Marco's list: It is June 2026. Station Road opens in September, and Lena and Marco meet every month as the directors of Lena's Bakery Ltd.
This month Marco brings a list
- Not about the inside. It is not about ovens, rotas or recipes.
- About the world outside the four shops. What customers are starting to do, what the government is planning, what flour will cost next year.
- Not Lena's to decide. None of it is hers to decide. All of it will reach the bakery anyway.
Everything outside a business that affects it, but that it cannot control, is its external environment. Lena can change her prices, her recipes and her opening hours. She cannot change the weather, a new law or what commuters want for breakfast.
She can only see those changes coming and get ready for them.
Inside the bakery (internal)
- The ovens. How many loaves Mill Lane can bake in a night.
- The people. Priti's recipes and the bakers' skills.
- The prices. The $3 loaf, set by Lena.
- The hours. When each shop opens and closes.
Outside the bakery (external)
- Customers' habits. What people want to eat, and when.
- Costs set by others. The price Valley Grain charges for flour.
- The law. What must be printed on a food label.
- The weather. A dry summer that cuts the wheat harvest.
A STEEPLE analysis is a tool for looking at that outside world in an organised way. It splits the external environment into seven kinds of factor, one for each letter: Social, Technological, Economic, Environmental, Political, Legal and Ethical.
The seven factors of a STEEPLE analysis, each with the kind of change it covers. Every one sits outside the business.
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What the analysis is for: Marco's list does two jobs. It spots the changes that could help the bakery (opportunities) and the ones that could hurt it (threats).
And it spots them early, while there is still time to prepare, rather than in the week they arrive.
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Marco starts with the three factors that reach the bakery through its customers and its costs. For each one he writes down what is changing, then what it could do to Lena's Bakery.
Social
- How people live, work and eat: habits, tastes, health, age and where people live
- More people now buy breakfast on the way to work
- Food on the go is the fastest-growing part of bakery sales
Technological
- New machines, software, and new ways of buying and paying
- Commuters expect to order and pay on their phones
- Newer ovens bake the same loaves with less energy
Economic
- Money in the wider economy: prices, incomes, interest rates, jobs and exchange rates
- Valley Grain is raising the price of its flour
- Tight household budgets push some shoppers to cheaper bread
A factor only matters once you say what it does to this business. Take the economic one. Valley Grain's new flour price adds about 6 cents to the ingredients in every loaf.
| Before | After the flour price rise | |
|---|---|---|
| Ingredients in a $3 loaf | $0.90 | $0.96 |
| Left from each loaf (contribution) | $3.00 − $0.90 = $2.10 | $3.00 − $0.96 = $2.04 |
| On a night of 1,450 loaves | 1,450 × $2.10 = $3,045 | 1,450 × $2.04 = $2,958, so $87 less |
The same factor can point both ways: A factor is not good or bad on its own. More people eating breakfast on the go is an opportunity for Station Road, which is built for commuters. The same change is a threat to a café where people sit down to eat.
So every entry has two halves: what is changing, and what it means for this business.
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The other four factors come from nature, from the government and from what people think is right.
The last four letters
Environmental
The natural world: weather, climate, pollution, waste and scarce resources.
At the bakery: last summer's drought cut the wheat harvest, and customers are asking for less plastic around the packed breakfasts.
Political
What governments, national or local, decide and plan: taxes, spending, grants, and how stable the government is.
At the bakery: the city council plans to close High Street to cars on Saturdays from spring 2027.
Legal
The laws a business must obey, and new ones on the way: food safety, labelling, employment, health and safety.
At the bakery: from January 2027, every packed food item must list all its ingredients and allergens on the label.
Ethical
What people believe is right and fair, beyond what the law demands: fair pay, honesty, how suppliers and workers are treated.
At the bakery: more shoppers choose businesses that treat their staff fairly.
| Easy to mix up | How to tell them apart | At the bakery |
|---|---|---|
| Political or legal? | Political is what the government decides or plans, such as a tax or a grant. Legal is a rule a business must obey, now or once it comes in. | The council's High Street plan is political. The labelling law is legal. |
| Environmental or economic? | Environmental is the event in nature. Economic is what it does to prices, incomes or jobs. | The drought is environmental. The dearer flour it causes is economic. |
| Environmental or ethical? | Environmental is about the natural world. Ethical is about right and wrong in how people are treated. | Less plastic is environmental. Paying bakers fairly is ethical. |
| Legal or ethical? | Legal is what the law requires. Ethical is what people expect beyond it. | The minimum wage is legal. Lena paying her bakers above it is ethical. |
One event, two entries: The drought appears twice on Marco's list: once as environmental (the poor harvest), once as economic (the dearer flour).
That is fine, as long as each entry says something different. Put each point under the letter that describes what is actually changing.
A STEEPLE analysis is built, not recited. Given a case, the job is not to list seven words: it is to find what is changing outside this business and set it out under the right letters.
Marco builds his in four steps
- Gather. Read everything about the world outside: the case, a market report, the news, what customers say. Note every change.
- Sort. Put each change under the letter that describes it. Leave out anything the business controls itself.
- Say what it does. For each change, write whether it is an opportunity or a threat for this business, and how: its sales, its costs or the way it works.
- Check the gaps. Look again at any empty letter. Has something been missed, or is there genuinely nothing there?
| Factor | What is changing | Opportunity or threat | What it could mean for Lena's Bakery |
|---|---|---|---|
| Social | More people buy breakfast on the way to work | Opportunity | More sales at Station Road, built for the 1,850 people who pass the station each morning |
| Technological | Commuters expect to order and pay on their phones | Opportunity | Breakfasts ordered the night before and collected in seconds, with no queue |
| Economic | Valley Grain is raising its flour price | Threat | About 6 cents more on every loaf: $87 less left over on a 1,450-loaf night |
| Environmental | A drought cut last summer's wheat harvest | Threat | Flour may stay dear, or run short, if the next harvest is poor too |
| Political | The council plans to close High Street to cars on Saturdays | Opportunity | More shoppers pass Aisha's High Street shop on foot |
| Legal | From January 2027, packed food must list all ingredients and allergens | Threat | New labels for the packed breakfasts, and Priti's team's time to check each one |
| Ethical | Shoppers favour businesses that treat staff fairly | Opportunity | Lena's already pays its bakers above the legal minimum wage, and can say so |
Where the results go next: Look at the third column. Every opportunity and every threat Marco found is external, so each one can go straight into the opportunities and threats of the bakery's SWOT analysis.
The STEEPLE does the searching. The SWOT puts what it finds next to the bakery's own strengths and weaknesses.
A good STEEPLE analysis is short and specific. A weak one usually goes wrong in one of three ways.
Three ways a STEEPLE analysis goes wrong
- Inside things. 'Priti may retire' and 'the oven is old' are internal. They belong in the strengths and weaknesses of a SWOT, not in a STEEPLE.
- One rival's move. Goldcrust opening a shop next door is outside the bakery, but it is one rival's decision rather than a change in the wider world. It sits more clearly among the threats of a SWOT.
- A label with no effect. 'Economic: inflation' says nothing about the bakery. 'Flour now costs about 6 cents more per loaf' does.
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How this comes up: STEEPLE comes up in short questions on one business, and as part of the stimulus in a longer case.
How it is asked
- Describe two factors. Describe two STEEPLE factors that could affect the business, or two ways one factor, such as rising interest rates, could affect it, for four marks.
- Opportunity and threat. Explain one opportunity and one threat from its external environment.
- In a longer case. A STEEPLE analysis is often part of the stimulus, set out letter by letter. Read what each entry says the business faces; copying the list out is not an answer.
The four-mark pattern
- Name the first factor. Say which letter, and what is changing: social, more people buying breakfast on the way to work.
- Describe what it does to this business. Station Road is built for those commuters, so its sales could rise.
- Name a second factor, from a different letter. Economic: Valley Grain is raising its flour price.
- Describe what it does to this business. About 6 cents more on each loaf, so less is left from every sale.
Two traps: The same letter twice. Two economic points can read as one factor said twice. Take the two factors from two different letters.
A factor with no business in it. 'Inflation is rising' is a label. Say what it does to this business's sales, costs or way of working, with a name or a number from the case.
Describe two STEEPLE factors that could affect Lena's Bakery Ltd's new shop on Station Road.
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