BMT - STEEPLE analysis

What does STEEPLE stand for?

Social

Technological

Economic

Environmental

Political

Legal

Ethical

What is STEEPLE analysis?

The factors which are opportunities and threats in the external business environment

They affect all businesses yet are are beyond the control of any individual organisation

It is a situational tool that is central to formulating business strategy

What are opportunities?

External factors that represent prospects for businesses

e.g. lower tax rates and lower interest rates

What are threats?

External factors that can harm a business

e.g. recession, oil crisis or major road works

Advantages of STEEPLE:

Simple to use

Permits thorough and logical analysis

Useful brainstorming tools

Promotes proactive and forward thinking

More likely that managers will be better and informed to deal with changes in the external environment

What do social opportunities and threats include:

Social, cultural, values and attitudes of society towards a wide range of different issues and demographic

What does the technological environment refer to?

Scientific knowledge and application to the external environment that presents constant threats and opportunities

Advantages of technology:

Improvements in productivity (machines are much faster and more efficient, no need for breaks)

New working practices (more flexible e.g. working from home, video conferences)

Quicker product development times (CAD/CAM)

Speed of access to information from any part of the world

Reducing language and cultural barriers through translation

Reduced costs (e-commerce reducing labour cost)

Overcoming geographical limitations

Disadvantages of technology:

High costs of keeping up

Price transparency

Online crime

Higher production costs - maintenance and training cost

Reduced productivity due to distractions

How does technology affect business functions:

Internet has directly affected:

Human Resources Management (in the recruitment process)

Marketing (e.g. e-commerce)

Finance (annual reports are published online)

Operations Management (e.g. access to benchmarking data)

Technology is not always a reliable resource

When adopting certain technologies, managers need to consider several factors:

Costs (purchase, installation, maintenance, depreciation, replacement, insurance)

Benefits (expected gains in efficiency)

Human relations

Recruitment and training (costs and time)

What does the economic environment refer to?

The state of the economy in which businesses operate.

This is determined by the governments ability to achieve its key economic objectives.

What are the governments key economic objectives?

To control inflation

To reduce unemployment

To achieve economic growth

To achieve a healthy international trade balance

What is inflation?

The continual rise in the general level of prices in an economy

Explanation of to control inflation:

Low and stable inflation is a prerequisite to achieving the other objectives

If not controlled, it can complicate business planning and decision making (higher costs and uncertainties)

What is the unemployment rate?

It measures the proportion of a country's workforce not in official employment

Explanation of to reduce unemployment:

Govs aim to deal with the problems of unemployment because there are social costs of high unemployment

Increased burden on tax payers to support gov spending, so they have less disposable income

What is economic growth?

The increase in the value of a country's economic activity over time

It is measured by the change in the economy's GDP

Explanation of economic growth:

Higher rates of EG mean the economy is more prosperous so society earns more income, creating more opportunities for businesses

What is a business cycle?

The pattern of fluctuations in economic growth

Boom

Recession

Trough

Recovery

Growth

What happens during a boom?

The level of economic activity rises

Consumer expenditure, investment spending and export earnings increase

Unemployment is low

Consumer and business confidence levels are high (higher level fo sales and profits)

What happens during a recession?

This occurs when there is a fall in GDP for 6m

Caused by a continual decline in spending in the economy, lower investment, falling export earnings and rising unemployment

What is a slump (or trough)?

Refers to the bottom of a recession

High unemployment

Low levels of consumer spending, investment and export earnings

Workers suffer from lack of job security

What is a recovery?

Occurs when the level of GDP starts to rise again, after a slump

Output and income start to increase

The level fo consumption, investment, exports and employment will gradually rise

Explanation of to achieve a healthy international trade balance:

The int. trade balance records the value of a country's export earnings and its import expenditure

Environment opportunities and threats:

Businesses and governments are increasingly concerned about the negative impacts of business activity on the natural environment

Changes in social attitudes towards the environment have meant that businesses are increasingly reviewing their practises

e.g. global warming and rising sea levels, extreme weather and natural disasters, health scares and epidemics

Political opportunities and threats:

The political stability of a country and its government policies can provide both opportunities and threats for businesses.

The use of taxation and government expenditure policies can be used to influence the level of business activity

What are two government policies?

Fiscal policy

Monetary policy

What is the fiscal policy?

Use of taxation and government expenditure to influence business activity

Two types: expansionary and contractionary

What is the monetary policy?

Use of interest rates to influence business activity

Interest rates are controlled by a country's central bank