SLEPT Analysis: Example, Overview

Instructor: Dr. Douglas Hawks

Douglas has two master's degrees (MPA & MBA) and is currently working on his PhD in Higher Education Administration.

Managers need to constantly watch their external environment if they want to remain competitive and successful. In this lesson you'll learn about a popular tool managers can use to better understand their external environment - the SLEPT analysis.

Definition of SLEPT

When identifying and assessing characteristics of a business environment, there is always an acronym managers can use to help organize their thoughts and ensure they conduct a complete analysis. One such acronym that is especially popular in the United States and England is SLEPT.

SLEPT stands for Social, Legal, Environmental, Political, and Technological. Each of these categories includes important external factors that will impact the strategic direction of a company. To make it easier to understand a SLEPT analysis, we will use the example of how an online bookstore may use a SLEPT analysis to understand their external environment.

Explanation of SLEPT Categories

Social factors are those related to the population or market served by the organization. There are broad social factors, such as the aging of the US population, and there can also be local or regional social trends, like fashion fads. An astute manager at our online bookstore might want to consider how an aging population might impact the business, as well as genres, lengths, and type of books that different market segments are reading.

Legal factors include those things that are regulatory in nature. An online bookstore is going to be very sensitive to specific legal factors, such as copyright issues and discussions on an internet tax, as well as the legal issues all businesses must deal with.

Environmental factors are those related to the physical environment. Managers at an online bookstore may closely follow 'green initiatives' related to packaging materials. Since physical books are still very popular and haven't been completely overtaken by eBooks, printing and distribution processes will still be impacted by environmental trends.

The P in SLEPT stands for political. Political factors are not legal factors, although they may be closely related in some instances. If our online bookstore employs more than 15 full time employees, then the 2009 discussions of health care reform would be a political factor. When health care reform was passed in 2010, it became a legal issue. Factors that stem from the political leaders in power that are not codified in regulations or laws are political factors.

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