3.1.4 impact of external influence Flashcards
what is PESTLE analysis
its a business analysis strategy which examines the external influences a business faces and how the business may be affected. it helps to ensure no opportunity or threat is overlooked in SWOT analysis
what does PESTLE stand for
political
economical
social
technological
legal
environmental
recent real-world impacts on businesses
-covid
-11% inflation in 2022/2023
-cost of living crisis
-brexit#
-increase in minimum wage
political impacts
-change in government= this can have big impacts on the structure of an economy and the laws set in place, also how this can impact trading relationships
-trade restrictions= this can include tariffs set by the government which will increase the cost of exporting and importing for businesses
-tax regulations= the government may choose to raise or lower taxes fir businesses or households, this will affect a businesses total profit as higher tax for households may reduce demand and higher tax for businesses will lead to increased costs and therefore less being supplied
-government intervention policies= the government can subsidies markets/businesses.
economical impacts
-interest rates= an increase in interest rates will impact the overhead costs of a business, it will lead to higher interest payments and make it harder/more expensive for a business to borrow.
-inflation= high inflation can lead to a spike in product prices to tackle the higher costs of production, this will see businesses having reduced demand as households cannot justify the new prices
-unemployment levels= high rates will impact business demand
how has brexit impacted business growth
-it is hard to access eu markets
-imports are more expensive
-weaker exchange rate
-less FDI
social impacts
-changes in demographics= the demographics of an area can help a business decide which products may be best suited
-social mobility=if social mobility is high then a high % of the population are unable to find new jobs and have skills associated in new service based industrys.
-tastes and preferences= for example many people have changes to being vegan which has impacted the sales of meat companys
some businesses will benefit from changes in society whereas some will suffer
technological impacts
-automation= new technology has made machinery more efficient and many companies may sue automated machines instead of human labour as it will save them money
-new research and development= this has improved the efficiency of businesses hoping to expand and make new products
-communication= new communication technology has reduced the need for business travel
-online trading
legal impacts
-health and safety= certain products may be banned due to new laws surrounding the harmful impacts of the product, and also businesses will need to spend money to ensure the workplace is safe
-increase in minimum wage= this will impact variable costs
-sex discrimination act= it is illegal to discriminate the gender of a person
-sales of goods act= goods must be of satisfactory quality and fit for purpose, this will increase business costs as the yneed to ensure higher quality
environmental impacts
-climate change=
-increased demand for ethical products
