1.3.1

External Influences

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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.
Social

Social

  • Social factors can affect how a business operates.
  • This includes:
    • Urbanisation - people usually move to urban areas because there are more job opportunities.
    • Migration.
    • Social changes - e.g. the growth of e-commerce.
    • Demographic changes - e.g. the UK has an aging population.
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.
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.
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1

Exploring Business

1.1

Features of Business Organisations

1.1.1Sole Traders & Partnerships1.1.2Private & Public Limited Companies1.1.3Types of Liability & Not-For-Profits1.1.4Purposes of Businesses1.1.5Purposes of Businesses 21.1.6The Different Economic Sectors1.1.7Multinational Companies1.1.8Stakeholders1.1.9Influence of Stakeholders
1.2

Organisation of Businesses

1.2.1Organisational Structure1.2.2Types of Organisational Structures1.2.3Business Aims & Objectives1.2.4Business Aims1.2.5Business Objectives
1.3

Business Environment

1.3.1External Influences1.3.2Political & Legal Change1.3.3Economic Environment1.3.4Social & Technological Environment1.3.5Lifestyle & Technological Environment1.3.6Corporate Social Responsibility1.3.7The Competitive Environment1.3.8Innovation1.3.9Risk & Uncertainty1.3.10Porter's Five Forces1.3.11SWOT Analysis
2

Marketing Campaigns

2.1

Marketing

2.1.1Setting Marketing Objectives2.1.2Customer Needs2.1.3The Market2.1.4Competition & The Market2.1.5Consumer Behaviour2.1.6Market Research2.1.7Forms of Market Research2.1.8Market Segmentation2.1.9Cultural & Social Factors in Marketing2.1.10Promotional Decisions 32.1.11Pricing Strategies
2.2

Marketing Mix

2.2.1Marketing Mix2.2.2Product Life Cycle2.2.3Pricing Decisions & Price Skimming2.2.4Pricing Decisions & Price Penetration2.2.5Promotional Decisions2.2.6Promotional Decisions 22.2.7Promotional Decisions 32.2.8Market Mapping
3

Business Finance

3.1

Sources of Finance

3.1.1Internal Finance3.1.2External Finance3.1.3External Finance 23.1.4Sources of Business Finance
3.2

Financial Planning

3.2.1Revenue3.2.2Costs3.2.3Cash & Cash Flow3.2.4Cash & Cash Flow 23.2.5Break-Even Analysis3.2.6Profits
3.3

Financial Statements

3.3.1Balance Sheets3.3.2Income Statements3.3.3Liquidity
4

International Business

4.1

Globalisation

4.1.1Growing Economies4.1.2Specialisation & Trade
4.2

International Business

4.2.1Internationalisation4.2.2International Trade4.2.3MNCS4.2.4Conditions that Prompt Trade4.2.5Assessment of a Country
4.3

International Economic Environment

4.3.1Globalisation4.3.2Factors Contributing to Globalisation4.3.3Protectionism4.3.4The EU & the WTO4.3.5Trading Blocs
4.4

Factors Affecting International Business

4.4.1Global Competitiveness4.4.2Ethics of Global Business4.4.3Controlling MNCs4.4.4Cultural & Social Factors in Marketing
5

Principles of Management

5.1

Management & Leadership

5.1.1Managers5.1.2Management Theories5.1.3Managing Organisational Culture5.1.4Management Style
5.2

Theories of Motivation

5.2.1Motivating & Engaging Employees5.2.2Taylor's Theory5.2.3Mayo's Theory5.2.4Maslow's Theory5.2.5Herzberg's Theory
5.3

Managing Change

5.3.1Change5.3.2Key Factors in Change5.3.3Scenario Planning5.3.4Managing Change5.3.5Managing Strategic Implementation
6

Business Decision Making

6.1

Business Principles & Practices

6.1.1Influences in External Environments6.1.2Product Decisions6.1.3Competitive Environment6.1.4Corporate Strategy6.1.5Quantitative Sales Forecasting6.1.6Legislation
6.2

Quality Management

6.2.1Importance of Quality6.2.2Measuring Quality6.2.3Total Quality Management6.2.4Evaluating TQM
6.3

Human Resources

6.3.1Contracts6.3.2Recruitment6.3.3Training a Workforce
6.4

Documents & Business Decisions

6.4.1Sales Forecasts6.4.2Managing Strategic Implementation6.4.3Problems with Strategy

Practice questions on External Influences

Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.

  1. 1
    What does PESTLE stand for?Fill in the list
  2. 2
    What are competition policies an example of?Multiple choice
  3. 3
    What has grown in recent years, impacting buying habits?Multiple choice
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Business Objectives

Political & Legal Change