The STEEPLE Analysis provides businesses and managers with an overview of the factors specific to the external environment only. These factors (considering both opportunities and threats), unlike internal ones, in addition to affecting all businesses on the market, are vastly beyond the control of any individual organization.
The acronym ‘STEEPLE’ stands for the Social, Technological, Economic, Environmental, Political, Legal and Ethical opportunities and threats of the external business environment. The short version of The STEEPLE Analysis is called The PEST Analysis.
The STEEPLE Analysis is central to business strategy as it shows the unpredictable factors that affect business activity and the issues that should be addressed in any business strategy, such as assessing the feasibility of an overseas investment project.
Opportunities in The STEEPLE Analysis are external factors that present chances for the business, e.g. lower TAX rates, lower interest rates, subsidies from the government, higher disposable incomes, better transportation links, etc.
Threats in The STEEPLE Analysis are external factors that can harm the business, e.g. a recession, oil crisis, higher TAX rates, higher interest rates, major roadworks, natural disasters, major health epidemics, etc.
Benefits of using The STEEPLE Analysis
It is a useful and straight-forward framework that aids decision making. It can be helpful for:
– Strategic business planning and forming business propositions. Judging the potential costs and benefits of a joint venture, merger or acquisition, expanding overseas or growth through product development.
– Investment opportunities. Evaluating whether the company should open a new retail store in a certain location.
– Marketing planning. Assessing the opportunities and threats of developing international marketing strategies.
– Workforce planning. Can help with identifying changes to business models that may have an impact on the future employment patterns.
– Product development. Deciding on whether to enter or leave certain markets, modify existing products, launch new products or scrap unprofitable ones, or those with low profit margins.
– Organizational change. Can help managers to identify potential opportunities and threats regarding labor changes – shortages of skilled workforce, high labor turnover, etc.
Examples of The STEEPLE Analysis
Let’s take a look at a partial STEEPLE analysis for UNISON, one of the UK’s largest trade unions.
EXAMPLE 1: UNISON ‘UNISON is Britain and Europe's biggest public sector trade union, representing more than 1.3 million members working in public services. Job roles they represent in the public sector include, for example: librarians, Human Resources, IT and finance workers, teaching assistants and early years nursery staff, secretaries, cleaners, caretakers and school meals supervisors, care workers, social workers and nurses. UNISON campaigns on a variety of issues relevant to its members. Currently, it is running the Migrant Workers Participation Project. This campaign focuses on the issues faced by migrant workers in the UK. Migrant workers are employees who have moved from overseas to the UK to find work.’ [1] Times Higher Education Case Studies Political factors Opportunity: ‘UNISON believes that if migrant workers are part of a trade union membership and can benefit from properly negotiated pay rates, this type of misinformation will not arise. As part of its campaign, UNISON aims to dispel the negative views on migration. Migrant workers play an extremely important role in providing many needed services. This provision would not be possible without migrant workers.’ Threat: ‘In areas of high migrant populations, there are greater pressures due to, for example, insufficient housing and health provision. The migrant workers population is not evenly spread across the UK - the majority of migrants are in London and the South East, according to government statistics. It is important to understand that the same pressures on services would occur if large numbers of UK workers suddenly moved to an area.’ Economic factors Opportunity: ‘Most migrants come to the UK from countries that are less economically developed. They can earn a better wage in the UK than in their home country. This difference in wages allows the migrants to enjoy an improved standard of living. The migrant workers are also able to send money back to their families who remain in their home countries.’ Social factors Opportunity: ‘A number of social factorshave increased the flow of workers into the UK. Many migrants moved to the UK to improve their standard of living. Social factors in the UK also contribute to the demand for migrant workers in the UK. The UK has an ageing population. Without immigration, the labour force would be shrinking.’ Threat: ‘Many social issues may affect migrant workers whilst they are in the UK. For example, UNISON is aware that many migrant workers have difficulty communicating in English. This creates problems with understanding important documents such as contracts of employment, company rules and notices. Migrant workers are often unaware of their rights in the workplace. The language barrier also affects migrants outside the workplace. It causes difficulties in shops, accessing housing and education and understanding the welfaresystem.’ Technological factors Opportunity: UNISON’s website is an important means of communicating with members. For example, it has welfare pages providing migrants with information about the benefits they can receive. The site provides access to leaflets in a range of different languages.’
How to construct The STEEPLE Analysis?
Social Factors (Opportunities & Threats):
The society has a huge influence upon the businesses with new changes and trends emerging among consumers. Also, the social and cultural influences on business vary from country to country, therefore many societal factors should be considered. You must think about issues such as:
- What is the dominant religion?
- What are attitudes towards foreign products and services?
- Population growth rates.
- Retirement age. Availability of labor.
- Does language impact upon the diffusion of products onto markets?
- How much time do consumers have for leisure?
- Attitudes toward immigration.
- What are the roles of men and women within society?
- How long is the population living on average? Are the older generations wealthy? Lifestyle trends.
- Do the population have a strong or weak opinion on green issues?
- Society mobility.
- Age distribution.
- Health consciousness.
- Retirement age.
- Level of education.
- Attitudes toward career switching.
Technological Factors (Opportunities & Threats):
Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points:
- Does technology allow for products and services to be made more cheaply and to a better standard of quality?
- Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile, phones, 5G and 6G networks, broadband Internet, etc.?
- Access to the Internet.
- New innovations and technological advancements.
- How is distribution changed by new technologies e.g. reading books via the Internet, booking flight tickets using phone Apps, product auctions online, etc.?
- Technological awareness among the society.
- Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc.?
- Advanced machinery, specialist tools, skilled resources.
- Spending on Research and Development (R&D) among large corporations.
Economic Factors (Opportunities & Threats):
Marketers need to consider the state of a trading economy in the short-term and long-term. This is especially true when planning for expansion or doing international marketing. You need to look at:
- Interest rates.
- The level of inflation.
- Employment level per capita.
- Long-term prospects for the economic growth.
- Gross Domestic Product (GDP) per capita.
- Economic cycles.
- Increase in labor costs.
- Fiscal Policy
- Monetary Policy.
- Supply-side policies.
- Developed economies, developing economies, underdeveloped economies.
- Exchange rates.
- Minimum wage.
- Working hours.
- Average income.
- Cost of living.
- Purchasing power of the average customer.
- Credit availability.
Environmental Factors (Opportunities & Threats):
Environment can bring both opportunities and threats to the business. Favorable weather may bring new possibilities to increase sales revenue, while any natural disaster can cause an increase in business costs. Consider the following points:
- Are our production methods environmentally friendly?
- Is there a chance that natural disasters will severely impact business operations?
- The weather.
- Climate. Climate change.
- Increase in energy costs.
- Availability and quality of utilities.
- Availability of green energy.
- Pollution creation, pollution trading, pollution quotas.
- Greenhouse gas emissions.
- Pressure from Non-governmental Organizations (NGOs).
Political Factors (Opportunities & Threats):
The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as:
- Political stability. How stable is the political environment?
- Will government policy influence laws that regulate or impose TAX on your business?
- What is the government’s position on marketing ethics?
- Corporate TAXation.
- What is the government’s policy on the economy?
- Does the government have its own view on culture and religion?
- Is the government involved in any trading agreements such as European Union (EU), North American Free Trade Agreement (NAFTA), The Association of Southeast Asian Nations (ASEAN), or other trading blocs?
- Current status of foreign trade. Trade wars. Trade restrictions.
- Anti-business rhetoric.
Legal Factors (Opportunities & Threats):
The legal issues also have a huge influence upon the regulation of businesses. Consider issues such as:
- Are there any legal aspects that apply specifically to our company?
- What new laws and regulations the government is going to introduce in the near future that may affect business operations?
- Overall legal framework regarding new company registration.
- Court system.
- Legislations toward employment. Employment laws. Discrimination laws. Anti-trust laws.
- Licensing. Patenting.
- Privacy regulations.
- Copyright laws.
- Industrial energy consumption regulations.
- Trade unions.
- Health & Safety regulations.
- Consumer-protection legislation.
Ethical Factors (Opportunities & Threats):
The ethical issues may have a big impact on the business’s reputation and brand image. Consider issues such as:
- What is the company’s attitude toward Corporate Social Responsibility (CSR)?
- Ethical decisions & Unethical decisions by management.
- Does your company publish your own Ethical Code of Practice?
- Bribery.
- Intellectual property theft.
- Confidentiality issues. Stealing trade secrets. Risks of hacking.
Evaluation of The STEEPLE Analysis
The importance of each opportunity and threat identified in The STEEPLE Analysis can be weighted in a scientific way. This is useful when trying to examine the advantages and disadvantages of a business decision. If the overall opportunities of a decision outweigh the threats, then the business is likely to pursue that option.
Advantages of The STEEPLE Analysis include:
1. Simple to construct. The STEEPLE Analysis is quite simple to prepare, and can be easily used for brainstorming and discussion. It also helps managers to be thorough and logical in their analysis of the external opportunities and threats faced by the business.
2. Flexibility with amount of details. The amount of research necessary to construct The STEPPLE Analysis will depend on the managers and the purpose of preparing it.
3. Cost effective. The costs involved in producing The STEEPLE Analysis will include the time spent by managers and the workers. It can be completed by using a simple WORD processor document or pen and paper, without the need for purchasing expensive computer software.
4. Promotes forward thinking. The STEEPLE Analysis promotes proactive thinking rather than static views based on personal gut feelings. Therefore, it will increase the likelihood for managers to be better informed and prepared to deal with external shocks.
5. Allows to exploit opportunities. The STEEPLE Analysis can be used to research social and technological trends, e.g. where your target market is moving towards to. It can also help your company to build a marketing campaign ahead of your competitors.
Disadvantages of The STEEPLE Analysis include:
1. Not practical in fast-changing environments. It is because external factors in The STEEPLE Analysis change frequently and are a subject to rapid and unforeseeable changes, e.g. price wars, trade wars, oil spills, hurricanes, etc.
2. Time consuming to prepare. Because it might be time consuming to prepare the full STEEPLE analysis including each factor consisting of both opportunities and threats, quite often managers prefer to use The PEST Analysis instead. The PEST Analysis includes political factors, economic factors, social factors and technological factors.
