Business studies

The economy

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Specialisation and external influences


Firms specialise in their own goods and services e.g insurance firms and DIY stores. As a result one part of the economy may depend on other parts. The division of labour allows a firm to employ specialists.

External influences:

The demand for many goods and services depends on the level of peoples incomes. Changes occur in peoples tastes and fashions. Sales depend on the success of competitors.

Success of a business will be influenced by government actions. The government creates various laws and regulations that affect businesses. The EU and UK government support businesses through financial assistance and advice.

Business are influenced by whats happening in our society. A businesses environmental awareness affects peoples decision to buy from them. As a result business establish their own ethical policies.

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The factors of production


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