IB BM unit 1.

5
External environment (STEEPLE)
STEEPLE
is an acronym for the Social, Technological, Economic, Environmental, Political,
Legal and Ethical
opportunities and threats of the external business environment. These factors,
unlike internal ones, affect all businesses yet are beyond the control of any individual
organization. STEEPLE analysis is central to business strategy.
See if the business needs to change its objectives
external factors that present chances of business are called opportunities
external factiors that can harm a business are threats
Advantages:
it is simple to use
the analysis helps the managers of the business to be thorough and logical in their
analysis of threats and opportunities towards the business.
useful brainstorming and discussion tool
promotes proactive and forward thinking rather than just looking at statistical DATA
based on assumptions and gut feelings.

social, cultural and demographic factors which directly affect the

business eg. increase in retirement ages, is an opportunity for
health care sector. changes in fashion trends (men using bags)
Social opportunites and trends in broader population such as when workers move from
thrests rural areas to modern cities in search for employment is an
opportunity for businesses. having a more flexible labour force
(hiring women) is a benefit for businesses Language creates
opportunites and threats (Faced by MNCs)

Technological opportunites introduction of high tech machinery, and processes in society

and threats which effects businesses eg. use of internet, mobile phones are
an opportunity for e commerce businesses (self explanatory)
advancement and introduction of industrial technologies

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 (automation) that improve efficiency is an opportunity for
businesses ability to communicate with consumers all around the
world, directly connect with consumers pose as threats because
it adds competition between local businesses and e commerce
businesses opportunites: 1. improved productivity 2. new working
practices (working from home. cuts cost for face to face
meetings) 3. quicker product development (CAD And CAM help
businesses to quickly produce prototypes of goods, less time
consuming, thus accelerating the processing, manufacutring and
launching products and also cuts cost 4. Job creation (low
unemployment Threats: 1. tech is not always reliable, secure
(hacked files) 2. it can be costly because as the product cycles
ends, the business has to devote more resources in
incorporating into the new product development 3. Job losses
(automation)

Economic Opportunities and economic environment refers to the state of economy in which
threats business operates) the economic factors are determined by the
governments ability to achieve the macroeconomic goal (low and
stable rate of inflation, reduced unemployment, economic growth
and healthy international trade) 1. inflation it is the continual
increase in price level of goods and services in an economy.
inflation complicates business planning and decison making.
inflation that is not controled becomes a threat due to higher
COP and uncertainity of prices. effects international
competitivness, when an economy has inflation, trading overseas
becomes less competitive and we export falls, output falls,
unemployment rises. it is caused when AD increases, (C+I+G+
(X-M)) 2. Unemployment unemployment rate measures the
proportion of a countries workforce who are out of jobs. there are
social costs of high unemployment. which is a threat to
businesses. poverty, increased crime levels. when governments
tackle unemployment, it provides opportunites to a business. eg.
reduction of interest rates to encourage consumption, govt.
spending 3. economic growth increase in a countries economic
activity. change in value of the economy’s output (Real GDP).
economic growth higher, economy is prosperous, income
increasing, opportunities of business increasing. in a business
cycle, a boom, recession,trough, recovery growth 4. healthy
international trade governments strive to avoid defecits in
international spendin/trade balance to correct trade imbalance

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 the government uses, exchange rates which provied opporunity
and threats. exchange rates measure the value of domestic
currency in terms of foreign currency. high exchange rate
appreciation of a country (export prices are high, reducing export
price competetivness) low exchange rates depreciation of a
country ( gives domestic firms an advantage) fluctuating
exchange rates, threats a business. effects business planning
protectionist measure refer to government policy used to
safegaurd domestic business from foreign competitors
ecological footprints the impact of a person or community on the
environment, expressed as the amount of land required to
sustain their use of natural resources. environmental factors
Environmental opportunites
refers to businesses which are influenced by the sarroundings,
and threats
natural environment weather change, climate change, global
warming poses a threat to businesses firms have to consider
ecological footprints which might be threats to businesses
nature and stability of the government and its policies towards
business. most countries use interventionist approaches to
manage economy by using legistation and policies to oversee
Political opportunity and
business behaviour government policies are fiscal (use of
threats
taxation and government expenditure to influence business
activity) and monetary (use of interest rates policy to effect
money supply and exchage rates to influence business)
legal standards that affect business, constraints of employment
laws such as national minimum wage and health and safety
regulations smoking bans in resturants and mall can have effect
Legal opportunity and threat
in business consumer protection legistation, employee protection
legistation, comptetion legistation, social and environmental
legistation(demeri goods)

differences between national values and attitudes held by the

countries population what is right or morally correct business
Ethical opportunity and
needs to think about the impact on environment and broader
threats
society so businesses choose to adopt environmental practices
to meet CSR

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