Influences On Business Environment Flashcards
Reasons for financial influences in the external environment
It influences the cost of borrowing money and therefore affect the level of investment by a business
Why are there geographical influences?
Changing demographic factors can lead to changes in demand levels and the nature of products and services
What is globalisation?
Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange. Globalisation has increased the production of goods and services.
How do social factors influence the external environment?
Changes in tastes, fashions and culture can lead to sales and profit opportunities, and business growth.
Why do legal factors influence the external environment?
The business must operate within the legal framework
Political influences?
Major political change can lead to business uncertainty or business confidence.
For example: social reforms affect paid parental leave.
Taxation affects GST
Institutional influences?
They control taxes, regulations, pay etc.
Purposes of technological influences?
They can increase business productivity and communication
How is the economy an external influence?
When the economy in a boom period there are higher levels of employment, wages increase, inflation increases and the spending by consumers increase.
What influences a business’s competitiveness?
- local and foreign competition
- marketing strategies employed by competitors
- number of competitors
- ease of entry into a market for a new business
What are the changes in markets as an influence?
Labour markets: the Australian government increased the number of temporary work visas to address this shortfall in skilled labour.
Consumer market: consumers around the world will just readily browse an online store as examine a catalogue delivered to their private letter boxes
What do product influences affect in the internal structure & operation within the business?
- the type of goods and services affects the internal operations by it possibly needing to expand if there is a wide range of products
- it influences the size of the business depending on the amount of goods and services produced
Location factors for the internal environment
- Visibility
- cost
- proximity to suppliers
- proximity to customers
- proximity to support services
What are the resources available to a business?
- human resources: the employees of the business
- information resources: market research, sales reports, economic forecasts, technical material and legal advice
- physical resources: equipment, machinery, buildings and raw materials
- financial resources: funds the business uses
What are management influences?
Fewer levels of management means that businesses can adapt quickly to meet changing consumer needs and market conditions because there are fewer managers who need to approve decisions.
