1.3.1
External Influences
The Impact of External Influences
The Impact of External Influences
External factors impact a business' objectives and strategies. PESTLE is a good acronym for remembering these external factors.


Political
Political
- Political factors can affect how a business operates.
- This includes:
- Government regulation of industries.
- The government's competition policies (price controls or anti-trust allowing mergers and acquisitions).
- The government's fiscal policy (the relationship between government spending and tax policies).


Economic
Economic
- Economic factors can affect how a business operates.
- This includes:
- Interest rates - a rise in interest rates increases the cost of borrowing (cost of debt). This disincentivises investment and consumption.
- Consumer spending - in a time of recession, consumer confidence may be low, so there will be little consumer spending.
- Economic growth - in a time of growth, consumer confidence will be high.
- Exchange rates - if exchange rates are lower, a business' exports can be internationally competitive.


Technological
Technological
- Technological factors can affect how a business operates.
- This includes:
- Mobiles.
- Big data - this helps businesses gain insights into consumer behaviour.
- Disruptive technologies - some businesses will have to adapt to new technologies. E.g. how are businesses responding to Netflix.


Legal
Legal
- Legal factors can affect how a business operates.
- This includes:
- The minimum wage - this may increase business costs.
- Laws on working conditions.
- Laws protecting the environment.


Environmental
Environmental
- Environmental or ethical factors can affect how a business operates.
- This includes:
- The supply chain - ensuring the business does not exploit its workers.
- Emissions - the business may need to focus on reducing its pollution.
- Taxes - the business may be unethical by trying to lower how much tax it pays.
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
Jump to other topics
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
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