1. Unit 1.5 – External Environment
IB Business Management

2. Goals for the Chapter Prepare a STEEPLE analysis of an organization
Explain the consequences of a change in any of the STEEPLE factors for a business’s objectives and strategy

3. Impact of External Environment
All businesses operate in an “environment”
Environment in business refers to conditions “external” to the business.
External environment is complicated
What happens in the external environment is beyond the control of the business

4. STEEPLE Current way to analyze
Older Versions
PEST – Political, economic, social, technological
PESTLE - Political, economic, social, technological, Legal and Ecological
STEEPLE – Social, Technological, Economic, Ecological, Political, Legal and Ethical

5. The Business Technological Economic Ethical Political Legal Ecological
Social

6. Impact of Changes in STEEPLE factors
If something changes, will impact the business
A STEEPLE analysis allows the business to consider influences of each element on the business
Most important influences determined
Then a strategy can be developed to deal with changes.

7. Common influences in a STEEPLE ANALYSIS
Social
Lifestyles; Social mobility; Demographics, Education, Fashions or tastes
Technological
New technology; improved technology, infrastructure; Research & Development Costs
Economic
Economic or business cycle, rate of economic growth, rate of inflation, rate of unemployment, interest rates, exchange rates
Ethical
Corruption, transparency, codes of behavior, fair trade
Political
Political stability, trade policies, regional policies, lobbying
Legal
Regulations, Health & Safety legislation, Employment laws, competition laws
Ecological
Depletion of renewable resources, organic farming, global warming, carbon footprints

8. 1.5 Work
ToK Discussion
To what degree are businesses limited in how much they can “know” about the external environment
Look at STEEPLE analysis for Cat’s Store – p. 63
Student Workpoint 1.8
Choose a type of business (some located on page 63); prepare a STEEPLE analysis.
Practice Question – page 64 – China!!

9. How do businesses react?
Must be flexible
Must be willing to change and adapt
Being an Early Adaptor
Having First Mover Advantage
A business must always be monitoring the external environment in order to change when needed.