Unit 1.5 - External Environment

Unit 1.5 External Environment IB Business Management 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 businesss 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

Technologic al Ecological The Busine ss 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 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 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 Cats 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.