Steeple Analysis Notes

STEEPLE Analysis: An Environmental Framework

  • Developed by Professor Francis J. Aguilar at Harvard Business School.
  • An environmental framework to assess external factors affecting a business.
  • Variants include PEST, PESTEL, and PESTLE, differing in the number of factors considered.
  • Focuses on overall strategy and is essential for strategic planning.
  • Examines external conditions that the company cannot control.
  • STEEPLE is an acronym for seven macro-environmental factors.

The STEEPLE Acronym

  • S: Sociodemographic
  • T: Technological
  • E: Economic
  • E: Environmental
  • P: Political
  • L: Legal
  • E: Ethical

1. Sociodemographic Factors

  • Refers to sociocultural and demographic conditions in the country.
  • Concerns culture, values, attitudes, and norms of a country's population.
  • Essential to understand culture when dealing with other countries.
  • Theories for analyzing culture include Edgar Schein's Cultural Analysis and Geert Hofstede's Cultural Dimensions.
  • Factors that are always part of a country's culture:
    • Economic System: How the economic system works.
    • Family Relations and Marriage: Norms around living arrangements and family structures.
    • Education System: How the education system works and its level.
    • Social Conditions: What is considered acceptable in society.
    • Relationship with the Supernatural: Beliefs related to the supernatural.

2. Technological Factors

  • Refers to technological developments influencing companies.
  • Technological development is rapidly changing business.
  • Includes new methods of production, distribution, and communication.
  • Examples: Artificial intelligence and drones.
    • Artificial Intelligence: Potential to radically change our way of living.
    • Drones: Used in video recording, surveillance, war, and delivery.

3. Economic Factors

  • Refers to the socioeconomic situation in the country.
  • Influences how business is done and profit opportunities.
  • Factors:
    • Economic growth rate
    • Exchange rates
    • Interest rates
    • Inflation rate
    • Purchasing power (disposable income)
  • Can be divided into:
    • Macroeconomic factors: Taxation, public expenditure, investments; comparisons between GDP growth and unemployment.
    • Microeconomic factors: Distribution of population's demand between goods and services, crucial for B2C and B2B markets.

4. Environmental Factors

  • Companies affect their surroundings and are affected by the world around them.
  • Factors:
    • Legislation for environmental protection
    • Management of wastes and their disposal
    • Water and air pollution
    • Energy-efficient technologies
    • Ecology in society
  • Continuous new demands:
    • ESG reporting
    • Green accounts
    • CSR reports
    • The 17 global goals

5. Political Factors

  • Refers to political decisions affecting the company.
  • Factors:
    • Political stability
    • Labor market legislation
    • Taxes and levies
  • Analysis of government, foreign governments, and international organizations affect the country's economy.
    • Import and export policy
    • Tax policy
    • Environmental legislation
  • World Trade Organization rules influencing a country's legislation.
  • Politicians' decisions can:
    • Initiate business promotion activities.
    • Set aside money to educate young people.
    • Revise the tax policy.
    • Increase public investment.
  • Legislation from the European Union may affect a company's possibilities.

6. Legal Factors

  • Refers to laws, regulations, and taxes affecting the company.
  • Includes legislation on:
    • Equality
    • Working environment and safety
    • Labeling of products
    • Product safety
    • Consumer rights
  • Complexity is high in international trade due to differences between countries.
  • Example: Novo Nordisk facing different regulations for drug approval in Denmark and the United States.

7. Ethical Factors

  • Refers to ethical norms and values influencing the company's behavior.
  • Linked to the company's CSR strategy.
  • Concerns marketing methods, recruitment, and hiring practices.
  • Child labor is an ethical problem.

How to Use the STEEPLE Analysis Model

  • Include and evaluate only concrete and relevant factors.
  • Suitable for keeping updated on societal developments.
  • Relevant when evaluating a new market.
  • Three stages:
    • Stage 1: Identify relevant factors from each area.
    • Stage 2: Gather relevant information and analyze it.
    • Stage 3: Determine which factors to consider in future planning.

STEEPLE Analysis Example: Car Dealer in Rural Denmark

  • Social Demographic: Shift to electric cars; area has lower incomes and limited education, so inform about electric car characteristics and financial benefits.
  • Technological: Shift from petrol to electric cars changes the industry so it's important to have technically skilled employees.
  • Economic: Inflation can threaten purchasing power for electric cars.
  • Environmental: Electric cars are environmentally friendly.
  • Political: Electric cars are supported by various schemes.
  • Legal: Legislation accommodates electric cars with driving bans for older diesel cars and free parking in cities.
  • Ethical: No significant ethical issues.

STEEPLE Analysis Conclusion (Car Dealer Example)

  • External factors favor the sale of electric cars (technological, legislative, political).
  • Challenges in the dealer's area to find customers willing to buy electric cars.
  • Staff may need retraining or replacement.

Critique of the STEEPLE Model

  • Risk of overlapping factors (e.g., social and political).
  • Subjectivity in integrating ethical factors.
  • Treats all factors equally without prioritizing impact.
  • Assumes a static environment.

Summary

  • STEEPLE model provides insights but has limitations.
  • Consider complementary approaches for a comprehensive analysis.