CHAPTER 1.5 EXTERNAL
ENVIRONMENT
STEEPLE analysis of a given organization (AO2, AO4)
Consequences of a change in any of the STEEPLE factors for a businesses’ objectives and
strategy.
Steeple Analyses
STEEPLE = Social, Technological, Economic, Environmental, Political, Legal and Ethical
opportunities and threats of the external business environment. These factors affect
businesses yet are beyond the control of any individual organization. It is central to business
strategy, such as assessing the feasibility of an overseas investment project.
Opportunities:
- Definition = external factors that present chances for businesses
- Example = lower tax rates and lower interest rates
Threats:
- Definition = external factors that can harm a business.
- Example = recession, oil crisis or major roadworks
Note:
- It is important for each opportunity and threat identified in a STEEPLE analysis can be
weighted in a scientific way.
- If the overall opportunity of a decision outweigh the threats, then the business is
likely to pursue that option
- However in reality external factors are subject to rapid and unforeseeable changes
- Key advantage STEEPLE analysis is that it is quite simple to use. The analysis helps
managers to be thorough and logical in their analysis
- STEEPLE analysis promotes proactive and forwards thinking rather than gut feeling
Social Opportunities and Threats
Social, cultural and demographic factors can directly affect the activities of a business. The
values and attitudes of society towards a wide range of different issues (such as business
ethics) can present both opportunities and threats for business
Example include:
, - The growing support for environment protection has altered business behaviour
immensely
- With a more liberal and modern social attitude towards women in societies
- Migration and the increased awareness and acceptance of multiculturalism has
created more choice for consumer
- Societal pressures for businesses to act more ethically and socially responsibly can
often result in higher costs
- Demographic changes in society such as ageing population in economically
developed countries
- Language can create opportunities and threats too.
Technological Opportunities and Threats
The technological environment presents constant threats and opportunities. Advances in
technology and work processes have improved productivity. However the high cost of
staying up to date with technological progress can cause problems for businesses.
Technology affects all aspects of business functions. For instance, the internet has directly
affected human resource management, marketing, and finance and operations
management.
Opportunities that technology can bring to business include:
- New working practises
- Increased productivity and efficiency gains
- Quicker product development time
- Job creation
- New products and new markets
The technological environment also presents certain threats to business, such as:
- Technology is not always reliable or secure
- Shorter product life cycles
- It can be costly
- Job losses
When adopting certain technologies, managers need to consider several factors:
- Costs
- Benefits
- Human relations
- Recruitment and training
Opportunities of internet technologies: - Reducing language and cultural
barriers
- Speed of access to information
- Reduced costs
- Overcome geographical limitations
ENVIRONMENT
STEEPLE analysis of a given organization (AO2, AO4)
Consequences of a change in any of the STEEPLE factors for a businesses’ objectives and
strategy.
Steeple Analyses
STEEPLE = Social, Technological, Economic, Environmental, Political, Legal and Ethical
opportunities and threats of the external business environment. These factors affect
businesses yet are beyond the control of any individual organization. It is central to business
strategy, such as assessing the feasibility of an overseas investment project.
Opportunities:
- Definition = external factors that present chances for businesses
- Example = lower tax rates and lower interest rates
Threats:
- Definition = external factors that can harm a business.
- Example = recession, oil crisis or major roadworks
Note:
- It is important for each opportunity and threat identified in a STEEPLE analysis can be
weighted in a scientific way.
- If the overall opportunity of a decision outweigh the threats, then the business is
likely to pursue that option
- However in reality external factors are subject to rapid and unforeseeable changes
- Key advantage STEEPLE analysis is that it is quite simple to use. The analysis helps
managers to be thorough and logical in their analysis
- STEEPLE analysis promotes proactive and forwards thinking rather than gut feeling
Social Opportunities and Threats
Social, cultural and demographic factors can directly affect the activities of a business. The
values and attitudes of society towards a wide range of different issues (such as business
ethics) can present both opportunities and threats for business
Example include:
, - The growing support for environment protection has altered business behaviour
immensely
- With a more liberal and modern social attitude towards women in societies
- Migration and the increased awareness and acceptance of multiculturalism has
created more choice for consumer
- Societal pressures for businesses to act more ethically and socially responsibly can
often result in higher costs
- Demographic changes in society such as ageing population in economically
developed countries
- Language can create opportunities and threats too.
Technological Opportunities and Threats
The technological environment presents constant threats and opportunities. Advances in
technology and work processes have improved productivity. However the high cost of
staying up to date with technological progress can cause problems for businesses.
Technology affects all aspects of business functions. For instance, the internet has directly
affected human resource management, marketing, and finance and operations
management.
Opportunities that technology can bring to business include:
- New working practises
- Increased productivity and efficiency gains
- Quicker product development time
- Job creation
- New products and new markets
The technological environment also presents certain threats to business, such as:
- Technology is not always reliable or secure
- Shorter product life cycles
- It can be costly
- Job losses
When adopting certain technologies, managers need to consider several factors:
- Costs
- Benefits
- Human relations
- Recruitment and training
Opportunities of internet technologies: - Reducing language and cultural
barriers
- Speed of access to information
- Reduced costs
- Overcome geographical limitations
