Impact of external influences Flashcards
1
Q
PESTLE analysis
A
- Business analysis tool which aims to look at external factors and how they may have an impact on the business
2
Q
P- Political
A
- Business should examine how they will be affected by:
- Change in government
- Tax rates
- Tariffs
3
Q
E- Economical
A
How business will be affected by:
- Interest rates
- Inflation
- Recession
4
Q
S- Social
A
Business may be affected with change in social factors:
- Change in demographics
- Change in social trends
- Culture mix changes
5
Q
T- Technological
A
Impact of technologies on their operations
- Automation improving efficiency
- Innovations in the industry
- Trading online
6
Q
L- Legal
A
Impact of changes in legislature
- GDPR act
- Health and safety act
7
Q
E- Environment
A
Business could analyse their environmental challenges
- Climate change
- Weather
- Disappearance of wildlife
8
Q
Porters 5 forces
A
5 Forces that determine the profitability of a business:
- Bargaining power of suppliers
- Bargaining power of customers
- Threat of new entrants
- Threat of substitutes
- Rivalry among existing business
9
Q
How to limit the bargaining power of suppliers
A
- Limit power of suppliers by looking for new ones
- Backward vertical integration merge or take over supplier
10
Q
Bargaining power of customers
A
- Make it too expensive for a customer to switch
- Forward vertical integration
11
Q
Threat of new entrants
A
- Create barriers to entry to prevent new entrants
- Heavily advertise to build strong bands
12
Q
Threat of substitutes
A
- Continuously invest into R&D and develop patents
- Buy up patents of rivals
13
Q
Rivalry among existing firms in the industry
A
- Create a cartel
- Buy up rivals through horizontal integration
- Continuously introduce new products to the market
