Proper analysis of all business aspects offers top managers and business owners valuable information on company position in various environments, its strengths and weaknesses, as well as helps in decision making and strategic planning. Analysis of company performance can be a daunting task since analysis is not only about locating strong and weak points, it is about evaluation of company stance and position in relation to different factors and indifferent external environments. The problem is that there are certain factors influencing business performance that do not depend on the company itself. Just to the contrary, it is the company that should adapt to peculiarities of external environments it is operating in. Thus, the company cannot change environment but should rather change itself in order to achieve success. This is where various analysis types help. SLEPT analysis is one of them. It is widely used throughout various industries and businesses. This article will give a brief overview of SLEPT components.
SLEPT is abbreviation for social, legal, economic, political and technological factors. Creators of SLEPT analysis claim that these factors cover the most important issues in external environment of any company.
Social factor analyzes company position in the society and attitude towards social issues. Business goes social these days. Business owners came to understand that business is a part of the society and thus in order to meet high demands and needs of customers it is important to be aware of all social trends that determine customer behavior.
Legal factor covers all legislative issues. No matter in what country the companies registered it is operating in a certain legislative field, which means it has to comply with norms of applicable legislation. Analysis of the legal factor evaluates company approach in solving of legal issues, as well as possible changes inside the company for a better compliance with the laws.
Economic factor is considered the most important since above all the companies operating in a certain economic environment. If the country’s national economy is weak businesses cannot expect positive financial results since customers and partner companies will have no money to buy products and services. Purchasing power of customers as well as availability of cheap loans are one of the most important indicators in relation to national economy. There are other indicators that are equally important such as inflation rate, national debt, gross domestic product etc.
Political factor is often said to be the least important. However, experience shows that political decisions and statements very often have a strong impact on national economy, investment climate and business environment. That’s why many companies look for services of experienced political analysts who will make forecasts as to possible consequences from certain political events.
Finally the importance of technology in a business development must be stressed. No one will doubt the fact that business acquired a modern shape only due to technological progress. Every smart business owner and top manager now understands that without an effective use of the latest technology is the company is doomed to fail.