3.1: The external environment

Question 1

STEEPLE

Answer 1

Social
Technological
Economic
Ethical
Political
Legal
Environmental

Question 2

describe each factor:
Social

Answer 2

Change in size and distribution of the population affects businesses (demographics)

Ex:
- smaller families –> growth in sells for smaller cars intead of a van

Change in life style and attitues of people affect businesses
Ex:
- more healthy people –> Rise salles of organic and non meat products

Question 3

Technological

Answer 3

Business must keep up with the new technology and improve in infrastructure
ex:
-Reduce the time to deliver products
- reduce the cost of delivery
- have a wide range of delivery

Question 4

Economic
Ethical

Answer 4

recession, inflation, exchange rates, interest rate, and unemployment affect the company.

Economic factors:
- macro economics: A part of economics that is concerned about the nation’s resources, aims to achieve economic growth, low unemployment and stable, low rates of inflation.
- Recession : a slowdown in economic activity as GDP (Gross Domestic Product has fallen)
- Boom period: rise in the economy. Businesses produce more goods and services.
- Exchange rates: the price of a countries currency in terms of another currency for the purpose of conversion
- Appreciation: an increase in the value of a currency on a an exchange rate system
- Devaluation: a decrease in the value of a currency on an exchange rate system
- Interest rates : the cost of borrowing or saving money often expressed as an annual percentage
- Inflation: an increase in the price of goods and services
- Deflation: a continuing decrease in the price level of goods and services
- Hyperinflation: very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency

Question 5

Ethical

Answer 5

Ethical trade means that companies take responsibility for improving the working conditions of the workers.

Fairtrade aims better prices, decent working conditions, promote sustainable livelihoods by providing producers with access to credit and long-term trading relationships.

Question 6

Political

Answer 6

• Rivatisation of nationalised: businesses able to enter markets such as gas and electricity, telecommunications and aviation as competition has opened up.
• Planning permission: gives permission to open new shops
• Providing infrastructure – new motorways can result in stock arriving to stores quicker resulting in the business becoming more efficient.
• Policy e.g. defence: defense a company when it needs

Question 7

Legal

Answer 7

Laws business has to follow.
Laws are designed to protect consumers, employees and the environment including health and safety laws, competition laws, consumer protection laws and employment laws
Legislation can also provide opportunities to enter a market

Question 8

Environmental

Answer 8

business must consider the environment and behave ethically in order to care for:
- customers
- local people
- costumers
- workers