External Factors

Question 1

what is PESTEC

Answer 1

political, economic, social, technological, environmental and competitive factors that affect a business

Question 2

how does political factors affect a business

Answer 2

decisions made from governments have impacts on how business operate (minimum wage, health and safety act)

Question 3

what is competition policy

Answer 3

policy set by the government to ensure fair competition in the market (more competition = suppliers maintain good price = remain competitive)

Question 4

what can competition policy prevent

Answer 4

business colluding with other organisations to fix prices
monopolies from occurring
mergers/takeovers that would lead to a large decrease of competition in the market

Question 5

what is economic policy

Answer 5

the behaviour of the government in influencing the economic performance of the country. includes decisions on taxation, government spending and interest rates

Question 6

what are the two economic policy areas

Answer 6

fiscal policy
monetary polic

Question 7

what is fiscal policy

Answer 7

deals with the tax rates and the level of government spending

Question 8

what is monetary policy

Answer 8

deals with setting interest rates and controlling the supply of money in the economy

Question 9

how does economic factors affect businesses

Answer 9

things like inflation or exchange rates determine the climate of the economy and how consumers behave (economy going through boom = consumers spend more)

Question 10

how does social factors affect businesses

Answer 10

forces such as family, friends and the media affect consumer attitudes, interest and opinions (widespread concern for health = consumers purchasing more healthy foods)

Question 11

how does technological factors affect businesses

Answer 11

changes in technology determine how a business operates (business integrates technology = greater use of technology/better advertising)

Question 12

how does environmental factors affect businesses

Answer 12

weather conditions can affect businesses by pausing suppliers reaching destinations (business cannot manufacture products = lack of/no sales)

Question 13

how does competitive factors affect businesses

Answer 13

businesses facing competition may host sales or special offers in order to gain an advantage over competitors (price wars)