1.5 External environment Flashcards
Business cycle
Business cycle refers to the fluctuation in the level of business
activity overtime. Countries tend to move through the cycle of
booms, recessions, slumps, recovery and growth.
Deregulation
Deregulation is the removal of government rules and
regulations which constrain an industry to enhance efficiency
and encourage more competition within the industry.
Economic growth
Economic growth measures changes in the Gross Domestic
Product of a country over time. It occurs if there is an increase
in GDP for two consecutive quarters.
Ethics
Ethics are the moral values and judgements (of what is right)
that society believes businesses ought to consider in their
decision-making.
The exchange rate
The exchange rate is the value of a country’s currency in terms
of other currencies.
Inflation
Inflation occurs when the general price level in an economy
continuously rises. It is measured by changes in the cost of
living for the average household in a country.
Interest rate
Interest rate is a measure of the price of money in terms of the
amount charged for borrowed funds or how much is offeredon
money that is saved.
Protectionist measures
Protectionist measures are any measure taken by a government
to safeguard its industries from overseas competitors.Theyare
a threat to businesses trying to operate in foreign markets.
STEEPLE analysis
STEEPLE analysis is an analytical framework used to examine
the opportunities and threats of the external environment
(social, technological, economic, environmental, political,
legal,and ethical environments) on business activity.
Unemployment
Unemployment refers to the number of people in the workforce
who are willing and able to work but cannot find employment.
Social
Social - social forces influence our attitudes, interests, opinions, moreover create our behavior and ultimately what we purchase. Trends’ changes have correspondingly direct impact on enterprises. These factors contain: structure of population, falling rates, competition, increase of global population, traditions, level of education, cultural diversity and standards. More examples of Social and cultural factors affecting business.
Techonological
Techonological - technological advances have greatly changed the manner in which businesses operate. Nowadays technological progress created a society which expects instant results. Here we can mention: new technologies, absorptive capacity for innovation, globalization. New technologies shorten Product life cycle and increase demand for new products. This revolution has increased the rate at which information is exchanged between stakeholders. A faster exchange of information can benefit companies as they are able to react quickly to changes.
Economic
Economic - national interest rates and fiscal policy is set around economic conditions, besides has influence on purchasing power of consumers and structure of their expenditure. These factors include: gross domestic product (GDP) creating by demand, stock quote, currency rate fluctuations, rate of inflations, market substitutive and complementary, tax policy, price changes, revenues, savings and level of unemployment.
Environmental
Environmental - environmental protection legislation, pollution, waste management and disposal, clean air and water, energy saving technologies, attitudes towards ecology in society. More examples of Ecological factors affecting business,
Political - factors could create plenty of advantages and opportunities for organizations. These factors include: political situation, political stability, state interference, market regulations, trade agreements, tariffs or restrictions, taxes, lobbying and clarity of law.
Legal
Legal - (subset of above mentioned political factors) involve all regulatory and law determinants that can negatively or positively affect results of market actions and decisions of management of company functioning in particular country. International companies must analyze and identify those factors (legal environment) independently for every state they function.
