1h- what makes a business un/succesful Flashcards
Q: What are external factors?
A: External factors are influences outside a business’s control that affect its operations, strategy, and profitability.
What are the key types of external factors?
6
A:
Political – Government policies, trade restrictions, tax regulations.
Economic – Inflation, interest rates, unemployment.
Social – Consumer trends, demographic changes, cultural shifts.
Technological – Advancements in automation, digital banking, e-commerce.
Environmental – Climate change policies, sustainability regulations.
Legal – Business regulations, employment laws, health and safety policies.
How do political decisions impact businesses?
4
Government stability – Stable governments attract investment and business growth.
Tax regulations – Changes in corporate tax, VAT, and income tax affect business profitability.
Trade restrictions – Tariffs and quotas on imports/exports influence global business operations.
Investment in public services – Increased government spending on healthcare, education, and infrastructure benefits businesses.
How do political decisions impact businesses?
Example
Example:
The UK’s Brexit decision changed trading relationships, leading businesses to adapt supply chains and pricing.
The US tariffs on Chinese goods forced companies to shift manufacturing to alternative countries
How do economic factors influence business decisions?
4
Inflation: Rising costs of goods/services increase business expenses and lower consumer spending.
Interest rates: Higher rates make borrowing expensive, while lower rates encourage investment.
Unemployment levels: High unemployment leads to reduced consumer spending; low unemployment creates labor shortages.
Exchange rates: Currency fluctuations impact the cost of imports and exports.
How do economic factors influence business decisions?
Example
Example:
A weaker British pound makes UK exports cheaper and more competitive abroad but raises import costs.
High inflation in Argentina has reduced purchasing power, affecting local businesses.
Q: What are the key social influences on businesses?
4
Education levels: A well-educated workforce leads to innovation and economic growth.
Demographics: Aging populations increase demand for healthcare and senior-focused products.
Consumer awareness: Ethical sourcing, fair trade, and eco-friendly products drive business choices.
Migration & urbanization: Population shifts affect labor availability and consumer demand.
What are the key social influences on businesses?Example:
Eco-conscious consumers in Indonesia and the Philippines prefer sustainable packaging.
Increased social mobility in the UK has led to more women in leadership roles, impacting HR policies.
Q: How does technology impact businesses?
4
Automation & robotics – Reduces costs, increases efficiency, and improves product quality.
E-commerce growth – Online businesses operate globally with fewer overhead costs.
Big data & AI – Improves decision-making, customer experience, and inventory management.
Digital banking & mobile payments – Increases transaction security and convenience.
How does technology impact businesses?
Example
Example:
Amazon’s automated warehouses speed up deliveries and reduce labor costs.
Digital-only banks (e.g., Revolut & Monzo) are disrupting traditional banking models.
Q: How do environmental concerns shape business decisions?
4
Green energy policies – Governments encourage businesses to shift to renewable energy sources.
Waste disposal regulations – Companies must comply with strict waste management laws.
Climate change risks – Extreme weather conditions disrupt supply chains and increase insurance costs.
Sustainable business models – Consumers prefer businesses that reduce carbon footprints and promote sustainability.
How do environmental concerns shape business decisions?
Example:
Tesla’s commitment to electric vehicles aligns with global sustainability trends.
Many global retailers are reducing plastic packaging to meet consumer demand for eco-friendly alternatives.
What legal factors impact businesses?
4
Consumer protection laws – Ensure fair trading, accurate product descriptions, and refund rights.
Employment laws – Regulate wages, working conditions, and equal opportunities.
Health & safety laws – Protect employees in the workplace.
Competition laws – Prevent monopolies and encourage fair pricing.
What legal factors impact businesses?
Example:
The EU’s GDPR regulations require businesses to protect consumer data privacy.
Stronger workplace safety laws in Australia have reduced workplace injuries in manufacturing industries.
