STEEPLE Analysis for China Negotiation (Part 1)

Train your negotiating teams to perform a STEEPLE scan of the Chinese operating environment.

Introducing STEEPLE analysis to find your Chinese CSF – Critical Succes Factors

A STEEPLE analysis (which is very closely related to a STEP, PEST or PESTLE) is a systematic method for scanning the business environment. When operating in your home market, it may Sign up for the ChinaSolved newsletternot feel necessary, since you are probably very familiar with all the key variables affecting your organization. In China, however, a systematic approach to scanning the business environment is crucial. First, newcomers to China simply don’t know what they don’t know. A STEEPLE framework gives you a 360 degree view of the Chinese operating environment and is likely to yield more questions than answers in the early stages – and that’s a good thing. The second benefit of a STEEPLE scan is that it forces you to confront an unfamiliar situation with naïve and fundamental questions. In China, assumptions are deadly and generalizations can lead to catastrophic decision.

A STEEPLE analysis is also a great team-building and training activity for your new international negotiating team. This kind of analysis is best when it is repeated regularly and systematically. Whether you are working with an ad-hoc negotiating team based in HQ or setting up a new management structure in China, an ongoing STEEPLE effort is a great way to sync up your group’s knowledge and make sure you are all pulling in the same direction.

Critical Success Factors (CSF):
One of the key benefits of a STEEPLE analysis in the China negotiating environment is that it will reveal your weaknesses, blind-spots, and misconceptions. In western markets, you may run STEEPLEs to study risk, conduct SWOT analysis, or explore market opportunities. For negotiators in China, however, there is an additional function – and that is to help identify what you don’t know. Negotiators and managers entering the China business environment should use the STEEPLE framework to help them understand which issues will be critical to their success – and which hide risks.

Back home your Critical Success Factors are often second nature, so you don’t even consider them as explicit variables. You are so familiar with the basic concepts of profit and loss, risk and protection that you don’t have to perform explicit analysis of the business environment. In China, however, you have to test your basic assumptions about laws, market preferences, and supply & demand. Experienced managers have found that their China CSFs include IP protection, managing bureaucracy and regulations, HR and staffing, and re-positioning their brand. You will be much more successful and effective if you confront your new priorities from the outset, instead of wasting months laboring under the misconception that the benefits of your offer will eventually become clear and compelling.

Next: The STEEPLE analysis

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read here-smallIf you haven’t already read the report “10 Common China Negotiating Mistakes”, please download it.  We are in the process of developing an interactive online course based on the report, and are looking for 10 beta testers.  If you are interested, please get in touch.

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