1.71.7 External influences on business. 1.7 External influences on business Types of external...
-
Upload
lynn-riley -
Category
Documents
-
view
233 -
download
4
Transcript of 1.71.7 External influences on business. 1.7 External influences on business Types of external...
1.7
External influences on business
1.7 External influences on business
Types of external influences
Business competitors
Economic conditions
Environmental constraints
All these influences can affect the way a business operates.
1.7 External influences on business
Business competitors
Competitors may:
Raise/lower their prices
Introduce more advanced goods/better service
Move into the area
Offer additional facilities, eg open later.
If they gain customers, this increases their market share.
1.7 External influences on business
Competitive features
The price of the product/service
The quality of the goods/service or the reputation of the business
The availability of the goods/service
Technological developments
Additional benefits/services
Those chosen depend upon the product and the target customer market.
1.7 External influences on business
Customer profiles
Identify the key customer by:
Age
Gender
Income
Lifestyle
Place where they live
1.7 External influences on business
Location of competitors
May be:
Local
National
International
Depends upon product/service and market eg Microsoft/Dixons/local taxi firm.
1.7 External influences on business
Economic conditions
Interest rates
Price changes
Exchange rates
The Government aims to keep these stable to help business planning.
1.7 External influences on business
Interest rates
The interest rate is the cost of borrowing money.
Low interest rates:
Encourage customers to buy expensive goods
Mean lower repayments (for businesses and individuals)
1.7 External influences on business
Price changes
Price rises = inflation (measured by RPI)
Raw materials more expensive
So selling price increases (sales may fall)
People can’t afford goods so want wage rise
Business costs increase again
Selling price increases again . . .
1.7 External influences on business
Exchange rates
Strong pound
£1 = 2 euros
Good for British travelling abroad
Bad for business (exports expensive)
Good for consumers (foreign goods cheap)
Weak pound
£1 = 1 euro
Good for foreign tourists
Good for business (exports cheaper)
Bad for consumers (foreign goods dearer)
The exchange rate is the cost of foreign currency.
1.7 External influences on business
The role of the Government
Sets economic targets which are good for Britain
Raises taxes to slow down spending
Lowers taxes to encourage spending
The Bank of England’s monetary team:
Raises interest rates to slow down spending
Lowers interest rates to encourage spending
1.7 External influences on business
Environmental constraints
Laws and regulations on the environment affect business activities
Many organisations have environmental policies
Key areas are reducing pollution and wastage
1.7 External influences on business
Types of pollution
Air pollution – affects air quality
Noise pollution – unwanted noise which harms or irritates
Water pollution – through hazardous substances or pollutants
1.7 External influences on business
Waste
Reducing waste by:
Recycling and composting
Using less energy
Minimising wastage and deterioration
Plus:
Disposing of waste and dealing with special/hazardous waste according to the law.
1.7 External influences on business
Summary
External influences affect business activities
Some are unpredictable
External influences change regularly
Businesses must take action to cope
Best action will vary, depending upon the business