been sold for the event.
Ethical
Ethics refers to the moral values and beliefs that apply to businesses and how they operate. There is an increasing expectation for businesses to consider the impact of their operations on all stakeholder groups, society as a whole and the environment. Essentially, it is about doing the right or moral things as part of their corporate social responsibilities (CSR). Examples include:
The fair treatment of workers
Fair trade deals with suppliers
Ethical marketing practices
Observing intellectual property rights
Principled accounting procedures
Operations that are sustainable and protect the environment.
Case Study 14 - The Volkswagen diesel scandal
In September 2015, the US Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to Volkswagen (VW) - Europe's largest car manufacturer. The EPA found that Volkswagen had deliberately reprogrammed its diesel engines to cheat laboratory emissions tests.
The nitrogen oxides emitted from VW's vehicles (which causes air pollution) were about 40 times higher than what is legally permitted in the USA. The EPA found that VW had been deliberately untruthful and unethical. This resulted in the German car manufacturer's share price plummeting and the CEO eventually resigning over the diesel scandal.
The EPA had discovered that approximately 11 million VW vehicles manufactured between 2009 and 2015 were programmed to bypass environmental standards and regulations set by the EPA. An additional 500,000 of these cars were estimated to have been exported to the USA.
VW stated it would spend $18.32 billion to rectify the emissions scandal - that's around $50,191,780 per day for an entire year! This was an extremely expensive crisis for the company, yet it could have been handled far more effectively. In April 2017, a US federal judge ordered VW to pay a $2.8 billion as a criminal fine for ‘rigging diesel-powered vehicles to cheat on government emissions tests’.
Case Study 15 - Tobacco 'advertising' in Canada
Due to potentially unethical business practices, the government may need to intervene to protect the individuals and society as a whole. This is covered under the Legal and/or Political aspects of a STEEPLE analysis.
For example, many government had place legislation on the advertising and sale of tobacco products. In Canada, Health Canada (the government department responsible for helping Canadians to maintain and improve their health) passed a law in November 2019 requiring cigarette producers to strip off their logos and designs and adopt “drab brown” as the default colour for all tobacco brands. This was part of the Canadian government’s attempt to reduce the appeal of such “deadly products” and to discourage young teens from smoking.
Source: adapted from Global News Canada
Note: PESTEL is the same as STEEPLE, however without "Ethical"
When using SWOT or STEEPLE you must APPLY it specifically to your company
In an exam, write out in full sentences to explain and justify rather than write a table
STEEPLE Analysis finds the external factors that impact your business (Opportunities and Threats)
Only include STEEPLE factors that impact your organization. For example, if environmental factors are not as relevant for your company then you can skip it
SWOT STEEPLE Case Study:
STEEPLE Case Study:
What This $100B Ghost City Reveals About China's Property Crisis | WSJ
Pandemic Winners Struggle in the Post-Pandemic World
SWOT Exam Practice Questions
https://drive.google.com/file/d/13_vdQBavP_2F8j5-vhv1ay98NdRlVyTO/view?usp=sharing
SWOT Exam Practice Question Answers
https://drive.google.com/file/d/1vIz0a4SQVXGwlf4NkD3YGHjWBZ8fBsk9/view?usp=sharing
STEEPLE Exam Practice Questions
https://drive.google.com/file/d/1VP9xxGcMXg4WIOXIigecc8U6ACrkIbK1/view?usp=sharing
STEEPLE Exam Practice Questions Answers
https://drive.google.com/file/d/14PDNZzVbjaxUjRJ7g7qFeKruuWfVketA/view?usp=sharing
Exam Practice Question
Explain how SWOT analysis is used as a strategic planning tool by managers and decision makers in a business or organization. [4 marks]
Answer
Possible answers could include an explanation of:
SWOT analysis is a commonly used business management tool used as part of the process of strategic planning by examining internal and external factors that affect the organization.
It enables the business to consider strengths, weaknesses, opportunities, and threats before it develops an appropriate business strategy.
It involves exploring the current position of the organization in terms of its internal strengths and weaknesses, and to identify potential opportunities and threats in the external environment.
In particular, consideration of weaknesses and threats enables managers and decision makers to assess risks and to minimise the potential harm to the organization.
It can enable managers and decision makers to examine how weaknesses can be turned into strengths and threats turned into opportunities.
It is commonly included as part of a business plan.
Accept any other relevant reason why SWOT analysis might be used as a strategic planning tool.
Award [1 – 2 marks] for a limited response that shows some understanding of the demands of the question.
Award [3 – 4 marks] for a clear and accurate answer that shows good understanding of the demands of the question. There is appropriate use of terminology throughout the response.