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Article

Rethinking External Environmental Analysis for Sustainable Development: The Case of a Beverage Manufacturing Industry in a Southern African Country

by
Eliot Quinz Farai Ruwanika
and
Liezel Massyn
*
Business School, Faculty of Economic and Management Sciences, University of the Free State, Bloemfontein 9301, South Africa
*
Author to whom correspondence should be addressed.
Sustainability 2024, 16(16), 6759; https://doi.org/10.3390/su16166759
Submission received: 5 June 2024 / Revised: 18 July 2024 / Accepted: 31 July 2024 / Published: 7 August 2024
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Abstract

:
The advent of the United Nations Sustainable Development Goals (SDGs) Agenda 2030 ushered in a new way of thinking about the forces that drive change in the business environment. Literature suggests that sustainable development is a megaforce driving change globally and envelops the traditional political, economic, social, technological, and ecological (PESTE) forces approach. This article reframes the external environmental analysis to integrate SDGs into the business strategy of a beverage manufacturing industry. A qualitative design using snowball sampling resulted in semi-structured, face-to-face interviews that were audio recorded. Interviews were held with eight executives, one former executive, and three non-executive staff from four companies of a southern African country’s beverage manufacturing industry. The data exposed some ignorance on sustainable development. Many executives understood the importance of sustainable development without consensus on its exact nature and implementation in the organisational context. Thematic data analysis confirmed the relevance of sustainable development and the need to incorporate it in external environmental analysis. Categorising SDGs into a 5-P framework (people, prosperity, planet, peace, partnerships) and integrating it with the PESTE framework, the study provides a new approach/tool for external environmental analysis. This approach facilitates identification of SDGs that are relevant to business during strategic planning.

1. Introduction

External environmental analysis is a strategic tool that assists organisations to identify external factors that impact on performance by considering both the macro environmental (general) and the micro environmental (industry) forces [1]. The macro environmental analysis uses the political, economic, social, technological, and ecological (PESTE) framework to scan the external business environment, especially during strategic planning [2]. Whereas the micro environmental analysis, which focuses on groups that affect the firm’s success within the industry, favours the Porter’s five forces model whose elements are competitive rivalry, supplier power, buyer power, threat of substitution, and threat of new entrants [1]. This study focuses on the macro or general environment, hence the PESTE analysis is suitable. A PESTE analysis is important to business because it enables evaluation of threats and opportunities arising from the external environment and their impact to the company [3]. Such an environmental scanning framework systematically provides early warnings about what is constant, what is changing, and what is continuously changing—information that is used for strategic decision making [4]. An analysis of the business environment helps to identify factors that affect an organisation to realign corporate strategy [5,6]. A change in an environmental factor or force has the potential to change the business environment [7,8].
In recent years, the focus has increasingly been on sustainable development as a contemporary megaforce [9]. In other words, sustainable development is bigger than the PESTE forces. Hence, Teodorescu [10], supported by Borowski and Patuk [11], indicates that sustainable development is a summation of economic, social, and environmental considerations of the present and, more so, for the future. This suggests that the United Nations (UN) Sustainable Development Goals (SDGs) Agenda [12] crosscuts with the forces of change as depicted by PESTE. Therefore, proactive businesses that invest in global warming and climate change issues (SDG 13) today can be market leaders in the near future [1]. Just like the PESTE, which has five pillars, the SDGs are divided into five pillars, namely people, prosperity, planet, peace, and partnerships [12].
Currently there is no clear framework that operationalises the crosscutting between PESTE and SDGs in the beverage manufacturing industry of a southern African country. This study endeavours to fill this gap. Given the SDG Agenda 2030, there is a need to reframe the external environmental analysis framework. The reframing should strengthen the focus of business on SDGs. Therefore, the research question is: How can the rethinking of external environmental analysis lead to a framework that incorporates sustainable development in the beverage manufacturing industry in a southern African country?

2. Literature Review

2.1. External Environmental Analysis

Modern external business environments are typified by an extremely high degree of dynamism, complexity, and uncertainty, requiring the ability to quickly adapt to such changes [13]. Environmental analysis assists in focusing the organisation’s strategic and tactical plans on external forces to stabilise and turn potential problems to its advantage [14]. In other words, businesses conduct environmental analysis to ward off threats emanating from competitors and to take advantage of potential opportunities [15]. Businesses that fail to adapt to the changing environment are disappearing and those that can analyse the environment are more competitive than their rivals [1]. Notable methods for conducting an external environment analysis include Porter’s five forces that only analyse the immediate industry (micro) external environment and not the general (macro) external environment [1]. Second is the external factor assessment (EFA) matrix that is used to evaluate environmental threats and opportunities and facilitates the summarisation and evaluation of information emanating from PESTE [15]. Third is the strengths, weaknesses, opportunities, and threats (SWOT) analysis that is used for business environmental evaluation, where the internal environment is analysed from a strengths and weaknesses perspective, whereas opportunities and threats come from the external environment [16]. This study focuses on the external environment.
Ghicajanu [17] argues that the company and the external environment are interdependent in the sense that as the company is impacted by the PESTE and sustainable development forces, the company also affects the environment through issues such as pollution or environmental degradation. He further argues that “the evolution of the modern enterprise is now marked by the amplification of its interdependences with its business environment” [17] (p. 2). Hence, this study argues that SDGs amplify the interdependence through the mantra that no one and no place will be left behind. The foregoing indicates the importance associated with contemporary business of analysing the external environment using both PESTE and SDG frameworks.

2.2. PESTE Forces of Change

The original forces of change framework was developed by Aguilar [18], who coined the initialism ETPS (economic, technological, political, and social). The framework has been evolving over the years by assuming different forces as shown in Table 1.
The preceding suggests that authors have different ways of naming and framing the forces affecting the business environment. However, in this article the PESTE approach is applied. It is closer to the original ETPS (PEST) framework than the other methods. The PESTE method broadens the social category to include demographic factors, the political category includes legal factors, and the natural environment (ecology) is added as the last E [4]. Hence, the PESTE framework is suitable for this study because its five-letter acronym can be aligned with the 5-Ps framework of SDGs (Figure 1). The following discusses and provides examples of PESTE forces in the external environment and assists in how to situate the PESTE forces in the 5-Ps framework of SDGs.

2.2.1. Political–Legal Drivers of Change

To safeguard organisational interests, it is necessary for organisations to evaluate political risks and implications associated with certain countries [21]. The formation of the UN on 24 October 1945 gave impetus to global governance as a change driver in the political–legal business environment. Global governance involves institutions, policies, procedures, norms, and initiatives through which countries and their citizens strive to foster predictability, order, and stability in response to transnational challenges [22].
The African Union was formed in 1963 to deal with political issues pertaining to the African continent; especially ending colonialism. The Southern African Development Community (SADC) was formed on 17 August 1992, while its precursor, the Southern African Development Coordination Conference, was formed on 1 April 1980 [23]. SADC promotes regional interdependence and integration that include maintaining security, peace, stability, and democracy [23]. According to the International Monetary Fund [24], the conflict and social unrest in sub-Saharan Africa result from discontent with state institutions, perceptions of government policy failures, inequality, and inclusive growth. Also, geoeconomic fragmentation into blocs amid global tensions can impact trade, capital flows, and international cooperation [24].
COVID-19 affected elections through cancellations or postponements prompting accusations of clinging to power or putting voters at risk, where elections went ahead [25]. The political–legal perspective of sustainable development is found under SDG 16, the peace pillar.

2.2.2. Economic Drivers of Change

To demonstrate the impact of economic drivers, Lutz and Meyer [26] studied the economic impact of higher oil and gas prices, and found that large oil-importing countries, such as the United States, Japan, China, and Germany, suffer GDP losses because of higher oil prices. In Africa, the political economic crisis bedeviling sustained economic growth lies with local political and economic struggles for greater democratic control of capital accumulation [27]. The impact is that foreign investment interests remain centred on extractive economies instead of promoting sustainable structural transformation with value addition [27]. In 2016, the sub-Saharan African economies were hit hard by the slump in commodity prices, especially oil exporters [28]. However, in 2024 sub-Saharan Africa is impacted by growth spillovers from G20 emerging markets (EMs), particularly China; thus, a decline in growth in China can lead to reduced growth in oil-exporting countries in Africa like Angola, Chad, and Nigeria [24]. Between 1984 and 2014, South Africa kept the domestic currency weaker to foster sectoral growth [29].
In May 2020, the impact of COVID-19 lockdowns in sub-Saharan Africa indicated that an additional 9.1% of the population had immediately fallen into extreme poverty, with about 65% being a direct result of the lockdowns [30]. The economic perspective of sustainable development is found under SDGs 7–11, the prosperity pillar.

2.2.3. Socio-Cultural Drivers of Change

Siemieniuch et al. [31] indicate that population demographics are major drivers of change. The world population will have increased from the current seven billion to between nine and ten billion by 2050. Social norms, gender disparities, and policies affecting labor force participation can drive change, while policies advocating for greater inclusion of women and older workers can impact economic growth [24]. The SADC population is largely rural (55%) [32]. Population increase ought to be complemented by increased activity in the prosperity pillar, lest ending hunger and poverty becomes challenging.
Socio-cultural forces that relate to ending hunger and poverty are an aging population [33], the empowerment of people [34], increasing migration [35], and COVID-19 [36]. The lockdowns in sub-Saharan Africa potentially made the savings of about 30% of the population vanish; thus, removing all resilience capacity to future shocks [30]. The socio-cultural perspective of sustainable development is found under SDGs 1–6, the people pillar.

2.2.4. Technological Drivers of Change

Technology has an impact due to new inventions, technological advancement, state-of-the-art technology, and technological diversity [37]. The impact is also found in the use of social media, which has changed the destiny of nations in recent years by eradicating political systems of entire countries, or a photo/video going viral can affect people’s perception of events [38]. Social media has become the standard means of communication in both developed and developing countries [39]. Technology as an enabler of all other SDGs is exemplified in southern Africa, where use of mobile money is prevalent [40], which promotes diversity and inclusion under SDG 5—access to finance. The impact of technology, particularly artificial intelligence (AI), in sub-Saharan Africa is significant with varying effects and may depend on factors like infrastructure, skilled workforce availability, and policies promoting innovation [24].
During times of social distancing and COVID-19 containment measures, the digital economy ensured the continuity of activities across governments, businesses, and society in sub-Saharan Africa [41]. This resulted in improved connectivity, a boost in digital technology adoption, improved tax administration, and the work-from-home modality [41]. Post-COVID-19 technological benefits manifest in Kenya, Nigeria, and South Africa that have emerged as epicenters of the financial technology (fintech) boom [42]. Fintechs are using inexpensive, accessible technologies to mobilise consumers to obtain digital loans (M-Shwari in Kenya) and savings and investment platforms (PiggyVest and Cowrywise in Nigeria) [41].
However, SDG 9, under the prosperity pillar, and SDG 17, under the partnerships pillar, are the most appropriate to address these issues, because SDG 9 promotes innovation and SDG 17 promotes technology as a means of implementation.

2.2.5. Ecological (Natural Environmental) Drivers of Change

There is a need to protect the environment, so that future generations will have something to inherit [9]. When managing environmental issues, companies should not be driven by compliance with legislation but by an attitude that it is the right thing to do [43]. Notable global ecological forces are climate change (atmospheric trend) [44]; land management (lithospheric trend) [45]; waste management for clean water (hydrospherical trend) [46]; and conservation of natural resources (biospherical trend) [47]. African trends in natural resources are a loss of biodiversity [48] and greater scarcity of water [49]. Other trends in southern Africa are the creation of resource corridors [50] and land reform [51,52]. According to the International Monetary Fund [24], the impact of climate change in sub-Saharan Africa includes weather shocks that have negative effects on economic activity and growth. Vulnerability is due to sub-Saharan Africa’s heavy reliance on agriculture and natural resources; meanwhile, weather shocks hinder growth prospects, increase unemployment, and lead to shifts in consumer prices [24].
During COVID-19 global lockdowns, nitrogen dioxide (NO2) emissions reduced by 20–30% in Tanzania, Botswana, Namibia, Angola, South Africa, Kenya, coastal countries of West Africa, Algeria, and Niger [53]. Whereas, at OR Tambo and Cape Town International Airports in South Africa, NO2 emissions decreased by 70.45% and 64.58%, respectively, during the global lockdown period [54]. The ecological perspective of sustainable development is found under SDGs 12–15, the planet pillar.

2.3. Sustainable Development as Megaforce for Change

According to Lozano [55] and Sturup and Low [9], sustainable development is part of the external environmental factors that have an impact on an organisation. The term sustainable development comprises complicated multidimensional perspectives [56,57]. It has different connotations, depending on the specific content of particular disciplines, such as economics, sociology, biology, or environmental ethics [10,58]. Consequently, it is a difficult concept to define because of the complex interdependencies [59,60]. Its main goal is to improve human lives through intergenerational equity [61] and fair welfare distribution among different generations [62]. Stazyk et al. [63] (p. 682) define intergenerational equity to mean that “we inherit mother Earth from last generations and we are obliged to give it, in a reasonable state, to future generations”. This definition suggests that organisations have a moral responsibility to consider the welfare of present and future generations [64]. Whilst the Brundtland Commission’s definition speaks to the macro aspect of sustainable development [65], the micro aspect states that when an organisation incorporates the concept of sustainable development in its operations, sustainable development at the organisational level is referred to as corporate sustainability [66].
There are 17 SDGs and 159 targets agreed by the United Nations General Assembly in September 2015 [12]. The 17 SDGs are global, integrating, indivisible, and interlocked in five categories that start with the letter P [67], as shown in Figure 1.
Wysokinska [68] describes SDGs as instruments for realising the sustainable development concept. SDGs paint an inspiring picture of what the world could look like in 2030 [69], with the aim of guiding the international development landscape until this time [70].

2.4. The Relationship between PESTE Forces and Sustainable Development Goals

The preceding discussion on driving forces of change established the following points. Firstly, factors that cause changes in the business environment were identified as PESTE forces. Secondly, sustainable development was identified as a megaforce; therefore, it should be the lens through which PESTE forces are viewed. Thirdly, the separation of sustainable development into macro and micro levels has helped us to understand the type of sustainable development that is applicable to the corporate environment, namely micro (corporate) sustainability. Apart from contributing to achievement of the SDGs, corporates are invited into the sustainable development agenda through SDG 17, the partnership pillar. The pillar mobilises the means for implementing SDGs through global partnerships, of which public–private partnerships are a common feature.
The PESTE has in the past been used to scan the external environment. Today, there is more pressure on business to consider SDGs in the scanning of the external business environment [71]. The SDGs integrate political, economic, social, technological, and ecological considerations through inclusivity that ensures that “no one will be left behind”, neither governments nor the private sector, global institutions, civil society, or citizens [69]. Lozano [55] argues that the new world order demands that organisations consider sustainable development in the entire strategic management process.
Figure 1 compacted the 17 SDGs into a 5 Ps framework. These 5 Ps (people, prosperity, planet, peace, partnerships) cater for the political, economic, social, technological, and ecological (PESTE) considerations that could affect the world. SDGs provide opportunities for companies to focus on specific goals that align with core activities and competencies [72]; thus, establishing an integrated relationship between PESTE and the 5 Ps. Therefore, the foregoing discussion suggested that combining SDGs with PESTE forces will result in an external environmental scanning framework for businesses, premised on SDGs.

3. Methodology

3.1. Research Strategy

The research strategy was a qualitative inquiry with a phenomenological perspective. According to Lee [73], studies of a qualitative nature tend to be more appropriate where the phenomena are ambiguous; where daily experiences of phenomena are a factor; and where there is a need to focus on the context. In this study, external environmental analysis is the phenomenon; the daily experiences of industry leaders are that of analysing the external environment of the beverage manufacturing industry; and the context is constituted by a changing business environment driven by PESTE forces and SDG megaforces. A characteristic of this qualitative research was to focus on experiences of participants with sustainable development in the context of SDGs; the meanings they attached to SDGs for sustainable manufacturing; and the participants’ subjective views on SDGs for sustainable manufacturing [74]. In this regard, the research was an interpretation of what was heard and understood [74]. Hence, the choice of the qualitative approach in this study.

3.2. Population and Sampling

There were 60 companies listed on a southern African country’s stock exchange. Of these, four were cold beverage manufacturing companies. The four beverage companies were targeted for the research. The companies were suitable for this research because they belonged to the same industry and faced the same external environment comprising similar opportunities and threats. The advantage of collecting data from representatives of companies listed on the stock exchange was that these businesses are obliged to provide sustainability reporting in compliance with stock exchange regulations. The research group for this study were the chief executives (CEOs), former executives, and senior managers of the four beverage manufacturing companies. The study adopted purposive sampling and the snowballing technique as the sampling strategy. Snowball sampling helps in identifying and reaching out to hidden populations where participants recruit future participants among their networks [75]. The findings of this study cannot be generalised to the population because of the non-probability nature of snowball sampling [76]. The sample comprised twelve informants who possessed exceptional experience in leadership and sustainable development as suggested by Patton [77]. This sample of twelve is supported by averments that qualitative research samples are inclined to be small to support the depth of case-oriented analysis [78]. Moreover, in interviews, more useable data are collected from each participant when the participants are few [79]. The selection of participants was in line with the statement by Gentles, Charles, Ploeg, and McKibbon [80] that in qualitative research the aim of sampling is to obtain useful information that helps understanding of the depth, complex nature, variation, or surrounding context of a phenomenon rather than obtaining population representation as is the case with quantitative research. Furthermore, in a qualitative inquiry there are no established rules for sample size, with researchers using their own judgements considering the time and resource constraints for completing the research [77].
Liamputtong [81] advocates that to achieve credibility, purposeful selection must choose informants based on their exceptional experience and knowledge. In line with Liamputtong’s [81] advocacy, the researchers sent the interview questions to potential participants by email to help them decide whether they were able to answer the research questions or not. In some cases, phone calls were made to follow up on emails. Therefore, not all recommended candidates participated in the research, because others declined on the basis that they felt they had limited knowledge of the SDGs. The researchers performed background checks of the companies to understand their vision, mission, values, and roles of the interviewees prior to data collection [82].

3.3. Data Collection

Twelve participants were interviewed: eight executives, three representatives who were not executives, and one former executive of the beverage manufacturing industry. The participants were anonymised by being identified through codes ranging from P1 to P12. The interviews were semi-structured, conducted face to face, and audio recorded. There was data saturation each time a second participant was interviewed from the same company. This saturation was attributed to the fact that participants from the same company had similar views because they were exposed to the same knowledge of sustainability since they are developed and trained in the syllabus of the same company. Data saturation occurs when sufficient data are collected to draw conclusions and further data collection does not add valuable insights [83]. The saturation point is only clarified during the process of data collection [84]. Therefore, the 12 informants were considered adequate because new insights could only be obtained from companies outside the beverage manufacturing industry. Obtaining data outside the beverage manufacturing industry was not part of this study because industries operate in external environments that possess different opportunities and threats.

3.4. Data Analysis

The interview response data from each participant were then categorised into the three themes as derived from the three interview questions, namely the importance of sustainable development, conceptualising sustainable development, and current practices on sustainable development in beverage manufacturing companies. To address the research question, interview questions were designed to align with the categories. The interview questions as per the interview guide were as follows: The world is currently focused on sustainable development, (a) tell me about your understanding of sustainable development and (b) how is it viewed in your organisation? (c) What are the current practices on sustainable development in your company? The data were analysed using thematic analysis resulting in themes being created under each category and then interpreted to reframe the external business environment analysis.

3.5. Quality Assurance/Trustworthiness of the Study

In qualitative research, a study is trustworthy only when the reader of the research report believes it is [85]. To this end, the construct of trustworthiness in this research findings is premised on credibility, transferability, dependability, and confirmability of the findings [86]. The study sought to ensure trustworthiness through credibility as suggested by Merriam [87] who viewed the credibility of a qualitative research study as establishing congruence of the findings with reality. In other words, the results of this research mirrored the views of the participants; thus, establishing confidence in the data [88]. The authors decided to leave the issue of transferability of the research results to the readers of this report. Shenton [89] states that transferability in qualitative research is the counterpart of external validity in quantitative research, measured in terms of generalisation. He further argues that the researcher must provide enough contextual information for the field worksites to enable the reader to make the transfer. In other words, it is the reader and not the researcher who makes such transfer by deciding how the study applies to the reader’s area of interest. Dependability refers to how coded data summed into blocks (categories) can be relied upon [90]. The following conditions stated by Miles, Huberman, and Saldana [91] were adapted to ensure dependability of data. It was ensured that data were collected from legitimate participants, in this case, beverage manufacturing executives and non-executives, both current and former. Quality checks were performed on all biases and knowledge of participants regarding sustainability and external environmental analysis. Lastly, parallelism in sources of data regarding interviews and context was ensured.
Regarding confirmability, the study was informed by Shenton’s [89] suggestion that research findings are the outcomes of the experiences and ideas of the participants and not the beliefs and preferences of the researcher. The researchers’ input was limited to the interpretation of the results. Also, the beliefs and assumptions underpinning decisions made in this study and the methods adopted were acknowledged as suggested by Miles, Huberman, and Saldana [91]. The decision to interview CEOs first was informed by the belief that they were the drivers of business strategy and had knowledge and experience of leading in the context of SDG-driven environments. Furthermore, the research design provided audit trails whose importance was emphasised by Bowen [92] (p. 307), who argued that “an audit trail offers visible evidence from a process and product, that the researcher did not simply find what he or she set out to find”, and the views in this article came from the participants themselves. Some of the audit trails are the audio recordings of the interviews and the manual transcripts of the audio recordings used to analyse the data. These audio recordings are in the custody of the researchers. To ensure that the views of the participants are respected, the study was guided by ethical considerations discussed in the next section.

3.6. Ethical Considerations

Strict ethical principles are enforced when research involves human beings as subjects [93]. This study met the criteria and was approved by the University’s Research Ethics Committee, approval number UFS-HSD2018/1338.

4. Data Analysis and Interpretation

Three themes were identified in relation to sustainable development or SDGs as a megaforce that affects the business environment. These are:
  • the importance of sustainable development,
  • conceptualising sustainable development, and
  • current practices on sustainable development in beverage manufacturing companies.

4.1. The Importance of Sustainable Development

While the SDGs attracted a great deal of attention at global, continental, and national governmental levels, there was some ignorance at the industrial level. Five potential participants declined to take part in the interviews because they had no meaningful knowledge of or claimed to not understand sustainable development and SDGs. A chief executive officer (CEO) represented the general feeling of this group as follows:
Thanks, so much for considering me to participate in the PhD research. I feel quite humbled to have been considered for this. The topic is centred on sustainable development goals and leadership. I must admit that I am not well versed on the first part, that of sustainable development particularly as it relates to SDGs. It would be unfair to you to even attempt to respond as I feel that this is an area I still need to understand more. In fact, as I went through the questions, I noted how far I lacked information on this topic. I would have loved to participate towards your research topic. Regrettably due to the foregoing, I am unable to assist in this instance.
Participants acknowledged sustainable development as a force in the changing business environment, though each understood sustainable development and the SDG agenda slightly differently. All the participants understood that SDGs impact and are impacted by the corporate world. Participant P9 put this understanding into perspective by stating:
I know SDGs developed from millennium development goals [MDGs]. I think at that point, which is some years back, it was just academic. We thought these are NGO [non-governmental organisations] and UN issues. But I know for a fact [that] over the last year or two we have focused on SDGs, which we think, at least, are relevant to our industry.
The relevance of SDGs to corporates was corroborated by participant P1, who said:
We are fully aware that, although SDGs are UN-sponsored and government-driven, they have an impact at industry level. Corporates have a duty to contribute to poverty eradication, gender sensitivity, renewable energy, energy efficiencies, refrigeration that protects the ozone layer, environmental sustainability, compliance with ISO 14001, buying and designing equipment that contributes to sustainability, and managing profits to include designing processes that consider sustainable development.
However, the relevance of SDGs to corporates is affected by ownership issues. Although the UN wants to transform the world through partnerships with the private sector, some participants believe ownership of SDGs is still a challenge. For example, participant P9 had the following to say:
We need a plan that engages the UN and the government. Then we need a plan of sharing resources as we set up milestones and sharing the SDGs across the industry so that we cover as much ground as possible. One point that stuck in my mind was that there is no ownership. The government thinks it’s the UN. The UN thinks it’s the government. Then the industry thinks we would want to contribute for sustainable profit.
The transformation agenda will come to nothing if this lack of ownership is not resolved. What is required is for every stakeholder in SDGs to understand their role. Hence, business must understand that it is a major contributor to the achievement of SDGs [12]. Participants believed that, to understand the importance of sustainable development, meaningful knowledge is needed. In addition, there is an intertwined relationship between SDGs and business, because SDGs impact business and SDGs are, in turn, impacted by business.
To summarise the importance of sustainable development, Table 2 shows that in accepting sustainable development as a force in the changing business environment, participants ascribed its importance to facets related to knowledge, impact, and ownership.

4.2. Conceptualising Sustainable Development

Some participants buttressed their own understanding of sustainable development by defining the concept. For example, participant P3, a CEO, clarified sustainable development by stating that,
The understanding we have in our organisation of sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It is also about promoting people, planet, and profit.
In this case, the CEO introduced an understanding that aligns with the Brundtland Commission’s definition of sustainable development [65]. However, other participants defined it in their own terms using a livelihood perspective. Participant P8 said,
My understanding of sustainable development is that, in the process of making livelihoods, where livelihood is when people apply all the means to make a living to [by] either using their competencies and [or] available resources for them to be able to live. In the process of making livelihoods, they should make sure that the natural environment or the ecosystem is preserved, such that the next generation don’t get it worse than we found it or enhance it.
Others used a futuristic perspective to explain their understanding of sustainable development; participant P12 argued,
Here, we are saying the world is not just for today, but the world must be there tomorrow, and a better world must be there tomorrow for future generations. For us what legacy are we leaving? So, we are looking at a better world ever improving towards better social welfare, better environmental impacts, better economic welfare, and inclusivity.
There was also a responsible management perspective in some explanations provided by participants; participant P5 had the following to say:
We have a responsibility as current citizens of the world to ensure that as we do our day-to-day activities, be it in business, farming or in our communities, we are also mindful of the fact that, there will be future citizens. Therefore, whatever we do today must ensure that we guarantee a future for the next generation. From a business perspective, profit must be obtained responsibly in a sustainable manner.
Participant P10 phrased responsible management succinctly, stating that,
As we do our business, there should be a sense of responsibility and to do so with minimum harm to the environment so that we safeguard the environment for future generations.
Other participants narrated some of the SDGs to demonstrate their understanding and provide their perspective, with participant P4 saying,
My understanding goes back to the decision by the United Nations to identify the 17 SDGs, as they call them, which ought to be a template to guide leaders whether they are in the public or private sector as they go about the business of running their organisations. Essentially, sustainable development is about looking into the future so that we have a better world in every respect and in a lot of diverse areas.
This explanation by P4 demonstrates that SDGs are recognised by industry as forces of change in the business environment. The different explanations given by participants show that there was no consensus on the definition of sustainable development. This corroborates literature assertions that the term sustainable development has a complicated, many-sided character [56] and that it remains a difficult concept to define [59]. This means that the lack of consensus about the definition and understanding of sustainable development continues. This was corroborated by P2, who said,
Sustainable development is a complex term. Very few people understand it so well. It is a scenario that has been evolving over the years. When you think you understand it, then someone comes up with something new to make it a little more complex.
The thrust of the United Nations [12] in reaching agreement on the SDG Agenda 2030 is an attempt to bring clarity and unity of purpose to sustainable development. The General Assembly [12] defines the corporate world as partners in sustainable development, though this partnership label does not confer ownership of SDGs on the corporate world; instead, the corporate world are stakeholders in sustainable development. The classification of corporates as stakeholders provides a much-needed sense of ownership, and it removes misunderstandings of their role. For example, participant P9 initially believed that SDGs are a UN and NGO agenda that had nothing to do with the corporate world.
Table 3 summarises the participants’ understanding of sustainable development as an external environmental force using dimensions identified by participants.
The different dimensions provided in Table 3 add to the diverse understanding of sustainable development that Gainullina [56] alludes to in the literature.

4.3. Current Practices on Sustainable Development in Beverage Manufacturing Companies

A demonstration of how sustainable development might be perceived as a force of change in organisations became apparent in participant P4’s cautious statement:
We are very much at the beginning of the cycle, if I may say so. We don’t consider ourselves as advanced. But at least we are aware of what SDGs are and we are conscious of the need for measuring ourselves against those SDGs.
Some participants cited their companies’ association with reputable organisations. Participant P3 boasted:
My organization is a member of the Business Council for Sustainable Development (BCSD) and a franchised bottler.
These assertions were made to lend credence to the company’s belief that they were top of the class in corporate sustainability due to their association with these two bodies; sustainable development was, therefore, viewed from an association perspective.
Other participants offered practical perspectives on the actions that their organisations were taking in response to the SDG agenda. There was no consensus about which SDGs were applicable to the beverage manufacturing industry, as participant P11’s explanation indicates:
My organization has embraced SDGs by selecting what is applicable to its own circumstance, such as gender equality, health and well-being of employees, water usage, sustainable manufacturing, and climate change.
In this case, P11 was suggesting a selective approach to SDG implementation. However, P12 demonstrated how seriously they viewed sustainability through structure:
We have a full-time sustainability manager responsible for overseeing our sustainability initiatives across our business.
Other participants argued in favour of taking strategic actions as a stepping stone to driving the SDG agenda at a corporate level. Participant P10 explained:
If you look at our strategic plan, we have said we want to be a forceful good in the communities and environments that we operate. We have set ourselves on a journey that recognises that our activities have a negative impact in many cases of [on] the environment. Therefore, we must take mitigating measures to ensure that as we do our business we do so in a sustainable manner.
This strategic perspective was corroborated by another participant (P6), who generalised it by stating that,
Sustainability has become a core element of the business strategy. It is now entrenched in [the] companies’ strategic decisions; it is discussed at companies’ board level; it is now an agenda at board meetings, and companies are even hiring or making investments in decisions in sustainable development.
Participant P7 referred to a resource management perspective by arguing that,
Management must understand that the resource they are using is finite and it must be used in a manner at best to replenish that resource. Whilst, at the same time, managing the waste created by such a process.
An imperative perspective surfaced in the explanation of participant P6:
Sustainable development is now an imperative for business and can no longer be ignored; it is the reason why people work every day, with green jobs being the sustainable way of creating jobs, making a difference in people’s lives, taking people out of poverty because poverty is dehumanizing, prevents social exclusion; consideration of ecological risks, and a nexus between the environment and economic development.
Participants agreed unanimously on the social licensing perspective, namely that a company’s activities ought to be accepted by the community in which it was operating. Participant P9’s argument was intense:
In our industry, sustainable development is a social license to operate that has led us to look at SDGs. We have also expanded these to look beyond the factory and the customers we do business with to go into the wider community. That is where our sustainable elements then come in, our social license to operate.
In addition, participant P12 had the following to say:
The organization is part of the community and what a favour to be running this organisation in the community! So, serve the community and serve the world in which you are operating, where the [our] children will be operating tomorrow.
The foregoing discussion brings new perspectives on sustainable development. These are summarised into perspectives and nuances of sustainable development seen through the lens of an organisation as shown in Table 4.
Table 4 provides clarity on the practical actions taken by businesses to incorporate sustainable development into business operations. These perspectives and nuances indicate the practical approach taken by beverage manufacturers in a southern African country in view of sustainable development forces. Business needs to understand SDGs because sustainable development is a new megaforce that is driving change in the business environment, internationally and locally [9]. The finding that some leaders do not have a holistic understanding of sustainable development, as a force for change in the business environment, should lead to questions about their ability to lead big organisations. Unless they understand the SDGs, businesses could end up being casualties and “will be left behind”.

5. Implications, Recommendations, and Conclusions

5.1. Practical Implications for Business

The field inquiry found that many corporate leaders grasped the importance of sustainable development but that they lacked consensus on its exact nature and implementation; thus, hampering its application by industry. The inquiry corroborates literature findings, which established that SDGs integrate the political, economic, social, technological, and ecological (PESTE) forces of change. The vision is to bring everyone on board with the mantra “no one will be left behind, including all governments, the private sector, global institutions, civil society, and citizens” [69] (p. 12). The beverage manufacturing industry has started taking practical actions to incorporate sustainable development into business operations. This aligns with literature findings that there is more pressure on business to consider SDGs in the scanning of the external business environment [71]. Following on from the practical approach to SDGs in the beverage manufacturing industry, there is a need to create a framework that can act as a guide for integration of SDGs and PESTE forces.
The integration of the SDGs and PESTE creates a tool for analysing the external business environment. There is a need to understand the sustainable development agenda, to take ownership of the SDGs, and to ensure that designs and processes account for the impact of or on SDGs. The impact of SDGs should result in a holistic improvement of all 5 Ps (people, prosperity, planet, peace, and partnerships). This 5-P framework should form the basis of measuring business performance. Therefore, SDGs through the 5 Ps should form part of a toolkit for an integrated PESTE analysis framework referred to as the Integrated PESTE-SDGs analytical framework as illustrated in Figure 2.
At the center of Figure 2 are the 17 SDGs. Adopting the Integrated PESTE-SDGs analytical framework will assist business to take into consideration the sustainable development agenda; thus, contributing to the realisation of the SDGs. This is supported by the UN [94], which explains the importance of recognising the link that exists between sustainable development and the economic, social, and environmental factors. By summarising the 17 SDGs into a 5-P framework and acknowledging all the PESTE considerations, the organisation can focus on specific SDGs that align with its core activities and competences in an integrated manner. In other words, during external environmental analysis, the organisation can identify SDGs that align with each of the PESTE forces. Table 5 is an example of alignment that can be adopted by a beverage manufacturing organisation to identify SDGs that are relevant to its operations.
Table 5 shows that a beverage manufacturing company in a southern African country can apply 10 of the 17 SDGs. Whilst this identification of SDGs was performed for the beverage manufacturing industry, its application to other business industries needs to be explored.

5.2. Theoretical Implications

This article contributes to the external environmental analysis discourse a new method of analysis that integrates the 5 Ps framework of SDGs with PESTE analysis in the form of Figure 2 and Table 5. The study’s separation of sustainable development into macro and micro levels adds clarity to the type of sustainable development that is applicable to the business world, namely micro (corporate) sustainability. The study adds to the current discourse, with the argument that sustainable development is a megaforce in the changing business environment. In addition, the argument that sustainable development should be the lens through which PESTE forces are viewed has been reinforced. Another argument that contributes to the discourse on competitive advantage is that companies that consider SDGs will grow their competitive advantage. Hence, proactive businesses that invest in SDGs today can be market leaders in the near future.

5.3. Limitations of Study

The research was limited to companies in the cold beverage manufacturing industry listed on the stock exchange of a southern African country. Only four companies were listed and all four were included in the study. Hence, the research did not include companies in other industries. The study was confined to interviewing experts who were leaders or managers who were knowledgeable in corporate sustainability and the SDGs Agenda 2030.

5.4. Directions for Future Research

Taking into account that only companies in the cold beverage manufacturing industry were considered, there is a need to widen the research to other industries whose external environmental opportunities and threats are different from the beverage manufacturing industry. Furthermore, there is a need to explore new metrics of measurement for the business sector that align with the 5-P framework of the sustainable development agenda. The study focused on the macro external environment as measured by PESTE analysis. It did not consider the immediate micro external environment as measured by Porter’s five forces model. Future research should explore integrating Porter’s five forces model and SDGs and also explore the possibility of a holistic approach that integrates PESTE forces, Porter’s five forces, and SDGs.

5.5. Conclusions

The coming in of the SDG Agenda 2030 brings in a new way of thinking about the forces that drive change in the business environment. Literature, corroborated by a qualitative field inquiry, suggests that sustainable development is a megaforce driving change globally and envelops the PESTE forces approach. This calls for a new method of conducting external macro environmental analysis. The article offers a reframed approach that can be used by business as a tool for scanning the external business environment to contribute to the Sustainable Development Agenda 2030. This framework integrates PESTE forces of change with SDGs using the 5-P framework, thus enabling business to consider SDGs in the strategic management process. The new framework should strengthen the focus of business on SDGs in the interest of future generations. However, there is a need to explore the development of a similar method that analyses the micro industry environment.

Author Contributions

Conceptualisation and design, E.Q.F.R. and L.M.; participant interviews, E.Q.F.R.; data analysis, E.Q.F.R.; data manuscript preparation and interpretation of results, E.Q.F.R. All authors were involved in commenting on, editing, and reviewing the manuscript. All authors have read and agreed to the published version of the manuscript.

Funding

This research was made possible through part funding by the University of the Free State, South Africa.

Institutional Review Board Statement

This article followed all ethical standards for research. The Research Ethics Committee of the University of the Free State provided ethical clearance through approval number UFS-HSD2018/1338.

Informed Consent Statement

Participants signed informed consent forms before being interviewed on the day. The form emphasised confidentiality and anonymity and that no names of participants will be mentioned in the written record of the research. Codes were used to differentiate participants.

Data Availability Statement

Relevant data in the form of interview excerpts are contained in the article. Audio recording of the interviews of the participants are available from the first author. However, these audio recordings cannot be shared due to the signed consent forms, which guarantee confidentiality. The data are not publicly available due to the data containing information that could compromise the privacy of the research participants.

Conflicts of Interest

The authors declare no conflicts of interest.

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Figure 1. SDGs in a 5-Ps Framework. Source: Authors’ own work.
Figure 1. SDGs in a 5-Ps Framework. Source: Authors’ own work.
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Figure 2. The Integrated PESTE-SDGs analytical framework. Source: Authors’ own work.
Figure 2. The Integrated PESTE-SDGs analytical framework. Source: Authors’ own work.
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Table 1. Frameworks for forces of the changing business environment.
Table 1. Frameworks for forces of the changing business environment.
AcronymCategories
1PESTPolitical; Economic; Social; Technical
2PESTEPolitical; Economic; Social; Technological; Ecological
3PESTLEPolitical; Economic; Social; Technological; Legal; Ecological
4PESTELEPolitical; Economic; Social; Technological; Ethical; Legal; Ecological
5PESTLIDPolitical; Economic; Social; Technological; Legal; International; Demographic
Source: Compiled from [5,18,19,20].
Table 2. Importance of understanding sustainable development.
Table 2. Importance of understanding sustainable development.
FacetsNuances Indicating Importance of Understanding Sustainable Development
KnowledgeLack of knowledge. Potential participant declines participation in interview. Focused on SDGs, which we think, at least, are relevant to our industry (P9)
ImpactThey (SDGs) have an impact at industry level (P1); designing processes that consider sustainable development (P1)
OwnershipSharing SDGs across industries (P9); huge opportunity for ownership of SDGs (P9)
Source: Authors’ own work.
Table 3. Dimensions and nuances in understanding sustainable development as an environmental force.
Table 3. Dimensions and nuances in understanding sustainable development as an environmental force.
DimensionsNuances Indicating Sustainable Development as an Environmental Force
Brundtland Commission definitionSustainable development promotes people, planet, and profit (P3)
LivelihoodsPreservation of the ecosystem in the process of making livelihoods (P8)
FuturisticCreates better social welfare, better environmental impacts, better economic welfare, and inclusivity (P12)
Responsible managementProfit must be obtained responsibly in a sustainable manner (P5); safeguard the environment for future generations (P10)
SDGsSustainable development is about looking into the future (P4)
Source: Authors’ own work.
Table 4. Perspectives and nuances of sustainable development through the organisational lens.
Table 4. Perspectives and nuances of sustainable development through the organisational lens.
PerspectiveNuances through Organisational Lens
AssociationMember of the Business Council for Sustainable Development (BCSD) (P3)
Selective approachEmbraced SDGs by selecting what is applicable (P11)
Functional approachSustainability manager responsible for overseeing sustainability initiatives; doing business in a sustainable manner (P10)
Embedding sustainability in strategySustainability has become a core element of the business strategy (P6); conscious of the need for measuring ourselves against the SDGs (P4)
Resource managementManaging waste (P7)
Imperative approachSustainable development is now an imperative for business (P6)
Social licensingSustainable in the community (P9); favour to be running this organisation in the community (P12)
Table 5. Identifying SDGs relevant to a beverage manufacturing organisation.
Table 5. Identifying SDGs relevant to a beverage manufacturing organisation.
5-PsSDGsPESTE Force
PeopleSDG 3: Ensure healthy lives and well-being of employees and families
SDG 5: Achieve gender equality and empowerment of women		Social
SDG 6: Ensure availability and sustainable management of water and sanitationSocial
Economic
ProsperitySDG 8: Sustainable economic growth Economic
SDG 9: Foster innovationEconomic
Technological
PlanetSDG 12: Ensure sustainable consumption and production patterns
SDG 13: Combat climate change and its impacts
SDG 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss		Ecological
PeaceSDG 16: Promote peaceful and inclusive workplace for sustainable development, provide access to justice for all and build effective, accountable and inclusive systems at all work levelsPolitical
PartnershipsSDG 17: Strengthen the means of implementation and partnership with government and communities in sustainable developmentSocio-political
Technological
Source: Authors’ own work.
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Ruwanika, E.Q.F.; Massyn, L. Rethinking External Environmental Analysis for Sustainable Development: The Case of a Beverage Manufacturing Industry in a Southern African Country. Sustainability 2024, 16, 6759. https://doi.org/10.3390/su16166759

AMA Style

Ruwanika EQF, Massyn L. Rethinking External Environmental Analysis for Sustainable Development: The Case of a Beverage Manufacturing Industry in a Southern African Country. Sustainability. 2024; 16(16):6759. https://doi.org/10.3390/su16166759

Chicago/Turabian Style

Ruwanika, Eliot Quinz Farai, and Liezel Massyn. 2024. "Rethinking External Environmental Analysis for Sustainable Development: The Case of a Beverage Manufacturing Industry in a Southern African Country" Sustainability 16, no. 16: 6759. https://doi.org/10.3390/su16166759

APA Style

Ruwanika, E. Q. F., & Massyn, L. (2024). Rethinking External Environmental Analysis for Sustainable Development: The Case of a Beverage Manufacturing Industry in a Southern African Country. Sustainability, 16(16), 6759. https://doi.org/10.3390/su16166759

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