1g-external factors Flashcards
Q: What are external factors in business?
A: External factors are influences outside of a business’s control that impact its decisions and performance.
Q: What are the key external factors?
4
Political Factors – Government policies, regulations, and stability.
Environmental Factors – Climate change, sustainability, and waste disposal.
Social Factors – Demographics, cultural trends, and consumer awareness.
Technological Factors – Advances in IT, automation, and digital banking.
Q: How do political factors impact businesses?
5
Government Stability: Businesses prefer to operate in stable regions with predictable regulations.
Trade Relationships & Agreements: Trade deals reduce tariffs and increase market access.
Tax Regulations: Changes in tax laws (corporate, carbon, and sales tax) impact profitability.
Trade Restrictions: Tariffs, quotas, and bans affect international business strategies.
Public Sector Investment: Governments invest in transport, education, and healthcare, supporting business growth.
How do political factors impact businesses?
Case study: UK
Case Study Example:
The UK Brexit vote changed business strategies due to uncertainty in trade agreements.
US tariffs on Chinese goods affected global supply chains.
Q: How do environmental factors impact businesses?
4
A:
Green Regulations: Governments enforce laws on pollution and carbon emissions.
Waste Disposal: Businesses must comply with strict disposal laws, increasing costs.
Energy Sources: Switching to renewable energy may reduce long-term expenses but has high initial costs.
Climate Change: Extreme weather conditions (floods, heatwaves) disrupt supply chains.
How do social trends impact businesses?
5
Education Levels: Skilled workers lead to a more productive economy.
Migration & Urbanisation: Cities attract businesses due to higher populations and workforce availability.
Consumer Awareness: Ethical sourcing and environmental impact influence purchasing decisions.
Demographics: Aging populations create demand for healthcare and senior services.
Social Mobility: Greater job opportunities for women and disabled individuals increase workforce diversity.
How do environmental factors impact businesses?
Case Study Example:
Case Study Example:
Many businesses are switching to electric vehicle fleets to meet environmental standards.
The EU Green Deal promotes sustainability, affecting European industries.
How do social trends impact businesses?
Case study
Case Study Example:
Tech firms outsource customer service to India due to its highly educated, English-speaking population.
Eco-conscious consumers in Vietnam and the Philippines drive demand for sustainable products.
Q: How does technology impact businesses?
4
Automation & Robotics: Increases productivity and reduces labour costs.
IT & Communication: Faster data transfer, digital banking, and e-commerce platforms.
Online Transactions: Reduced reliance on cash handling, improving security.
AI & Big Data: Helps businesses predict trends and manage supply chains efficiently.
How does technology impact businesses?
Case study
Case Study Example:
Amazon’s warehouse automation speeds up deliveries and cuts costs.
Digital banking services have reduced the need for physical branches.
