STEEPLED analysis explains how eight specific macro-environmental factors can influence a product, brand, business, or location. It’s an acronym with each letter representing a different environmental influence:
Businesses should understand how each one can negatively and positively influence the company. Although some factors may be more detrimental than others, it’s important to have a thorough understanding of all eight. Let’s break down these eight factors and explain the significance of each one.
STEEPLED analysis — Explained
Social factors: Lifestyle, values, and cultural ideations.
Society — specifically the location of customers, cultural ideals, and values — can impact business success. If a business isn’t aware of these societal factors, it may succumb to the lack of knowledge.
For instance, health is a big concern for many people these days. We’re seeing an uptick in grass-fed meat products, meat alternatives, and low-calorie meals. Businesses that offer the opposite — foods rich in sodium, sugar, and fat — may struggle to entice customers to buy or investors to invest in the company. With so many leaning towards healthier foods, investors don’t want to be associated with a brand that may be linked to diabetes, heart attacks, or other health complications.
The above example explains how a specific lifestyle can impact businesses, but there’s also the growth, age, and attitudes of a population to consider too. Societal factors are typically determined on location, so business owners need to keep up-to-date whenever possible.
Technological factors: Differentiating advantages based on location
This comprises the next letter in STEEPLED analysis, and it’s relatively self-explanatory. The current, previous, and future state of technology impacts businesses. Not every person has the same access to technology as others. For instance, China owns the fastest bullet train in the world. It travels 267.8 miles per hour. However, Japan is currently developing a bullet train that will reach these same speeds. But you won’t find such fast trains in the western part of the world — at least not yet.
This means that China and Japan may have different technological opportunities compared to other parts of the world. These countries have access to faster public transportation, which may lead to various sponsorship deals from selective brands.
But technology comes in many forms. It’s the manufacturing and production of devices. Or the packaging of another. It’s the WiFi, cybersecurity, and the internet of things. It’s also more physical, like the machinery found in factories.
By understanding what technology is available now and in the future, brands can take advantage of current and future technological-based opportunities.
Economic factors: One of the most crucial factors of STEEPLED analysis
One of the most impactful macro-environmental factors of STEEPLED analysis is the economy. It affects small and large corporations. For example, the growing unemployment rate, inflation, taxes, and lack of economic growth can undo even the most successful companies.
Right now, with the forced quarantine of many countries due to the COVID-19 outbreak, the economy all around the world is in a questionable state. Small businesses are struggling to stay open even with government support. The future is uncertain, yet some businesses will survive and even thrive post quarantine.
Environmental factors: What impact does a business have on the planet?
Many people are concerned about the current state of the planet. In regards to businesses, customers worry about what impact companies are having on the environment and natural resources. To alleviate concerns, it’s common practice for businesses to outlay an environmental plan to increase renewable resource usage — solar panels, wind turbines, and more — to decrease the use of harmful resources. Companies that fail to outline a plan, or that are actively harming the planet (like by dumping waste into water) are quickly criticized.
Political factors: The power of forced regulations and policies
Government policies and regulations are one of the most strict factors of STEEPLED analysis. Businesses are at the mercy of political parties in power. These parties can pass new regulations quietly, with little to no influence from outside parties. For instance, tax prices would rise overnight, or products could be banned from entering or leaving a country. All any company can do is abide by regulations set by the government. Fighting against it will lead nowhere, other than the shutdown of the company forever.
Legal factors: Regulations must be followed by all corporations
Corporations are bound by legal regulations. As a business owner, you must pay employees the minimum rate set by governmental parties. You must also keep workers safe and healthy while working.
Business owners often have insurance, like liability insurance, to protect themselves if a customer were to be injured on business property. Keep in mind, new regulations are popping up, so it’s important for any business to stay updated with the newest policies related to the business, state/country, or industry.
Ethical factors: The one factor you can influence
Ethics is one of the macro-environmental factors businesses can influence. The ethical guidelines are determined by a company, and it’s up to the owner and employees to uphold these ethics. However, ethics don’t need to be set by or influenced by society, but this is often the case.
Demographics factors: Similar to social factors, but not quite
Corporations should have a detailed understanding of which demographics interact with their brand and products. This means understanding geographic traits too. In some ways, this section of the STEEPLED analysis follows similar principles as the society (first letter) but focuses on more numerical and straightforward characteristics, like population size, age, and location.
STEEPLED Analysis: Bottom line
STEEPLED analysis comprises the same eight macro-environmental factors in PESTLE analysis, but with ethical and demographic added at the end. Business owners can use this analysis to determine how these factors may impact, impede, or improve business. More specifically, with this knowledge, business owners can make strategic and smarter business decisions.
Image by picjumbo