How does STEEP analysis aid in the development of the strategy in a company?

How does STEEP analysis aid in the development of the strategy in a company?

STEEP analysis is designed to monitor trends in the society and natural environments. In doing so, this analysis requires scanning the environment for sociocultural, technological, economic, ecological, and political environmental forces that may impact the way an organization does business.

4-2. The effects of climate change on companies can be grouped into six categories of risk. Use any two of these to explain the impact upon the resort hotel industry.

The six types of risk are regulatory risk, supply chain risk, product and technology risk, litigation risk, reputational risk, and physical risk. Each of these can impact the resort hotel industry. For each of these risks, the student should be able to give several examples of the impact for the resort hotel industry.

SUGGESTED ANSWERS TO DISCUSSION QUESTIONS:

4-3. Discuss how a development in a corporation’s natural and societal environments can affect the corporation through its task environment. (LO 1)

Developments or trends in a corporation’s natural or societal environment typically do not affect the corporation directly but indirectly through their impact on one or more stakeholder groups in the corporation’s task environment. As mentioned in the text, the trend toward dual-career couples is a recent development in the societal environment of any company operating in the U.S or Canada. Sociocultural forces regarding the changing role of women, plus the trend toward single family households, combined with the economic forces of high interest rates and inflation in the 1970s to send both men and women searching for full-time jobs in addition to their being parents. This development in the societal environment continues to effect companies through its impact on employee/union groups (who ask for parental leave and/or company-sponsored day care centers), customers (employed parents who increasingly shop for convenience goods because of time constraints), and special interest groups and even governments (who ask business firms to help support local schools and deal with community social problems). As another example, the trend toward global warming may not directly affect a company making toys, but may affect it indirectly through a sociocultural trend supporting the use of rechargeable batteries and solar cells as replacements for disposable batteries. Such a sociocultural trend may be reflected in changing customer preferences or in new government regulations or incentive programs.

4-4. How would you determine the level of competitive intensity in an industry? (LO 3)

The answer to this question can be found in Figure 4.2 in Chapter 4. By this time, students should be able to list the five forces presented by Michael Porter plus the sixth force (other stakeholders) proposed by Ed Freeman. They are briefly:

Threat of new entrants
Rivalry among existing firms
Threat of substitute products or services
Bargaining power of buyers
Bargaining power of sup,,,,,,,,,,,,,,,,,,,,,