3.1.4 - Impact of External Influences

Question 1

What PESTLE

Answer 1

• analysis of the External POLITICAL ,ECONOMIC , SOCIAL, TECHNOLOGICAL, LEGAL and ENVIRONMENT factors affecting a Business

Question 2

Explain in PESTLE - POLITICAL -

Answer 2

examples
- GOVERNMENTS LAWS: Minimum Wage
- TAX RATES (e.g. Increase in VAT)
- TARIFFS (when importing into the UK)

Question 3

Explain PESTLE - ECONOMIC

Answer 3

examples
- INCREASE In INTEREST RATE
- INCREASE In INFLATION
- RECESSION

Question 4

Explain PESTLE - SOCIAL

Answer 4

examples
- CHANGE in DEMOGRAPHICS and IMPACT on MARKETS
- CULTURE MIX Changes in the UK

Question 5

Explain PESTLE - TECHNOLOGY

Answer 5

e.g.
- INNOVATIONS in INDUSTRY
- NEW COMPUTER SYSTEM

Question 6

Explain PESTLE - LEGAL

Answer 6

• HEALTHY and SAFETY at Worth in terms of PPE
• SEX DISCRIMINATION ACT

Question 7

Explain PESTLE - ENVIRONMENTAL

Answer 7

• CLIMATE CHANGE
• WEATHER

Question 8

PORTER - 5 FORCES which DETERMINE the PROFITABILITY of an INDUSTRY

Answer 8

• BARGAINING POWER of SUPPLIERS
• BARGAINING POWER of CUSTOMERS
• THREATS of NEW ENTRANCES
• THREAT of SUBSTITUTES
• RIVALRY AMONG EXISTING

Question 9

Explain The PORTER’s FORCE - BARGAINING POWER Of SUPPLIERS

Answer 9

• the MORE POWER a SUPPLIER HAS Over Customers, the HIGHER the PRICE It CAN CHARGE, Reallocating Profit to Them
• LIMITING SUPPLIER POWER –> Get COMPETITIVE ADVANTAGE
• e.g. MERGE OR TAKEOVER SUPPLIER through FORWARD VERTICAL INTEGRATION

Question 10

Explain The PORTER’s FORCE - BARGAINING POWER Of BUYER

Answer 10

• Buyer WANTS LOWEST PRICE ->
• BUYERS Have MARKET POWER IF they can LOWER PRICES
• BUSINESS could TRY to MAKE It MORE EXPENSIVE/HARDER for CUSTOMERS To SWITCH to ANOTHER SUPPLIER - e.g. USP > CUSTOMER LOYALTY
• INCREASE MARKETING -> Create PRICE WAR -> LEAD to LESS SELLERS in MARKET -> LESS CHOICE FOR CUSTOMERS

Question 11

Explain The PORTER’s FORCE - THREATS of NEW ENTRANTS

Answer 11

• CREATE new BARRIERS to ENTRY to PREVENT NEW ENTRANTS
• HEAVILY ADVERTISE to BUILD STRONG BRANDS -> CUSTOMER LOYALTY -> MAKE CUSTOMERS LESS PRICE SENSITIVE
• LARGE ADVERTISING = LARGE COST For NEW ENTRANTS

Question 12

Explain The PORTER’s FORCE - THREATS of SUBSITUITUES

Answer 12

• Reduce Substitutes through R&D and then PATETNING THE SUBSTITUTE Itself
• BUY PATENTS of RIVALS and SHELVE to PREVENT PRODUCTION
• can also use MARKETING TACTICS