3.1.4 - Impact of External Influences Flashcards
What is PESTLE analysis?
Examines the external factors that are likely to impact the activities and outcomes of a business
What does PESTLE stand for?
P - Political
E - Economic
S - Social
T - Technological
L - Legal
E - Environmental
Examples of Political Influences
- Government policy
- Foreign Trade
- Trade restrictions
- Investment in public services
Examples of Economic Influences
- Inflation
- Exchange rates
- Cost of living
- Unemployment rates
Examples of Social Influences
- Population growth
- Age distribution
- Lifestyle attitudes
- Education
Examples of Technological Influences
- Advancements
- R&D activity
- Quality
Examples of Legal Influences
- Taxation
- Health and Safety
- Consumer Protection laws
Examples of Environmental Influences
- Climate
- Climate change
- Energy consumption
What are highly competitive markets?
Lots of competitors differentiating what they do
What is a monopoly?
One business dominates the market
What is an Oligopoly?
Few large businesses dominate the market
What is Porter’s Five Forces?
Identifies the key pressures on an industry that impact the ability of a business to compete with rivals
What are Porters 5 forces?
- Threat of substitute
- Buyer Power
- Supplier Power
- Threat of new entrants
- Competitive rivalry
When is supplier power high?
- Few suppliers
- Supply is essential for production
- Not many substitutes
Pros and Cons of high supplier power
PROS
- Could build strong relationships and have long term contracts
CONS
- Can charge high and unfavourable credit terms if they have high bargaining power
