External influences on business

External influences on business

Economic Factors

  • Effects of inflation on a business, including increased costs and potential changes in consumer spending.
  • Impact of exchange rates on import/export costs and international business relations.
  • Influence of interest rates on borrowing costs and investment decisions.
  • The role of economic cycles (boom, recession) on business sales and profitability.
  • Consequences of unemployment levels on recruitment, wage levels, and demand for products.

Political Factors

  • Impact of government policies and regulations on operational activities and strategic planning.
  • Effects of political stability on business continuity and investor confidence.
  • The role of taxation policies on business profitability and pricing strategies.
  • The consequences of trade agreements/tariffs on import/export activities and cost of goods.

Social Factors

  • The influence of changing consumer attitudes and behaviour on product development and marketing strategies.
  • Effects of demographic changes (age, ethnicity, etc.) on market size and business opportunities.
  • Impact of cultural and lifestyle trends on product demand and market positioning.
  • How ethical considerations are shaping corporate culture and consumer behaviour.

Technological Factors

  • How advances in technology are creating new business opportunities and challenges.
  • Effects of e-commerce and digital marketing on sales, customer reach and competition.
  • Impact of data analytics and AI on decision making and business efficiency.
  • How businesses need to adapt to information and communication technology changes.
  • Influence of employment law on recruitment, retention and treatment of staff.
  • Role of health and safety regulations on business operations and workplace environment.
  • How data protection laws are affecting data handling and use.
  • Impact of changes in business legislation on operations, liability and compliance.

Environmental Factors

  • Significance of sustainability and green initiatives on corporate image and operational efficiency.
  • Role of climate change and environmental disruptions on supply chains and distribution.
  • Influence of environmental regulations on operations, product development and waste management.

Remember, understanding these factors allows businesses to anticipate change, minimise risk, seize opportunities, and remain competitive in markets that are constantly evolving. Simple awareness isn’t enough – businesses must be proactive in analysing, predicting, and adjusting to these changing dynamics.