3.1.4- Impact of External Influences

Question 1

PESTLE analysis

Answer 1

• business analysis tool that aims to look at how external factors will impact a business
• aids strategical and tactical decisions

Question 2

Political

Answer 2

• change in government
• government intervention policies
• tax rates
• tariffs

Question 3

Economic

Answer 3

• increase in interest rates
• increase in inflation
• unemployment rates
• recession

Question 4

Social

Answer 4

• change in demographics
• cultural mix changes
• social trends

Question 5

Technological

Answer 5

• impact of new technologies on their business
• new research and development
• online trading

Question 6

Legal

Answer 6

• asses how the business may become affected by a change in legislation
• sales of goods act
• data protection act
• health and safety at work

Question 7

Environmental

Answer 7

• climate change
• weather
• sustainable production

Question 8

Porter’s 5 forces

Answer 8

Argued that there were 5 forces which determine the profitability of an industry:

• bargaining power of suppliers (limit power of suppliers by looking for new ones)
• bargaining power of consumers (make it expensive for consumers to change)
• threats of new entrants (create barriers to entry in the form of heavy advertising, creating a strong brand)
• threats of substitutes (invest in R&D and develop patents)
• rivalry among current businesses (buy rivals through horizontal integration, introduce new products to the market)