Internal & External Factors

Question 1

Describe internal factors.

Answer 1

Influences within the control of the organisation which will affect how it operates

Question 2

Identify all internal factors.

Answer 2

Availability of Finance, Human Recourses (Employees and Management) and Current Technology

Question 3

Explain the influence that availability of finance has on a business.

Answer 3

If a business has a lot of finance available, then this means it will be able to hire the most qualified employees.

Question 4

Explain the influence that human resources may have on a business.

Answer 4

If employees are highly skilled then this means they may be able to produce a higher quality product.

Question 5

Explain the influence that current technology may have on a business.

Answer 5

If an organisation has up to date technology it will be able to produce products up to the highest specification

Question 6

Describe external factors.

Answer 6

Influences outwith the control of the organisation which will affect how it operates (outside the business).

Question 7

Identify all internal factors.

Answer 7

(PESTEC)
Political
Economic
Social
Technological
Environmental
Competitive

Question 8

Explain the influence that political factors may have on a business.

Answer 8

If the government increases the National Minimum Wage this will lead to the business’ wage bill increasing.

Question 9

Explain the influence that economic factors may have on a business.

Answer 9

If unemployment levels rise, people will have less money available to spend in your business.

Question 10

Explain the influence that social factors may have on a business.

Answer 10

Changes in consumer tastes over time could lead to a decreased demand for your product/service.

Question 11

Explain the influence that technological factors may have on a business.

Answer 11

Increased use of e-commerce by a business’ competitors may lead an organisation to decide to launch its own website with selling capabilities.

Question 12

Explain the influence that environmental factors may have on a business.

Answer 12

Pressure from government to meet pollution targets could lead businesses to invest in new greener technology in production.

Question 13

Explain the influence that competitive factors may have on a business.

Answer 13

If a competitor lowers its prices for a similar product it may lead a business to have to lower its prices too.