Introduction
As market and competitive intelligence professionals, business analysts, and strategy consultants, understanding the key factors that impact businesses and their competitive environments is essential.
A popular framework for analyzing these factors in a holistic way is the 5C model/5c framework, which covers the climate, customers, competitors, collaborators, and the company itself.
In this blog post, we’ll delve into the “climate” component, explore the STEP acronym—an integral part of the 5C model.
First, we will revisit the socio-cultural, technological, economic, and political factors that make up the STEP acronym and highlight the need for the extended version, which includes legal and environmental considerations.
Next, we will introduce a new factor, accountability, that has emerged as an essential component in market and competitive analysis in recent years.
Finally, we will introduce and encourage the acoption the STEAPLE acronym (Socio-cultural, Technological, Economic, Accountability, Political, Legal, and Ecological factors) and highlight its importance, so businesses can make better-informed decisions and drive success in an ever-evolving market landscape.
Background: Understanding the 5C Model
The primary objective of the 5C model is to gain a comprehensive understanding of the current business environment.
By conducting a structured situation analysis, you can explore key business areas related to your company and identify essential factors that shape your market and competitive landscape. The 5C framework helps to do that by proposing five areas to analyse:
- Climate
- Customer
- Competitor
- Company
- Collaborators
What is the STEP Acronym?
In business, STEP (also commonly and correctly referred to as PEST) is an acronym that stands for Socio-cultural, Technological, Economic, and Political factors. These four components are crucial when analyzing the external environment of a company within the market and competitive intelligence context.
By understanding the factors that make up the STEP acronym, professionals can make informed decisions to drive business success.
Breaking Down the STEP Acronym
Let’s take a closer look at each component of the STEP acronym and how they contribute to market and competitive intelligence:
1. Socio-cultural Factors
Socio-cultural factors include the social, cultural, and demographic aspects of the environment in which a business operates.
This may encompass consumer attitudes, lifestyle trends, and cultural values. By analyzing socio-cultural factors, businesses can better understand their customers and their triggers, and tailor their products or services to meet the needs of the target market.
2. Technological Factors
Technological factors involve the rate of technological advancement, intellectual property & patents and innovation, as well as the availability and accessibility of new technologies.
These factors can greatly impact a company’s operations, product development, and competitive advantage. Staying up-to-date with technological trends can help businesses identify opportunities for growth and mitigate potential threats from competitors.
3. Economic Factors
Economic factors encompass the overall health of the economy, including inflation rates, interest rates, employment levels, and GDP growth.
By examining these factors, businesses can gauge the potential for growth or contraction within their industry and make informed decisions about expansion, investment, and resource allocation.
4. Political Factors
Political factors include government policies, regulations, and political stability. These factors can shape the business environment and impact the level of risk associated with operating in a particular market.
By understanding the political landscape, businesses can navigate regulatory requirements and anticipate potential changes that could affect their operations.
Expanding Beyond STEP: Legal and Environmental Factors
While the STEP acronym provides valuable insights, it’s important to note that it lacks two important factors: Legal and Environmental. Legal factors include laws and regulations that can affect businesses, while Environmental factors encompass ecological aspects, such as climate change and sustainability.
5. Legal Factors
Legal factors involve the various laws and regulations that govern businesses and industries. These can include labor laws, consumer protection laws, and antitrust regulations.
Understanding legal factors can help businesses stay compliant, avoid potential legal issues, and navigate any changes in the regulatory environment.
6. Environmental Factors
Environmental factors refer to the ecological aspects that can impact businesses and industries, such as climate change, resource scarcity, and environmental regulations.
By considering environmental factors, companies can identify potential risks and opportunities related to sustainability and develop strategies to address them, improving their overall environmental performance and brand reputation.
Introducing Accountability Factors
In recent years, the markets have started demanding companies to provide evidence of their commitments to various social, environmental, and ethical issues. As a result of the increase in importance, we propose the addition of Accountability factors which shall evaluate the how the markets and business address areas such as
- environmental sustainability.
- diversity, equity, and inclusion,
- career growth and learning,
- work-life balance,
- social impact,
Accountability matters in the modern world
One example of the growing importance of accountability in business analysis is the increasing number of public tenders that require information on a company’s diversity and inclusion practices. In some cases, companies that do not have enough women in leadership positions or project teams may be excluded from the bidding process.
This highlights the need for businesses to not only be aware of their own accountability but also to understand the accountability of their competitors and the expectations of their customers and stakeholders.
By incorporating Accountability factors as a new component in market and competitive intelligence analysis, businesses can gain a more comprehensive understanding of the market landscape and make better-informed decisions that align with their values and those of their stakeholders.
Introducing the STEAPLE acronym
Building on the foundations of the STEP acronym and the additional legal, environmental, and accountability factors, we propose a new, comprehensive acronym to better guide businesses in their market and competitive intelligence analysis: STEAPLE.
The STEAPLE acronym represents the following factors:
- Socio-cultural
- Technological
- Economic
- Accountability
- Political
- Legal
- Environmental
By incorporating the STEAPLE acronym into your analysis, you will be able to address not only the traditional factors that shape the business landscape but also the growing importance of accountability in various social, environmental, and ethical areas.
Adopting the STEAPLE framework ensures a more holistic understanding of the market climate, which enables better-informed decision-making and helps businesses adapt to the ever-changing market conditions.
Simplified template for STEAPLE analysis
Don’t forget that a 5C analysis is just a first step in the situation analysis, usually followed by a SWOT that will summarize the most important results and prepare them for a strategic converstaion.
Conclusion
The STEAPLE acronym, which expands the STEP acronym to include Legal, Environmental, and Accountability factors, is a crucial tool for market and competitive intelligence professionals, business analysts, and strategy consultants.
By understanding and applying the STEAPLE analysis within the context of the 5C framework, businesses can navigate the complexities of the external environment and make informed decisions to drive success.
We propose the adoption of the STEAPLE acronym as a new standard for market and competitive intelligence, ensuring a more comprehensive understanding of the external factors affecting businesses today. By incorporating this expanded framework into your analysis, you’ll be better equipped to identify opportunities, mitigate risks, and ensure the long-term success of your organization.
Remember to keep the STEAPLE acronym in mind when analyzing the “climate” component of the 5C framework to gain valuable insights and stay ahead of the competition.