STEEPLE Analysis for Strategic Business Success

The External Business Environment

All businesses operate in an external environment, and its conditions significantly impact them. The environment consists of various conditions external to the business.

Strategic Planning and STEEPLE Analysis

There are few ways to control the influence of external environmental factors. To succeed and overcome these challenges, a contingency plan is used to identify environmental changes and features. This allows a business to develop strategies and objectives to prevent issues from becoming major problems. A tool used to create this analysis is STEEPLE.

STEEPLE includes Social, Technological, Economic, Ethical, Political, Legal, and Ecological factors. Here, the business considers the influence of each element and determines the most important ones to develop a strategy to overcome them.

Due to constant changes resulting from technological advances and globalization, businesses must be flexible to adapt and survive in their environment more effectively than those that are inflexible. The STEEPLE analysis helps identify these changes, allowing businesses to respond quickly and gain a first-mover advantage.

Components of STEEPLE Analysis

Social Factors

These take into account different aspects changing in society, such as:

• Lifestyles and social mobility
• Demographics and education
• Fashions and tastes

Technological Factors

Advances in technology significantly influence business practices and operational efficiency.

Economic Factors and Government Objectives

Economic factors are determined by how the government achieves specific objectives:

Key Economic Indicators

• Inflation: This involves controlling the continual rise of prices in an economy. If inflation increases, the costs of raw materials, unemployment, and wage claims typically rise, while international competitiveness and export earnings decrease.
• Unemployment Rate: High unemployment leads to rising social costs.
• Economic Growth: This is the increase in a country's economic activity over time. Higher economic growth leads to a more prosperous economy where the average person earns more income.
• Healthy International Trade Balance: This records the value of a country's export earnings versus import expenditure. Since export earnings should ideally be higher than import expenditure, the government may alter the exchange rate (the value of domestic currency in terms of foreign currency). Because continual changes in exchange rates affect businesses, the government sets protectionist measures—such as tariffs, quotas, subsidies, embargoes, and technical and safety standards—to correct trade balance irregularities.