Political and Environmental
Political - government economic policies
- government social policies
- extent of government intervention
Economic - business cycle
- income levels
- interest rates
- exchange rates
- level of inflation
- level of unemployment
- membership of the EU
Social and Technological
Social - demographic factors
- ethical issues
- impact of pressure groups
- influence of different stakeholders
- changing lifestyles
Technological - new products
- new processes
- impact of change
- costs of change
Legal and Environmental
Legal - legislation (law)
Environmental - environmental issues
Factors Affecting Demand
- Price - higher prices usually lead to a fall in demand, depending on elasticity.
- Tastes and fashion - trends change, busy lifestyles increase demand for convenience goods.
- Price of other goods - if there are a lot of substitutes people will shop somewhere else if prices go up, complementary products e.g, shampoo and conditioner increase demand for the other product.
- Marketing and advertising - strong brand image - increases demand.
- Seasonal factors - time of year impacts demand.
- Government action - can introduce taxation to decrease demand, introduces campaigns e.g. 5 a day.
- Interest rates
- Demographic factors
- Environmental issues and fairtrade
To be more competitive a business needs to be more efficient, cost-effective and improve quality.
Competition is good for customers as it leads to wider choice, lower prices and better quality.
- Price focused competition can lead to worse quality and unethical decisions.
- More money is allocated to marketing rather than research and development.
- Takeovers/merges leads to fewer firms but larger more dominant firms so there is less competition.
Determinants of competitiveness and their impacts
- Investment in new equipment - reduces costs.
- Improvements to operational procedures - reduces costs.
- Effectiveness of marketing mix - increases demand.
- Innovation through research and development - changes can be rapid so need to stay ahead.
- Financial planning and control - improving efficiency and reducing costs.
- Incentives schemes for staff - motivates them, better quality products - increasing demand.
- Quality procedures - improving quality, better reputation, increased demand.
- Staff skills - more productive, innovative ideas
- Enterprise - entrepreneurial skills of owners, better culture.