Environmental analysis – STEEPLE

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Table of Contents

Introduction
Steeple Analysis
Technological factors
Social factors
Political Factors
Economic Forces
Other Forces
Micro environment
Conclusion
References

Introduction

An industry environment is surrounded by various variables that operate within it. A steeple analysis of an industry environment is a framework that is used to identify external and internal factors affecting a business environment. The analysis is quite rooted to the factors that matter to the industry thus has so much impact on the business area.

Most industries analyse their business environment using the PEST analysis which involves an examination of a company’s political, economical, social and technological environment (Beiske, 2007, p13). A steeple analysis is an extension of the PEST analysis which on top of the PEST environmental factors, it includes other factors such as educational, ethical, legal and environmental factors (Curtis, 2007, p357).

Though most of the above forces are beyond company’s control, the importance of carrying out steeple analysis is to identify factors in the environment that have effects on the company taking into consideration that this type of analysis is capable of exposing the potential threats and opportunities (Soffe, 2005, p315).

Steeple Analysis

A steeple analysis combines the above mentioned factors that contribute to changes in the industry which include political, economical, social, technological, educational, ethical, legal and environmental factors.

Identifying these factors, it becomes easy to summarize the whole industry environment and the operations of the business. The business is also able to counter act and respond properly to the influences brought about by the above factors (Score Card Report, 2010).

Identification of the factors influencing the industry environment plays a great role in helping the industry identify the threats and opportunities there in. This makes it easier to distribute the important factors as well as interpreting them. Apart from the factors brought about by the steeple analysis, lifestyle changes also have so much impact on the external environment of any industry or business.

Steeple analysis also checks on the global economy to determine its effects on the industry depending on the information and the knowledge of the corporation. It puts in to consideration issues to do with global warming and climate change that influences carbon emissions thus enabling the industry to focus on the wider changes in the environment.

Technological factors

The steeple analysis enables an industry to identify the technological efforts that are associated with the discoveries and the various developments that are associated with the highly advancing technology and the rate of technological obsolescence (Score Card Report, 2010). Technological factors have so much impact on the changes of IT, use of energy and accessibility of communication channels.

Technology plays a vital role in the business environment of each and every industry. Every industry should keep up to date with the advancing technology in order to ensure delivery of efficient and timely services to its customers. If an industry fails to do so, its clients are likely to be lost to its competitors who are advancing with technology thus being effective in their services.

However, keeping up to date with technology may seem expensive but it is important all together. It is therefore important to understand market needs, future changes in technology and the possible impact to the industry in order to put in place the correct technology that will maintain its position for a long time while delivering the necessary services (Soffe, 2005, p316).

Social factors are the regulatory concerns in any business environment that should be checked once in a while. This enables the industry management team to gain understanding of the external environment of the industry’s business (Score Card Report, 2010). The social environment of any commodity and the satisfaction brought about by the product are as important as the product itself (Curtis, 2007, p357).

For instance, a new customer may not want to be served with a greasy spoon since this portrays a certain image and environment of the cafe in question. Some of the major areas inclusive in the social factors of the environmental analysis include the cafe culture, fair trade, coffee and organic products.

Looking at the environment surrounding the airline industry, some of the social issues involved include reluctance to fly following the September 11, 2001 events, fear of continued terrorism, loss of consumer confidence to security issues among others (Beiske, 2007, p13).

In the film industry, such things as multicultural environment and knowledge of Bollywood raise the level of awareness and interest (Curtis, 2007, p357).

When doing environmental analysis in any industry, it s always important to consider the social factors since they play a key role towards consumers response to the business. Social forces may be brought about by such issues as ‘quality of life, demographics, attitudes, cultural expectations, lifestyle, leisure time, and image’.

Today, the environmental policies require the government to improve its citizen’s quality of life, which is constantly followed by people who promote ethical business practices, environmental protection and conservation. These individuals are also concerned with GM crops, child labour, sustainable developments, and green house gases among others (Soffe, 2005, p315).

Political Factors

In every environmental analysis, political factors are mostly closely related to the legal forces operating against the business. Considering the film industry, it is important to put in to consideration political and legal forces since some of the films or any information portrayed to the media may have politically controversial content (Curtis, 2007, p357).

Political and legal forces involve regulatory requirements from local council which are passed on to the government and later to the international arena like the European parliament whereby their influence on the businesses are very significant (Soffe, 2005, p315).

The importance of legal and political forces in a business environment is that they mould the ability of the business to prosper as well as the dynamics and challenges that the industry is operating in.

Some of the forces that may be considered in this field include ‘taxation, employment law, foreign trade, trading laws, monopoly control, gambling, licensing and age limits, education, as well as government regulations, policies and strategy (Lancaster & Withey, 2007, p48)’.

The management team and the researchers should therefore be responsible in identifying the political, legal and regulatory level factors that may have effects in the business in present and in future (Soffe, 2005, p315).

Some of the common examples may include new rules concerning the use of emails, the 2005 European directive that legally held motor vehicle manufacturers responsible for recycling the worn out vehicles among others.

Economic Forces

These are the environmental forces that relate to global and domestic economic conditions that every industry ought to be aware of in any economic market place. Some of the examples of economic forces include ‘buying power, exchange rates, economic stability, inflation, supply and demand, levels of disposable income, trade cycle, interest rates among others’ (Lancaster & Withey, 2007, p48 & Soffe, 2005, p315).

Proper environmental analysis on economic grounds may provide opportunities or potential threats to such areas as ‘employment, interest rates, investment grants, GDP, imports and exports’ (& Soffe, 2005, p315).

Considering the hotel industry in this context, we may consider an example of an increased spending on a limited room by five days a week commuter customer. Though this may provides an offer for value for money, it is quite expensive for an average family night out. It would therefore be fair to seek the additional money from sponsors to keep the ticket prices down (Curtis, 2007, p357).

Other Forces

Other forces that are brought about by a steeple environmental analysis include environmental, ethical, and educational factors. Environmental issues include environmental pollution, renewable resources, and issues of green houses among others. Ethical factors touch on issues to with children and health issues that are brought about by products such salt and fats leading to obesity (Lancaster & Withey, 2007, p49).

These should be put in to consideration whenever any industry is carrying out its businesses to ensure that it abides to ethical and environmental policies to avoid instances of conflict. Furthermore, industries should put effort in educating their staff members for them to provide informed advice and services to their customers (Curtis, 2006, p357).

Micro environment

Most of the forces and factors discussed above are termed as macro environmental factors. Micro environment analysis is aimed at identifying critical factors in the immediate environment that have impact on the industry, market, customers and competitors. While doing the industry analysis, the Porter’s five analysis model is usually very useful.

The five forces in the porter’s model include suppliers, buyers, potential entrants, substitutes and competitive rivalry. Supplier’s chain may be controlled by a few or many individuals. Supplier’s power is only reduced in instances where buyers have a wider range of choice thus driving the prices down (Sum, 2006, p17).

The same case applies when there market is controlled by a few buyers thus making the suppliers to reconsider their pricing strategies. Potential entrants in every industry are usually faced by so many barrier like money, cost of machinery, and licenses that make it hard to enter in to the industry thus leaving it to a few.

Substitutes refers to product which comes to replace others thus affecting their marketing while competitive rivalry involves such issues as ‘intensity of completion, size of competitors, case of completion and competitive advantage’ (Soffe, 2005, p317, Sum, 2006, p17).

Competitor analysis should be followed as per the coverage in the porter’s model. A competitive intelligence system as well as a profit impact of marketing strategy is very important tools the help in competitors date collection and analysis.

Market analysis covers actual and potential market as well as analyzing customer segments. It is very vital to understand a customer in a business scenario since today’s customers are more complex, have very specific needs, are better educated and have higher level of spending powers (Kew & Stredwick, 2005, p205).

Conclusion

Environmental analysis is a very important step in any business or industry since it helps the investor understand the forces and the factors affecting their industry.

A steeple analysis is of even more importance since it touches on a wider range of these forces which enables individuals in the industry to be in a position to see the opportunities and threats facing their business. Failure to carry out an environment analysis in a business field may make business men to be prone to the threats therein.

References

Beiske, B. (2007) Loyalty Management in the Airline Industry. Norderstedt: GRIN Verlag.

Curtis, T. (2007) Marketing in Practice 2007-2008. UK: Butterworth-Heinemann.

Curtis, T. (2006) CIM Course book 06/07 Marketing in Practice. Burlington: Butterworth-Heinemann.

Kew, J. & Stredwick, J. (2005). Business environment: managing in a strategic context. London: CIPD Publishing.

Lancaster, G. & Withey, F. (2007) Marketing Fundamentals, 2007-2008. Burlington: Butterworth-Heinemann.

Soffe, R. (2005) The countryside Notebook. Victoria, Wiley-Blackwell.

Sum. (2006) SMB 360 Risk Assessment Workbook. LLC: New York.

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