External influences on Business

P - politicalE - environmentalS - socialT - technologicalE - economicalC - competition

Business constraints

Limiting factors / reasons why businesses can not do what they would like to

INTERNAL

EXTERNAL

Money available

Expertise available

Company’s Aims & Objectives

Political

Economical

SocialTechnological

EnvironmentalCompetitors

HoweverThink... Not all external factors are ‘constraining’.

We are going to look at 6 different external factors, for each you need to think if the factors are beneficial to businesses or constraining to businesses, or both?

PoliticalP

Local Gov.

Local Tax

Education services

Public transport / Parking

Housing

P

Central Gov. Monetary PolicyP

Central Gov. Fiscal PolicyP

European Gov. European UnionP

Economical

Performance of the economy affects the success of the business. Consider:

•Exchange rates (will determine where the products are sold)

•A poor performing economy will inhibit sales

•The strength of the economy will determine the rate of growth possible for a business

E

SocialThe current trends and tastes of the customer

Clothing - what styles of clothing is popular

Food - What types of food is popular

Ethics – consumer’s priorities for business ethics

S

Technological TLO: Explain the advantages & disadvantages of

technological change.

Technological

How can Technology affect business?

New machines = production more efficient New products =

(innovation encourages spending)

Reduction in costs = usually cheaper (less workers needed)

World wide market = (internet)

T

VW http://www.youtube.com/watch?v=46_rhAzJzo4&feature=related

Technological

Honda assemblyhttp://www.youtube.com/watch?v=nvZBtJ-ncEM&feature=related

T What are the advantages and disadvantages of new technology being introduced in car manufacturing?

VW http://www.youtube.com/watch?v=46_rhAzJzo4&feature=related

x√

Exam style QAnalyse how technological change would affect a large food shop.

[8 marks]Structure:1.What is technological change. Technological change is...

2.What advantages would it bring (explain why it is an advantage)

3.However what disadvantages would it bring (explain why it is a disadvantage)

4.Overall, do YOU think technology has benefited the food shop?

What have we learnt?

Discuss with a partner before you

share it with the class

EnvironmentalCorporate Social Responsibility – The business considers and acts upon the thoughts of stakeholders other than their shareholders.

UK law states that a business must try to make a profit for its shareholders.

I know my factory pollutes the environment, but it is expensive to use a cleaner method of production. W e are

making a large profit, and that's what are shareholders want

We invest a lot of money into cleaner methods of production to help protect the environment, customers prefer a company that are aware of their CSR,

which in turn boosts are profits.

E

Environmental

Read page 83 –

Q. Explain the three external constraints that discourage businesses from polluting. [6marks]

http://classtools.net/education-games-php/timer/

E

CompetitionNearly all businesses have competitors, which will undoubtedly affect the way the business is ran

C

Cost-Benefit analysis

A ‘cost-benefit analysis is made by the government to help them decide whether or not to build / expand

External costs – these are disadvantages felt by the community

External benefits – the community gains in some way from the business activity.

Cost-Benefit analysis

Cost-Benefit analysis

Cost-Benefit analysis

Cost-Benefit analysis