Challenge 1 Outside in

All organisations are subject to external influences that affect the organisation, its employees, customers and competitors. With that in mind your quest starts by understanding what influences your organisation.

Later we will consider how your organisation is set up to respond to these influences to capitalise on opportunities that arise. This process can be summarised in the interactive STEEPLE diagram below.

Hover over each label to read about the different factors:

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Figure 2 A STEEPLE diagram (adapted from Aguilera, 1967)
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Social factors includes the demographic and cultural aspects that affect customer needs and the size of potential markets. Examples include population growth, age distribution and changing social habits and trends.

Technological factors e.g.cyber security, innovation and technology disruption have the ability to increase operational efficiency, pose certain risks and can lower barriers to entry for new competitors. They can create new products or ways of delivering services, change marketing and promotion mechanisms.

Economic factors can affect the purchasing power of potential customers as well as your organisation’s cost of capital. Examples include economic growth, interest rates, exchange rates and inflation.

Environmental factors may include stakeholder pressure onyour organisation’senvironmental performance, or its impact on the natural environment, its dependence on natural resources. For example, moves towards plastic reduction, alternative energy sources and incentives.

Political factors define both formal and informal rules under which firms operate. Examples include changes in government or government policy, tax policy and political stability.

Legal factors examples laws and legislation that covers a multitude of operational and environmental aspects from anti-discrimination and employment conditions, to health and safety, waste disposal, information security, advertising standards and so on.

Ethical factors cover the organisation’s reputation within its communities. Issues over trust, confidentiality, fair treatment and how the organisation operates and is seen to operate.

Figure 2 A STEEPLE diagram (adapted from Aguilera, 1967)
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Full definitions of the STEEPLE diagram above can be read in the Summary section [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)]   of this challenge

Answer the following questions about your own organisation.

Don’t worry if you don’t know the answers to all the questions immediately. There are some hints and tips that follow but for now see how many you can answer confidently, right now. Take a note of your answers.

These questions are about the key external factors most likely to have the biggest impact on your organisation in the next 1 – 3 years. Using the STEEPLE acronym there are 7 potential sources.

After reading each question take a note of how many you could answer fully and confidently out of a possible 10. Then for each answer, decide how significant the impact will be on the organisation and how it will need to adapt (e.g. slight impact, moderate impact requiring the organisation to plan for changes, significant impact requiring transformation)

  1. What changes are happening in society that will have an affect on employees, customers, competitors in the sector and/or business you are in during the next 1-3 years?
  2. What new technologies are you aware of that could affect your organisation’s products, customers, and how it operates or provides service to customers?
  3. What is happening to the economy in the country your organisation is based in that could impact on its financial future?
  4. What environmental issues will impact on how your organisation operates?
  5. What are the main political influences that are likely to have an impact on your organisation or the sector or country you operate in?
  6. Are there any likely changes in the law or legislation that will represent a major change in how your organisation operates.
  7. What ethical standards are being applied to how your organisation operates that have the potential to conflict with your organisation’s stated values?
  8. How would you rank the possible threats or opportunities to the organisation you have identified from the greatest to the least?
  9. Can you identify and name a person, function or department in your organisation that is responsible for scanning the environment?
  10. Which possible opportunities or threats might have an impact directly on your role?

How much did you know?

How confident are you that you have answered each of these questions fully?

Record your score out of 10 in the box below.

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Please note: Throughout this challenge you will be making notes in free text boxes like the one above. These will be there for you to look back at as you progress through the challenge.

However, in order to be able to see all your notes, it is important that you do not clear your browser history for this course site, otherwise they will be lost.

Hints and tips

One reliable way to expand your knowledge is to use the wisdom of others. To complete today’s challenge, share your ideas with at least one colleague and find out whether they agree with your analysis.

Ask what they can add to your list or expand on. Do they agree with your assessment of how significant the factors will be? If you are curious about expanding your commercial awareness try to engage someone from a slightly different work area or with a different range of knowledge and experience to yourself.

To learn more read tips 1, 2 and 3 in the Hints and Tips section.

Now you can go to Challenge 2 Know your competitors.