Factors that impact business activities Flashcards
Describe the complexity of the external business environment using PEST analysis.
Business functions in a wider system and business people make decisions daily. These decisions are influenced by what is going on in the external environment.
PEST analysis is a study of political, economic, social and technological.
Explain the nature of the internal environment using SWOT analysis.
Strength
Weakness
Opportunities
Threats
SWOT analysis involves specifying the objective of a business venture and identifying the internal and external factors favorable and unfavorable to achieving that objective.
Describe about Political Environment.
Attitudes or styles of the government have a direct impact on the environment of the business.
Government act as an
- Planner
- Entrepreneur
- Legislator
- Promoter
Describe what it means to be a entrepreneur.
Political Environment
Government provides goods and services through it’s own departments that benefit all it’s citizens if they are funded and organized at the national level.
Describe what it means to be a planner.
Political Environment
Government plans for the future through education and training policy, employment policy, industrial relations policy, regional policy and international policy.
Describe what it means to be a legislator.
Political Environment
Government can affect an organization or economic activity through it’s political or legislative actions and economic policy,
For example, changes in tax rates, manpower laws, the legal system and ACRA.
Describe what it means to be a promoter.
Political Environment
Government promotes the interests of business and provides it with new opportunities. It involves bringing in talents, investors and businesses outside so as to firmly establish a strong position in the global economy.
What is a recessions/slump and what happened during a recessions/slump?
(Economic Environment)
Recessions/Slumps is the negative state of economy.
- Business do badly
- Employment falls
- Prosperity falls
- Output falls
- Firms lay off workers
- Wages and prices fall
- Firms stop investing
What is a boom and what happens during a boom?
Economic Environment
Boom is the state of a positive economy.
- Business booms
- Employment rises
- Prosperity rises
- Output rises
What is inflationary rates and what are the problems to it?
Economic Environment
Inflation occurs when the general level of prices is rising which means cost of living is increasing.
Individuals with fixed incomes may not be able to cope with increased in cost of living.
Businesses’ have problems with rising cost for both raw materials and cost of labour. Exports become more expensive and less competitive hence demand for exports falls.
Why is businesses affect by exchange rates?
Economic Environment
Businesses are affected by the exchange rate because they import raw materials and export their goods overseas.
Exchange rate can make a difference between trading at a profit or a loss.
What is a strong dollar?
Economic Environment
Imports are cheaper.
Exports are more expensive to design buyers therefore less competitive.
Benefits Singaporean traveling abroad.
What is a weak dollar?
Economic Environment
Imports are more expensive.
Exports are cheaper therefore more attractive to foreign buyers.
Explain the role of the government in encouraging or restricting business activities.
(Economic Environment)
Minimum unemployment & high disposable income.
During a boom > Increase interest rate > Encourage savings and reduce spending. Increase tax rates to reduce spending.
During a recession > Lower interest rates to deter savings and encourage spending. Lower tax rates to encourage spending.
What is demand?
Economic Environment
Demand refers to how much of a product or service is desired by buyers.
The law of demand states that the higher the price, the lower the quantity demanded.
