This is the third part of a 9-part series on 9-key strategic business areas that are vital for the continuity of services and operations.
External Environmental Factors are events that occur in your environment which you cannot necessarily control but which could have severe impacts to the continuity of your businesses service and operations.
Types of External Environmental Factors
To determine your external environment facts, you can conduct an environmental scan, which is – as defined by Clearpoint Strategy - “the process of methodically gathering, analyzing, and interpreting data about external opportunities and threats. It’s a mechanism to collect relevant information about the outside world, your competitors, and your company itself.
One of the most popular methods used to perform an environmental scan is the PESTEL analysis. This model is an external factor evaluation matrix that focuses on six spheres of data:
(P)olitical: The extent to which a government may influence the economy and thereby impact organizations within a certain industry. This includes government policy, political stability, and trade and tax policy.
(E)conomic: How economic conditions shift supply and demand to directly affect a company. This includes economic growth or decline, and changes in interest and inflation rates.
(S)ocial: Changes in the sociocultural market environment that illustrate customer needs and wants. This includes emerging trends, population analytics, and demographics.
(T)echnological: How innovation and development evolve a market or industry. This includes automation, technology awareness and adoption rates, and new services or products.
(E)nvironmental: The ecological and environmental aspects that affect a company’s operations or consumer demand. This includes access to renewable resources, weather or climate changes, and corporate responsibility initiatives.
(L)egal: The current legal allowances or requirements within countries or territories in which an organization operates. This includes health and safety requirements, labor laws, and consumer protection laws.”
In the world of business continuity, continuity practitioners must be aware of the PESTEL framework and should use it to help mitigate potential impacts that could disrupt business services and operations.
How to assess External Environmental Factors for business continuity purposes?
One way to assess these factors is by applying our “Genesis Resiliency Agile User Stories” method in a specific tabletop scenario that is relevant to you and which could cause significant impacts to your business.
For example, let’s assume we are a car manufacturing company that produces specialized high-end vehicles, employing 500 full-time staff and 2,000 unionized staff.
Consider the following scenarios based on the PESTEL method
Political: The incoming political party favors importing vehicles from a specific country and will allow for more competition during their 4-year term.
Economic: Our ability to manage debt has become an issue because the inflation rate has increased significantly. This will impact our payroll.
Social: Many of our local customers have lost their jobs due to a pandemic.
Technological: We can only automate some aspects of our vehicle manufacturing process because we hand craft most of our parts. Unfortunately, most of our employees are unable to work at the factory due to health concerns.
Environmental: Due to increasing climate regulations, our manufacturing waste needs to be re-used into renewable waste or integrated into our products within the next 6 months.
Legal: We can only have a specific number of employees working in our factory due to the Health & Safety measures given by our government.
Consider the perspective of one of our users – our local community
The expected benefits for our community are jobs, the community initiatives we support and the taxes we pay to support infrastructure.
Complete the process of Agile user story writing
This story writing process will help identify blind spots in our continuity planning process and document corresponding strategies (or outputs) that mitigate the risk to our user. These outputs, following PESTEL categories, may include:
Develop marketing strategies to encourage the purchasing of local vehicles.
Design and manufacture a more economical model that can also be sold to other countries.
Develop strategies with suppliers to enable long-term accounts receivable agreements.
Create communication strategies to inform our employees of government financial support in the event of layoffs.
Create methods of vehicle sharing.
De-automate certain processes to increase job growth.
Invest in training initiatives to increase the skills of employees who can enter the factory and complete other tasks.
Create a strategy with vendors to assemble products prior to shipment to our factory.
Create an environmental assessment to determine what waste can be turned into renewed material.
Modify certain components of the vehicle or manufacturing process to ensure that waste does not impact the environment.
Create a Health & Safety regulatory assessment process to make sure changes in Health & Safety processes are implemented as soon as possible.
Create and update Health & Safety training programs that staff complete prior to beginning their shift.
The Genesis Resiliency method of Agile user stories strengthens understanding of External Environmental Factors. Additionally, through the conversations and resulting outputs (or strategies) our method generates, we improve your business continuity planning process, safeguarding your interests and those of our local, regional & global communities.