When a firm uses an external consultant to solve a problem or evaluate an opportunity the consultant can use STEEPLE (social, technological, economic, environmental, legal, and ethical), which is a preliminary analysis technique to answer why the business organization or systems exist (Wickham, & Wickham, 2008, p. 128). This analysis the consultant preforms helps to determine how the firm business fits in its external environment. The consultant can also use the balances scorecard to measure the financial and non-financial performance of the firm. The consultant will use the STEEPLE and Balance Scorecard to analyze Phillip-Morris introduction of its electronic cigarettes in the market. In addition, the consultant will make any recommendation to Phillip-Morris from the results of the STEEPLE and Balance Scorecard analysis.
The STEEPLE analysis is and extension of the PEST analysis. The PEST analysis acronym stands for; political, economical, social, and technological factors the firm may face in its external environment. This analysis is a form of system analysis that provides a structure for examining elements from the larger system of which the firm is a part of (Gustafson, 2002, p. 134) The STEELPE analysis includes the factors of the PEST analysis with the additions of the legal, environment, and ethical factors the firm can also face in its external environment. The consultant will examine the seven external environmental factors to solve the firm’s problem or opportunity in the market: Sociological factors are trends and attitudes that can affect buying behaviors. The negative publicity that firms, such as Phillip-Morris on the effects of smoking cigarettes, has altered societies view of Phillip-Morris. This has led to millions of individuals to stop smoking to improve his or her health status.
Technological factors- Technology is constantly changing. This trend is that advanced technology generates new questions. The question for Phillip-Morris is does the firm have the knowledge for the design, production, and delivery of the product? If not, where can the firm gain the knowledge to produce such a product or use a third party to produce it. Economic factors- the consultant will look at if the target market can afford the product. In addition, the consultant must look at if the Phillip-Morris can afford to borrow the necessary funds to produce the product. Environmental Factors- The consultant look at how the e-cigarettes will be packaged and what type of chemicals is going to be used in the production of the product. Depending on the package materials and the chemicals that are used in the production of the product can have a negative effect on the environment.
Green issues are important in society today, and the firm must take the issues of protecting the environment in consideration when producing any product. Political and legal factors- relates to the government of a countries federal, state, and local law passed by various governmental agencies. In this analysis the consultant must look at what laws and the attitudes of government agencies have been made for regulating smoking e-cigarettes. Ethical Factors- The consultant must look at how the product will be packaged, design and the marketing campaign to entice consumers to buy the product. This is because the negative publicity cigarettes firms marketing, packaging, and design its products to minors. If the product is produced to make smoking e-cigarettes is “cool” this can have a negative impact on the company, because it can entice minors to use the product. After conducting the STEEPLE analysis the consultant must determine where the firm has strengthens, weakness, threats, and opportunities in the internal and external environment.
Phillip-Morris has a negative sociological factor regarding the views of consumers who uses the firm’s products. This negative view has made millions of customers to stop using the firms products. The technological factor, Phillip-Morris has does not have the knowledge of producing e-cigarettes. The firm will have to rely on a third party to produce the product. With the company not having the technology or the technical know how to produce e-cigarettes the price of the product can be very expensive. This has a negative affect on the economical factor, because many consumers may not be able to afford the product. In addition, by the firm using a third party to produce the product the firm does not assume the risk of borrowing the necessary funds. The firm will not have any negative environmental factors of producing the product, because the third party will assume the risk.
However, Phillip-Morris does impact the environment with its current production of making cigarettes. In the political and legal issues the firm can face is very limited. Phillip-Morris will have to comply with federal, state, and local laws governing the legal age requirement for purchasing the product. The firm will have ethical issues if the packaging, design, and marketing is promoting the alternative way of smoking as “cool.” This can entice young society members to purchase and use the product. However, if its marketing, packaging, and design is to provide adults an alternative and health way of smoking. This will show society that the firm cares about the health of its customers and those who are affected by second hand smoke.
The balance scorecard gives the organization a total management system to help clarify its vision and strategy. In addition, this technique gives the usable data for the organization to take appropriate business actions, provides feedback to the internal business processes and the external outcomes to improve the firms strategic performance. According to the article “Using the Balance Scorecard,” written by Kaplan and Norton (1996), (pp. 75-85) the balance scorecard has four perspectives of: Financial Perspectives- Phillip-Morris must balance its business functions which as been allocated across the organization. If the Phillip-Morris decides to increase its economic growth it can do this through a productivity strategy. Phillip-Morris can lower the direct and indirect expense to improve cost, or reduce working and fixed capital to utilize its assets to support the business Customer Perspectives- The value proposition of the customer is the mix of products, price, service, relationship, and Phillip-Morris image.
With this perspective Phillip-Morris will have to take on its competition. The company will have to differentiate its value proposition. Phillip-Morris can do this by selecting different operational excellence, customer intimacy, and product leadership. Business Process Perspectives-This matric allows management to understand how efficiently the organization is performing. It also helps Phillip-Morris to understand if its products or services is meeting the customers needs. In addition, this perspective makes sure that the organization is align with the four high level business process of: Building franchises
Increase customer value
Achieving operational excellences
Phillip-Morris becoming a good corporate citizen
Learning and Growth Perspectives- This perspective looks at the employee career growth, training, and the corporate culture for individual and the firm’s self-improvement. In addition, it looks at the knowledge enhancements that Phillip-Morris has to communicate with employees and a mentor program. If Phillip-Morris can enhance employees learning and growth it can have a workforce to meet the firms strategic position. These perspectives allow the development of metrics, data analysis, and collection for the firm. Phillip-Morris is the largest tobacco firms and has a clear objective for its current and potential stockholders. This objective can be to improve the financial side of the firm. In this case the firm has the motivation to have long-term shareholder value, and avoiding the ethical issues that is associated with tobacco companies. By doing this Philip-Morris will neglect the customer, business process, and learning and growth perspective of the balance scorecard. Phillip-Morris must develop a different business strategy to have a more balanced scorecard.
The STEEPLE analysis shows Phillip-Morris has a negative sociological and technological factor. There are no environmental factors in producing e-cigarettes, and the political and legal issues will be the same as other tobacco products. The ethical factors can be a negative or positive depending on how the company package, design, and market the product. Phillip-Morris balance scorecard focuses on the financial perspective, while neglecting the three other perspectives. With Phillip-Morris focusing on the financial perspective, and without the technical know how. It is recommended that Phillip-Morris look for a third party to produce its e-cigarettes. It is also the recommendation for Phillip-Morris to enter in a joint venture so it can gain the technical knowledge and have a complete balance scorecard.
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