*External Factors (PESTEC) Flashcards
what are external factors?
Influences out-with the control of the organisation which will affect how it operates (outside the business)
name all external factors
political, economic, social, technological, environmental, competitive
definition of the political factor?
changes in the government policies, legislation or taxes
examples of political factors
legislation (national living wage, equality act, GDPR)
taxes (Income, corporation, VAT)
policies (increase spending on schools, set environmental limits, build new roads)
definition of the economic factor?
factors which encourage people to spend or save their money
examples of economic factors
unemployment, recession, inflation, interest rates, exchange rates
what is unemployment?
people of working age who are not currently employed, but are actively seeking employment
what is recession?
a period of economic decline when trading slows and incomes decrease
what is inflation?
an overall increase in prices for goods and services
what are interest rates?
the % amount set by the Bank of England as a minimum to be charged when borrowing money
what are exchange rates?
the value of ones currency against another
definition of the social factor?
changes in demographics, characteristics of the population, culture and values
examples of social factors
changing trends in fashion and food tastes (vegan, veg etc)
customers becoming more conscious about ethical and environmental issues
UK’s ageing population
changing work-life balance (working from home, different hours etc)
definition of technological factor?
advancements in technology happening in a organisation’s industry (this does not refer to technology available within an organisation)
examples of technological developments?
increased use of:
- e-commerce by competitors and customers
- social media
- cloud computing for data storage
- tablets, smartphones and apps
- availability of robotics for production
