The STEEPLE analysis framework helps businesses scan the environment and shape their long-term strategies. STEEPLE stands for Social, Technological, Economical, Environmental, Political, Legal, and Ethical threats. Although time-consuming and resource-intensive, this analysis enables businesses to understand external factors impacting their objectives.
It aids in strategic planning, problem-solving, and improving products/services. Business analysts employ STEEPLE analysis for holistic strategic planning, continuous improvement, and strategic positioning.
The STEEPLE Analysis
Seven factors impact businesses according to the STEEPLE framework.
These factors are:
- Social Factors
- Technological Factors
- Economic Factors
- Environmental Factors
- Political Factors
- Legal Factors
- Ethical Factors
1. Social Factors
Social factors include the sentiments and opinions of the audience, which significantly influence their purchasing decisions. Understanding these social factors empowers businesses to market their products effectively, gather feedback, refine product design, packaging, and pricing, and make informed advertising and marketing choices.
2. Technological Factors
Technological factors are key in shaping businesses in today’s volatile, uncertain, complex, and ambiguous (VUCA) world. These factors include advancements such as research and development, robotics, artificial intelligence, and automation, which have become indispensable for maintaining business relevance and adaptability.
The continuous emergence of disruptive innovations further amplifies the significance of technological factors as they reshape businesses and livelihoods.
3. Economic Factors
Economic factors hold tremendous sway over the survival and prosperity of any business. Evaluating the economic landscape enables businesses to make critical strategic decisions and align their products and services with prevailing economic trends. Fiscal and monetary policies, foreign exchange rates, economic growth, inflation, and interest rates are key indicators illuminating the economy’s performance and influencing business operations.
4. Environmental Factors
Environmental factors direct attention toward the impact of geographical location on a business. Considerations such as energy consumption, waste management, environmental policies, weather patterns, and natural disasters wield considerable influence over the success or failure of a business venture. Thorough environmental scanning facilitates the harmonization of internal business variables with the external factors prevalent in the business environment.
5. Political Factors
Political factors wield substantial power to reshape business plans if not thoroughly understood and considered. Governments can enact laws and policies that significantly affect industries and economies. Keeping a keen eye on political trends and movements and promptly adapting to changes is imperative for businesses seeking to leverage tax policies, labor laws, trade barriers, and other governmental interventions.
6. Legal Factors
Intricately linked with governmental factors, legal factors demand careful evaluation during strategic planning. Countries, states, and provinces are subject to varying laws, necessitating businesses to align their activities and projects with the prevailing legal framework. These legal considerations include customer rights, privacy, and security regulations, advertising standards and laws, equal opportunity, gender equality, and health and safety regulations.
7. Ethical Factors
Ethical factors are the bedrock for robust corporate governance, reputation, and brand image. Ethics embody the moral principles that guide businesses in their actions, dictating what is considered good or bad for the common good. They also determine the right course of action for customers and employees. These ethical considerations encompass cultural values, responsibilities, integrity, morality, social responsiveness, and employee conduct within society.
NB: These variables will depend on the country and peculiar regulatory framework in the STEEPLE analysis.
STEEPLE Analysis Process
To achieve the desired outcomes, it is imperative to conduct the STEEPLE analysis systematically. The established approach involves scrutinizing each factor encompassed by STEEPLE, thoroughly evaluating their impact on the business, and discerning whether they present opportunities or threats.
Subsequently, high-risk factors are prioritized, and strategies are formulated to address the identified opportunities and threats. The utilization of SWOT analysis aids in identifying the strengths and weaknesses of the business about external opportunities and threats.
The essence of STEEPLE analysis lies in the meticulous gathering of ample and pertinent data by strategists and stakeholders concerning the environmental factors that surround the business.
Subject experts hold workshops and carry out the following:
- Establishing the Workshop Team: The workshop team should comprise not only the business’s professionals but also experts and employees from other enterprises, thus ensuring a diverse range of perspectives and fostering the availability of a second opinion.
- Clarifying the Purpose: Team members must clearly understand the analysis’s purpose, priority, and objectives concerning the business environment. This clarity enables the team to take targeted actions concerning external factors, maximizing the potential for business success.
- Conducting a STEEPLE Brainstorming Session: Provide the team with a template sheet based on the STEEPLE framework to facilitate a structured approach to the task. The session should systematically explore each area represented by the acronym S, T, E, E, P, L, E, documenting threats and opportunities. Additionally, assess competitors’ strengths during this stage to inform strategic positioning.
- Prioritizing High-risk Factors: In this phase, organize all factors according to their potential impact and likelihood of occurrence. This prioritization is of utmost importance as it allows the appropriate allocation of resources to address high-risk issues effectively and optimally use limited business resources.
- Implementing Corrective Actions: Develop a comprehensive plan and delegate responsibilities for mitigating identified threats and capitalizing on opportunities. The strategies devised should align with the ecosystem’s identified effects of both external and internal factors.
It is crucial to emphasize that the primary objective of utilizing STEEPLE as a business tool is to differentiate between threats and opportunities. Opportunities refer to external factors that provide favorable circumstances for the business, such as reduced income tax rates, lower interest rates, government subsidies, increased disposable incomes, and exemplary environmental practices.
On the other hand, threats encompass uncontrollable factors that have the potential to impact the business detrimentally. Examples of threats include economic recessions, oil crises, higher tax rates, elevated interest rates, inadequate transportation infrastructure, natural disasters, and global pandemics.
Assessing the STEEPLE Framework
The significance of each opportunity and threat identified in the STEEPLE session can be weighted scientifically. This helps management assess the merits and demerits of a business decision. When the opportunities outweigh the threats, the business takes that action.
STEEPLE analysis has the following advantages:
- It offers a straightforward and user-friendly framework that facilitates STEEPLE analysis’s preparation, construction, and utilization for comprehensive and logical brainstorming and discussions.
- The analysis provides flexibility in accommodating various levels of detail, depending on the managers’ discretion and the specific objectives of the exercise.
- A significant advantage of this business tool lies in its cost-effectiveness, as it requires minimal financial resources.
- STEEPLE analysis fosters forward-thinking and proactive decision-making, steering away from static perspectives solely based on personal intuition or gut feelings.
- The approach empowers businesses to seize opportunities by actively researching and analyzing social and technological trends, enabling them to align with their target market’s evolving preferences and movements.
Despite the usefulness of the STEEPLE analysis, it has some disadvantages. Below are some of them:
- Implementing a STEEPLE analysis can be a time-intensive process that may necessitate a financial investment.
- While STEEPLE analysis encompasses a broad spectrum of external factors, it may not offer an exhaustive examination of specific issues or trends.
- The framework primarily focuses on external factors, potentially overlooking internal factors that impact an organization or industry.
- STEEPLE analysis does not offer explicit guidance on responding strategically to the identified external factors.
Uses of STEEPLE Analysis
The uses of STEEPLE analysis are as follows:
- Market Research: Implementing STEEPLE analysis facilitates the collection of valuable market information, enabling organizations to identify relevant trends and patterns that have implications for their business.
- New Product Development: Leveraging STEEPLE analysis empowers organizations to identify novel product opportunities based on current market trends or changes in the external environment. This proactive approach ensures alignment with market demands and enhances the potential for successful product development.
- Business Planning: STEEPLE analysis plays a pivotal role in aiding organizations to identify both opportunities and threats within the external environment. This valuable insight enables them to develop effective risk management strategies and capitalize on the identified opportunities, ensuring robust business planning and strategic decision-making.
- Risk Management: Through a comprehensive understanding of external factors derived from STEEPLE analysis, organizations are equipped to formulate strategies that effectively mitigate risks while capitalizing on opportunities. This proactive approach to risk management bolsters the business’s resilience and enhances its ability to navigate the evolving landscape.
- Government Relations: A nuanced comprehension of political and legal factors that can impact an organization is paramount. Conducting STEEPLE analysis empowers organizations to develop effective government relations strategies, ensuring compliance with regulations and fostering positive relationships with relevant authorities.
Conclusion
STEEPLE analysis evaluates the ecological condition of the market, enabling a comprehensive understanding of the external environment, forecasting growth rates, and attaining a competitive edge. Its primary objective is to gain a comprehensive overview of the factors unique to the external environment. This versatile framework is highly applicable in real-life scenarios.
Through STEEPLE analysis, no factor is left unaddressed, enabling businesses to position themselves effectively for competitiveness and resilience within the intricacies of a complex business environment.