3.1.4 Impact of external influences Flashcards
What does PESTLE stand for?
Political Economic Social Technical Legal Environmental
What do businesses use PESTLE for?
it makes them think carefully about the external influences that could affect them as a company
Define direct competitors?
Companies that sell very similar products and services
Define indirect competitors?
Companies competing for the same consumer spending power
Define Porters Five Forces?
five forces that determine where power lay in the market
What can businesses gain from analysing the five forces?
to understand both the strength of the current competitive position and strength of position it may be moving into
What are porters five forces?
- Rivalry amongst existing competitors
- Threat of new entrants
- Threat of substitute products
- Bargaining power of suppliers
- Bargaining powers of buyers
Define what is meant by a competitive market?
Large numbers of buyers and sellers with little control overcharged prices
Define what is meant by uncompetitive markets?
Dominated by single producer, also known as monopoly
Define a monopoly?
One business that supplies to the entire market
Define Oligopoly?
Market that is dominated by few very large producers
3 impacts on businesses of changing competitive environments?
New entrants
New products
Consolidation
Two examples of political factors that could affect a firm?
Joining or leaving EU
Changes in government
Two examples of economic factors that could affect a firm?
Falling unemployment
Lower interest rates
Two examples of social factors that could affect a firm?
Increase in migration
Becoming more health conscious
