You are on page 1of 2

THE EXTERNAL ENVIRONMENT

External Environment – refers to those influences outside a business control.
- Business managers have to be aware of changes to the
external environment and adapt
- Poor adaptation leads to unsustainability (the ability to
maintain levels of activity) and poor decision making
Carrying out a STEEPLE Analysis





Collecting and Applying Information
Describing each external factor from the POV of the business
Describe the impact each factor has on the STRATEGIC OBJECTIVES
Describing the positive or negative impact upon the business operations
Identifying appropriate business responses to each external factor.

STEEPLE – used to analyze a business’ external pressures
Social - In the social step for STEEPLE analysis, you have to look carefully at the
social. You will also have to judge the cultural changes which take place in the
business environment. This step often includes market research. This is because it
is important to see trends and patterns.
You might need to study population growth, consumer attitudes, age structure, or
lifestyle changes when analyzing the social environment. The analysis might point
out any faults in your strategy. It can also provide new ideas.
Technological - The business world has become different from what it was in the
past. A lot of these behavioral changes are a result of technological changes.
Technology has advanced in all parts of the world. The importance of these changes
depends on the business market.
Changes in method of production can pose as new opportunities. These can help to
improve your company’s profit margin, but these need huge initial investments.
You should understand that these technological changes can impact demand.
Advancement in technology can create new market
Economic – The economic situation will change a lot of times throughout the
company’s lifetime. You have to weigh the present levels of inflation, economic
growth, unemployment and international trade. By doing so, you can carry out your
strategic plan better.
For example, if the trends suggest that your country might be a victim of the
recession, you should make small changes in the capital investment plan. Changes
are also needed in product launch strategies.

To ensure compliance. Government interventions. The changes can be economic. The external factors have equal impact on the success of a firm. They might even be a combination of these 3. . Example of an element would be increase or decrease in tax. safety. it must follow the laws. So. This impact can either be negative or positive.The second E in STEEPLE is for the environment. Legal – Everyone hopes that their business goes like they wish. It can be positive when the environment gets benefits like processing and cleaning waste. employment and even competition. Changes like these will have a direct sway on your businesses. try to stay upto-date with all the political factors. It is not that easy to shape a business. You must always check the company’s ethical factors. The impacts vary from business to business. The values provide a basis for what is right and what is not. All businesses impact their environment. STEEPLE analysis is a great way to prompt helpful discussion. social or legal. It is negative in cases of pollution or waste. It helps to find out where your business stands within its external environment. The legal limits and regulations avert negative behaviors. Your government might increase taxes for some businesses while it reduces taxes in other areas. But. such as changes in interest rate policy.Environmental . These elements also increase the cost in many industries. Political – Changes in the government policy make up the political factors. small changes in morality take place over time I suggest using the concept of social responsibility to take your company to a better ethical standing. Ethical – This E in STEEPLE refers to the range of social values which shape business behavior. you need to check on new legal requirements. The ethical ideas of a country will not change overnight. can have an impact on company’s demand patterns. The business should focus on health. There are many other factors which you should watch. To operate legally in the environment. Business owners spend a lot of time to analyze the internal capabilities of their company.