The External Environment Flashcards
Economic factors
Consumer income
Interest rates
Inflation? - price goes up
Demographic factors
Changes in migration
Changes in birth and death rate
Market factors
Changes in power of competitors
Growth in sales within a market
Environmental and social factors
Consumers prefer environmentally friendly products
Growth in popularity of fair trade products
Factors that make up the external environment
Market conditions and competition Incomes Interest rates Demographic factors Environmental issues and fairtrade
Rising interest rates
Costs of servicing existing loans may increase
Cost of importing products may fall
Demand for products (brought on credit) may fall
Falling interest rates
Costs of servicing existing loans may decrease
Cost of Importing products may rise
Demand for products ( brought on credit) may rise
Factors that affect the external environment
Economic factors
Demographic factors
Market factors
Environmental and social factors
What is the external environment
External forces that can influence a businesses activities and can determine its success or failure
What is market conditions
Features such as the level of sales, the rate at which they are changing and the number and strength of competitors
Perfect competition
All firms compete on an equal basis products mostly identical, charge similar price
What’s oligopoly
When a small number of firms dominate the market and charge similar prices
What’s a monopoly
Where one business has complete control over its market. No competition
What is inflation.
Rise in the general level of prices so therefore a fall in the purchasing power of money
DEEM analysis
Demographic
Economic
Environmental
Market forces
