Unit 1 5 External Environment IB Business Management

Unit 1. 5 – External Environment IB Business Management

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

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

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

Political Ethical Legal Economic Technological Ecological The Busines s Social

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.

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 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 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

1. 5 Work � To. K 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!!

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.