1.3 External Environment Flashcards
What are external factors
Factored that are happening outside the business that impact the business. This means that the business has to be dynamic.
PESTLE
Political , economic , social , technological , legal , environmental
Define interest
Cost of borrowing , reward of saving
What are political factors
-If the demand of the economy is low , the government will try to increase it by lowering tax and working with the BoE to lower interest rates . Vise versa if demand is too high.
-political parties have different values
-government can change consumer behaviour through tax
How is inflation stopped
When inflation goes up , the BoE puts interest up , the consumers can’t afford new inflated prices , consumers stop spending , business have to lower prices to meet demand
Labour supply factors
-unemployment = 4.1% means less people with disposable income
-more choice of workforce , business can offer lower wages
What is unemployment and what are the different types
-people who want to work but cannot get it
-made redundant, dismissed , school, college , or uni leaver
What is GDP
Gross domestic product
-sum of all the finished goods in a country for a year
Different stages of the economy over time
Boom, downturn, recession/slump , recovery
What is happening in the boom stage of the economy
-highest point of GDP
-high confidence , demand , employment, disposable income , borrowing
-low inflation , interest
-good salaries
What is happening in the downturn stage of the economy
-caused by external factors
-decaf ease in employment , demand , investment and confidence
What is happening in the recession/slump of the economy
-two consecutive quarters of declining GDP growth
-low demand , employment , investment and confidence
-less disposable income
What is happening in the recovery stage of the economy
-increasing employment , demand , investment and confidence
Seasonal demand and supply examples
-fuel , heating needed in different months
-religious festivals/timings impacts demand
- summer seasons , holidays +tourism
-farming is seasonal
How do businesses prolong the season of demand of their product
-advertising
-pricing
-upselling
