External Environment
STEEPLE: Sociocultural and technological factors
STEEPLE is a framework that is useful in examining a firms external environment. Is used to better recognize and understand the opportunities and threats facing a business. Is an acronym designed to prevent analysts from leaving out important factors when evaluating the external environment
The letters stand for the following
Sociocultural
Technological
Economic
Enviromental
Political
Legal
Ethical
Sociocultural Factor
Technological factor
Economic Factor
Enviromental Factor
Political Factor
Legal Factor
Ethical Factor
Relate to the way people live and what they believe and value. This factor therefore includes a wide variety of considerations.
Religion includes consideration of both the dominant and minority religions of the population, as well as the importance and influence of religion in daily life.
Cuisine is also included in sociocultural factors: what do people eat, at what time, and with whom?
Family life: Are families large or small? Is the nuclear family the essential family unit, or do extended families including several generations live together under one roof?
Demographics is included with sociocultural factors. What are the statistics in terms of fertility and life expectancy? What does the pyramid of age look like?
Health and types of diseases can also be included in this category. What diseases are most prevalent in the country and do all citizens have access to health care?
Education is another element included in sociocultural factors. How long is the formal education system in the country?
Some of the biggest technological changes over the last few decades are related to the explosion of innovations in information technology.
Closely linked to the growth of information technology is the increasing availability of big data that can be exploited by companies to understand and meet the needs of their clients.
Other key technologies include nanotechnology, with applications in fields as varied as textiles and electronics, and genetic engineering, which is leading to advances in medical and agricultural science.
a more traditional factor to take into consideration is the availability of infrastructure, particularly in developing countries. Infrastructure includes things like ports and road and rail networks, drinking water and sanitation facilities, and communication networks and reliable electricity, all of which are necessary to doing business.
As economies develop, consumers have more money to spend
Gross domestic product
GDP per capita
Recession
Depression
Inflation
Deflation
Interest rate
Unemployment rate
Imports
Exchange rates
Is calculated as the total monetary value of all final goods and services produced in an economy in a given period of time. Anual GDP is often used to estimate the overall size of an economy.
Is calculated by dividing total GDP by the population of a country. Is used to measure the relative wealth or poverty of a nation
Refers to the case where GDP decreases for two or more quarters. (three - month period)
Is used to describe a prolonged or particularly severe recession
Refers to an increase in prices, usually calculated as an annual rate of increase.
Refers to a decrease in prices. Is less common than inflation, although it does occur when economies slump
Is the cost of borrowing money. Vary over time, and also according to risk. When interest rates are low it its generally positive for businesses. Low interest rate can also encourage consumers to buy goods on credit, thereby increasing demand
Is calculated as the percentage of the labour force that is out of work but actively seeking employment at a given time
Are goods brought into a country and exports are goods manufactured in a country and sold abroad
Refer to the cost of one country's currency in terms of another country's currency.
Environment in this case refers to the natural environment
The quantity and quality of available fresh water.
[Climate change] is already having an impact on businesses worldwide. Most experts agree that climate change has already altered weather patterns and increased the frequency of storms and floods, as well as forest fires and droughts
The necessity to protect species and their habitats can limit the development of some businesses. Other businesses, like those in cosmetics and pharmaceutical industries, see biodiversity as a potential source of inspiration for medical advances
The challenge of how to recycle or dispose of the growing amount of solid waste created by modern societies is a cost for some businesses and an opportunity for others
Air quality is another area of concern that has different impact on different businesses; compliance with pollution regulations can be expensive, but bad air quality can also affect decisions related to corporation relocation
Politics is ever-present in business decision-making. From a sole trader seeking permission from a local government to open a new outlet, to a multinational company seeking access to oil fields, all businesses have to take political factors into account.
Business must at a minimum abide by all existing laws and regulations. Companies must obey the law not only in their home countries, but in all the countries where they operate.Some companies are not content to be observers, but even hire lobbyists that try to influence legislation that will have an impact on business.
The potential for litigation is an issue in many industries. Companies can be sued by governments for anti-trust behaviour, by other companies for anti-competitive practices, by employees for unfair practices, and by consumers for producing harmful or potentially harmful products.
Companies are increasingly under fire for marketing products that may not be in consumers’ best interests. Many people would argue that it is unethical to market sugary cereals and fizzy drinks as well.
Even in the west, movements opposing unfair labour practices must be considered.
Companies’ pricing policies, such as discriminatory pricing and predatory pricing, may have ethical components.
Each year, Transparency International publishes its 'Corruption perceptions index', which indicates to what extent corruption is a problem in individual countries. Corruption includes anything from buying votes to paying direct bribes to public officials in exchange for preferential treatment.