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1.5 External environment

STEEPLE analysis

  • STEEPLE analysis: acronym standing for social, technological, economic, environmental, political, legal and ethical external factors that impact on business; it refers to a framework for analyzing the external environmental factors affecting business objectives and strategies.

  • STEEPLE analysis for McDonald’s restaurants (example)

    • Social issues:

      • How are dietary trends changing and how different are customer tastes from those in other countries (e.g. cultural and religious factors)?

      • What proportion of couples both work less time to prepare meals?

      • Growing health consciousness - is the demand for healthy foods increasing?

      • Is the population aging? Do the elderly buy more or fewer fast-food meals than the young? Is the population growing?

    • Technological issues:

      • Can the food production process be automated? Is technical support available?

      • Online selling - is full internet/broadband coverage available? Will customers order online?

      • Are IT support services available locally?

    • Economic issues:

      • Economic growth - is this slowing or even negative (recession)?

      • Unemployment - is this rising and reducing consumer incomes? Interest rates are these high or low?

      • Exchange rate - is this likely to appreciate or depreciate?

      • Is the government’s fiscal policy likely to lead to increases or reductions in consumer incomes?

    • Environmental issues:

      • Environment - is environmentally friendly packaging technically possible and available In this country?

      • Are waste-recycling facilities available?

      • Is sustainable/renewable energy available in this country?

      • Are environmental pressure groups powerful in this country?

    • Political issues:

      • Is the government stable and are there likely to be any demonstrations against the government?

      • Are government grants available for setting up In the country?

      • Is the government committed to increasing or reducing taxes?

      • Does the country belong to a free-trade area or political unions?

      • Does the government put tariffs or quotas on imported goods? For example, supplies needed from the USA for McDonald's restaurants.

    • Legal issues:

      • Political stability of the country is civil unrest likely

      • Employee and consumer protection laws - how restrictive are these, e.g. health and safety laws?

      • Trade restrictions or membership of free trade bloc - can food be imported without tariffs?

      • Environmental regulations - what forms of packaging of fast food are allowed?

      • Health concerns about fast food - could the government pass new laws about the contents of fast-food products?

    • Ethical issues:

      • Are there any high ethical standards in public and commercial in this country?

      • Do suppliers treat workers ethically?

      • Is bribery and corruption widespread in this country?

Impact of technology

  • Impact on objectives and strategies:

    • Focus on new product development

    • Improve stakeholder communication

    • Developing new and better processes

    • Cost benefits

    • Competitive advantage

    • Outsourcing and offshoring - the impact of globalization

  • Economic influences:

    • Economic growth and recession

    • Interest rates - the use of monetary policy

    • Exchange rates - increases (appreciation) and decreases (depreciation) in the value of a currency value against other currencies

    • Tax changes through the use of fiscal policy

    • Unemployment

    • Inflation (cost-push and demand-pull)

  • Environmental influences:

    • Environmental controls on business activities such as waste disposal, use of sustainable energy, reducing packaging

    • Threats from natural events such as drought, earthquakes and floods

    • Natural resources

    • Infrastructure road and air transport facilities, for example

  • Political influences:

    • Government stability

    • Form of political structure, e.g. democracy

    • Government’s attitude to private ownership

    • Trade policies and membership of free-trade areas or Customs Unions (e.g. EU)

  • Legal influences:

    • Improved employee legal protection, e.g. better health and safety at work, redundancy pay, protection from discrimination, minimum pay levels, maternity pay

    • Consumer protection laws that constrain businesses from advertising inaccurately or inappropriately, selling faulty goods or those described incorrectly, high-pressure selling tactics, not allowing consumers to change their minds after signing credit agreements

    • Competition laws can restrict unfair competition or restrictive practices by businesses, monopoly exploitation of consumers, mergers and takeovers (external growth) that could lead to a monopoly.

  • Ethical influences:

    • National differences in the values and attitudes held by the majority of the population

1.5 External environment

STEEPLE analysis

  • STEEPLE analysis: acronym standing for social, technological, economic, environmental, political, legal and ethical external factors that impact on business; it refers to a framework for analyzing the external environmental factors affecting business objectives and strategies.

  • STEEPLE analysis for McDonald’s restaurants (example)

    • Social issues:

      • How are dietary trends changing and how different are customer tastes from those in other countries (e.g. cultural and religious factors)?

      • What proportion of couples both work less time to prepare meals?

      • Growing health consciousness - is the demand for healthy foods increasing?

      • Is the population aging? Do the elderly buy more or fewer fast-food meals than the young? Is the population growing?

    • Technological issues:

      • Can the food production process be automated? Is technical support available?

      • Online selling - is full internet/broadband coverage available? Will customers order online?

      • Are IT support services available locally?

    • Economic issues:

      • Economic growth - is this slowing or even negative (recession)?

      • Unemployment - is this rising and reducing consumer incomes? Interest rates are these high or low?

      • Exchange rate - is this likely to appreciate or depreciate?

      • Is the government’s fiscal policy likely to lead to increases or reductions in consumer incomes?

    • Environmental issues:

      • Environment - is environmentally friendly packaging technically possible and available In this country?

      • Are waste-recycling facilities available?

      • Is sustainable/renewable energy available in this country?

      • Are environmental pressure groups powerful in this country?

    • Political issues:

      • Is the government stable and are there likely to be any demonstrations against the government?

      • Are government grants available for setting up In the country?

      • Is the government committed to increasing or reducing taxes?

      • Does the country belong to a free-trade area or political unions?

      • Does the government put tariffs or quotas on imported goods? For example, supplies needed from the USA for McDonald's restaurants.

    • Legal issues:

      • Political stability of the country is civil unrest likely

      • Employee and consumer protection laws - how restrictive are these, e.g. health and safety laws?

      • Trade restrictions or membership of free trade bloc - can food be imported without tariffs?

      • Environmental regulations - what forms of packaging of fast food are allowed?

      • Health concerns about fast food - could the government pass new laws about the contents of fast-food products?

    • Ethical issues:

      • Are there any high ethical standards in public and commercial in this country?

      • Do suppliers treat workers ethically?

      • Is bribery and corruption widespread in this country?

Impact of technology

  • Impact on objectives and strategies:

    • Focus on new product development

    • Improve stakeholder communication

    • Developing new and better processes

    • Cost benefits

    • Competitive advantage

    • Outsourcing and offshoring - the impact of globalization

  • Economic influences:

    • Economic growth and recession

    • Interest rates - the use of monetary policy

    • Exchange rates - increases (appreciation) and decreases (depreciation) in the value of a currency value against other currencies

    • Tax changes through the use of fiscal policy

    • Unemployment

    • Inflation (cost-push and demand-pull)

  • Environmental influences:

    • Environmental controls on business activities such as waste disposal, use of sustainable energy, reducing packaging

    • Threats from natural events such as drought, earthquakes and floods

    • Natural resources

    • Infrastructure road and air transport facilities, for example

  • Political influences:

    • Government stability

    • Form of political structure, e.g. democracy

    • Government’s attitude to private ownership

    • Trade policies and membership of free-trade areas or Customs Unions (e.g. EU)

  • Legal influences:

    • Improved employee legal protection, e.g. better health and safety at work, redundancy pay, protection from discrimination, minimum pay levels, maternity pay

    • Consumer protection laws that constrain businesses from advertising inaccurately or inappropriately, selling faulty goods or those described incorrectly, high-pressure selling tactics, not allowing consumers to change their minds after signing credit agreements

    • Competition laws can restrict unfair competition or restrictive practices by businesses, monopoly exploitation of consumers, mergers and takeovers (external growth) that could lead to a monopoly.

  • Ethical influences:

    • National differences in the values and attitudes held by the majority of the population

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