Businesses do not exist in a vacuum but exist in an environment that provides resources (i.e. people, customers, products, services, national economy). The business environment is changing all the time and there are several factors that affect and cause these changes which include costs of products and services, demographics of the workforce, competitors alongside key drivers economic, government and legal influences. If you want to generate ideas to help your business stay ahead of the game, below are some simple models that can be used to scan the external business environment with purpose.
Informed Decision Making (Analysis models)
The SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is an extremely useful and versatile model for understanding the business.
- Improving customer satisfaction
STEP (Social/Cultural, Technological, Economic, Political/Regulatory) analysis can be useful for understanding external interrelationships and the forces/issues affecting customers.
- Improving profit margins/bottom line
PEST (Political Economic, Social, Technological) analysis is a useful model for understanding market growth or decline, and as such the position, potential and direction for a business.
Porters Five Forces (New entrants, Substitute products/services, Customers/buyers, Suppliers, Industry rivalry) model is useful for understanding or making an evaluation of the business’s position in a market.
STEEPV (Social, Technological, Economic, Environmental, Political, Values) analyses are future-oriented, and consider possible future factors of change.
Generating Ideas from the Models.
- Decide the topic of interest then List headings from the relevant analysis model.
- Using multiple sources research current topics, information, references that fit with the headings.
- When the research has been exhausted, review the model and make adjustments to the entries.
- Glean insights and look for dependencies from the entries.
- Identify actions from the insights and dependencies that address the topic of interest.