External Factors Understanding Business Higher Business Management Business

External Factors Understanding Business Higher Business Management

Business Environment The Internal Environment is within the business, whereas the External Environment is outside the business EX L A N TER T N E M N O R I V EN IN L A N TER T N E M N O R I ENV

Business Environment Factors of the External Environment P E S T E C Political Factors Economic Factors Social Factors Technology Factors Environmental Factors Competitive Factors

External Business Environment P § Government legislation Health and Safety § § § Political Factors Employment Taxation Government Decision Making European Union Decision Making Smoking and Drinking Minimum Wage

External Business Environment P Political Factors According to the British Beer & Pub Association, 39 pubs a week are now closing, which is down from the rate of 52 a week in the first six months of last year. Source: The Independent 2010

External Business Environment P Political Factors Microsoft was found guilty by the European Competition Commission in 2004, which resulted in a € 497 million euro fine. Microsoft were forced to unbundle it’s Media Player software from Windows to allow other software makers to produce rival products. Microsoft dragged its feet and the Commission later imposed a daily € 1. 5 million fine on the company, adding up to € 280. 5 million. Source: www. forbes. com

External Business Environment E Economic Factors • Inflation rates • Exchange rates • Interest rates (on bank loans, credit, etc) • Recession impact (loss of businesses) • Discount allowances • Trade credit availability

External Business Environment S Social Factors More women in work. Therefore supermarkets sell more ready meals, stay open longer and there is an increase in online shopping.

External Business Environment S Social Factors More environmental awareness. Increase emphasis on green and ethical business. Businesses are using more recyclable materials and bio-fuels etc.

External Business Environment S Social Factors Increase car ownership has resulted in more out of town shopping centres

External Business Environment S Social Factors From 2010 the retirement age will increased so that by 2020 it will match the male retirement age of 65. Between 2024 and 2046 the retirement age for both men and women is set to increase to age 68.

External Business Environment T Technology Factors There has been an increase of new technology. Businesses must keep up-to-date with this change in order to remain competitive. For example, automation has grown in the Secondary Sector of Industry.

External Business Environment E Environmental Factors These could include storm, flood, pollution, etc.

External Business Environment E Environmental Factors The Iceland volcanic ash not only cost Airlines millions (£ 130 m a day according to the BBC), but effected the distribution and supply to businesses within and around Europe. This especially impacted businesses using a Just In Time (JIT) stock model.

External Business Environment C Competitive Factors With the increase of e-commerce, businesses are under increasing threat from not only local competitors, but also regional and even global organisations.

External Business Environment C Competitive Factors Customers are more savvy than ever and will look at difference deals and prices before choosing their purchase.