WHAT IS A BUSINESS?: Businesses in an External Environment
- Created by: alvlrevision
- Created on: 12-04-18 23:24
Looking at the external environment of a business, we must consider 'PESTLE' factors: political, economic, social, technological, legal and environmental.
Political Factors:
- government economic policies
- government social policies
- extent of government intervention
Economic Factors
- business cycle
- income levels + interest rates
- exchange rates / level of inflation
- level of employment
- membership of the EU
Social Factors
- demographic factors
- ethical issues
- impact of pressure groups
Technological Factors
- new products and processes
- impact and cost of changes
Legal Factors
- legalisation
Environmental Factors
- environmental issues and fair trade.
Influencing business costs and demand of goods and services is controlled by several factors:
- Competition
- Whether the economy is growing
- Impact of changes in interest rates
- Changes in demographics
- How environmental issues affect the type of products demanded and the way they're produced.
- Costs: if they wish to improve profit, cost of products should be largely considered.
Factors affecting demand:
- price of product
- tastes and fashion changing over time
- price of other goods: substitutes and complementary products
- marketing and advertising
- seasonal factors (e.g. demand for suncream decreases in winter months)
- government…
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