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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 companys 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
companys 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.

Environmental - The second E in STEEPLE is for the environment. All businesses


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