3.1.4 Impact of External Influences Flashcards
What’s PESTLE
Political (local + national gov influence)
Economic (economic)
Social (personal attitudes impact)
Technological (advancements)
Legal (changes in regulation)
Environmental (protections)
Examples of Political factors (7)
-Government stability and relationships with key trading partners (trump has fucked us all)
-Tax regulations
-Trade restrictions
-Political Ideology and attitude to Business
-Fiscal policy (gov spending that influences economy)
-National security status
-Investment in public services
Examples of economic factors
-Inflation
-Exchange rates
-Cost of living
-The stage of the Business Cycle and GDP growth
-Unemployment levels
Examples of social factors
-Social mobility
-Education
-Ethics & Religion
-Migration
-Health profile
-Population growth
-Demographic structure
Examples of technological factors
- R+D
- Production and distribution processes and efficiency (e-commerce)
- Quality and new materials
- Intellectual property (an invention/artwork)
- Online presence
- The technology used in communication
Examples of legal factors
- Taxation
- Employment
- Advertising
- Health & Safety
- Compliance ( Health and Safety Executive, CMA)
Examples of environmental factors
- Changing infrastructure - for example in favour of green transportation networks
- Energy availability & cost
- Disposal of materials
- Changes in climate and weather patterns
- Air quality
What are 5 causes for the change in competitive environment
- Threat of new entrants (porter)
- Changing laws
- Growth of internet (distribution, marketing)
- Changing consumer tastes (causes shorter product life cycles - fast fashion)
- Globalisation (increased rivalry)
What do porters five forces identify
the key pressures on an industry that impact the ability of a business to compete with rivals
What are the 5 forces
- Threat of new entrants
- Buyer power
- Supplier power
- Threat of substitutes
- Degree of competition
What will understanding the five forces help a business with ?
Helps strategic decision making to achieve and sustain a competitive advantage
= increase chances of success
What is meant by degree of competition?
-many competitors = porters strategic differentiation or cost leadership
-less competitors = premium pricing
What is meant by threat of new entrants?
If barriers to entry are low = more competition, businesses have little power
Vice versa
What is meant by buyer power ?
Reduced if there are less businesses offering a product = higher prices
Increased if there are more choices to choose from = lower prices
What is meant by supplier power ?
Business finds itself with less supplier options = supplier has power
Business has loads of options = supplier has less power to negate prices
What is meant by threat of substitution ?
Links with degree of competition
If there are cheaper substitutes, customers will go to competitors
Whereas if there are less substitutes then business has more market power
