External Analysis
In answer to the question – how to conduct an external analysis, our answer is that it means taking a much higher, broader, and longer-term view of the commercial environment outside of the business.
It is the expertise and ability to step back far enough to see what opportunties might be out there for you to take advantage of. There might also be som,e that could seriously knock the business off course.
Either way you need to be informed as to what is happening in the big, wide world and take appropriate action.
Conduct an external analysis – here’s how
Assessing the external analysis that might or moght npot impact the business strategy can be daunting.
Fortunately, there exists a series of mnemonics that you can use. They are:
- PEST
- SLEPT
- PESTLE
- STEEPLE
As STEEPLE has more letters in than the others, we can use that as the initials are the same, no matter the mnemonic.
STEEPLE – what the mnemonic means as follows:
Societal – what is happening at the societal level. The cultural, trends of the people in the market place. It could also be the demographics or more importantly the changes in the demographics. Lifestyle changes might also impact the market attractiveness.
Technological – nowhere are there faster changes than in technology. Predicting how far they develop is notoriously hard. Remember the IBM President who in 1943 confidently predicted that “There is a world market for maybe five computers”! Take a hard look at how technology impacts your business.
Economic – look at those economic factors that could impact your strategic business direction – taxation, interest rates, availability of and cost of funding, exchange rates, unemployment levels. Whatever might impact your business strategy.
Environmental – The key here is to monitor any proposed legislation that might enhance or diminish your strategic business opportunities such as waste, pollution, ecological, environmental protection, air pollution.
Political – are there any potential changes in the political landscape that could positively or negatively impact the strategic direction of the business. A general election could paralyse political decision making for up to six months. Think not only of the UK, but what changes internationally could damage or strengthen your business strategy.
Legal – keep an eye our for potential changes in the law that might impact your strategic business decision making. Compliance might be mandatory and with it an associated cost that could lower margins.
Ethical – an ever-changing landscape with various ethical factors impacting business strategy. Knowing which way the winds blow may stave off future downturns and keep your various stakeholders on board.
Conducting a strategic business analysis using the STEEPLE mnemonic
There are two main options as follows:
Do it yourself – get the senior leadership team plus department heads together, preferably off-site and brain storm the headings. They will get the more obvious issues right but might miss the areas that they are no aware of.
Hire in support – ideally an external strategic business advisor with the skills, expertise, bandwidth, and the knowledge to mentor the leadership team to arrive at a strategic business overview that is extensive, wide ranging and helps them to steer a path through the potential storms ahead.
We can help!
Follow the link if you want to know more about the strategic business analysis process.
If you want to create your own strategic business plan then follow this link.
If this is an area that you would like to explore in more detail then head over to this Wikipedia page – PEST Analysis