External Factors of Business Flashcards
What are the external factors of business ?
- Socio-cultural
- Economic
- Political-legal
- Technological
- Competitive
- Global / Natural
Socio-cultural and demographic is ?
- Culture
- values
- beliefs - demographics (age,
gender, ethnicity, religion, etc.) - trends can impact customer
preferences - how products are marketed
- public opinion
Economic is ?
Culture, values, beliefs, demographics (age,
gender, ethnicity, religion, etc.) and any related trends can impact customer
preferences, how products are marketed, how employees expect to be treated,
public opinion, etc.
Political and legal environment
Laws and regulations in general can affect
product design, demand for certain products, manufacturing techniques, etc. As
well, certain regulations related specifically to business can have an impact on
their operations. Finally, the stability of the political climate and related violence
or terrorism in certain areas must be considered.
Technological
The availability and use of technology and any related trends can
impact customer preferences and product design, manufacturing techniques,
working methods, promotional strategies, etc.
Competitive
The level of competition in a certain industry (i.e. perfect
competition, oligopoly, monopolistic competition, monopoly) plays an important
role in determining pricing strategies as well as other business strategies. Actions
of specific competitors related to product pricing, new product offerings,
expansion, and other factors must also be taken into consideration.
Natural
Weather can affect the selection of a location to favor production. Natural
disasters related to natural causes can affect product demand, cause operational
problems and generate important financial losses. The presence of natural
resources, such as minerals, can also be a prerequisite for certain businesses to
be successful.
