AOS 3 - External Environment Flashcards
(32 cards)
What is the external environment in business?
All factors outside a business’s internal environment that impact its planning and performance.
What are the two main components of the external environment?
- Operating environment
- Macro environment
What is the operating environment?
Made up of direct stakeholders that a business has some influence over.
What is the macro environment?
Broad societal forces that a business has no control over.
Define the term ‘customers’ in a business context.
Individuals or organisations who buy a business’s goods or services.
How do customer preferences impact businesses?
Businesses must respond to changes in customer expectations such as ethical sourcing, better value, or healthier products.
What is the role of competitors in the operating environment?
Competitors impact pricing, promotion, and market share.
What should businesses monitor regarding competitors?
Changes in strategies, discounts, or product innovations.
What is the role of suppliers in business operations?
Suppliers provide raw materials, components, or services needed for production.
What can happen if suppliers fail to meet expectations?
It can disrupt production or damage the business’s reputation.
What does a supply chain include?
All stages from sourcing inputs to delivering products to customers.
What are special interest groups?
Groups that aim to influence business behaviour, such as unions and environmental organisations.
What are political and legal factors in the macro environment?
Laws, government policies, and regulations businesses must follow.
What do societal attitudes and behaviours refer to?
Values, beliefs, and trends in the community.
How do economic conditions affect businesses?
They influence pricing strategies and consumer behaviour.
What are technological developments?
Innovations in equipment, software, and digital systems.
What is corporate social responsibility (CSR)?
A business’s commitment to act ethically and contribute to economic, environmental, and social wellbeing.
What is the difference between macro and operating environments?
Macro includes broader, uncontrollable forces; operating involves direct stakeholders.
How can changing customer expectations influence business planning?
It might lead to introducing sustainable products, adjusting pricing, or extending business hours.
What is the importance of monitoring competitors?
Helps anticipate trends and avoid falling behind.
What role do strong supplier relationships play in business?
They reduce disruptions and support ethical operations.
What might businesses do in response to rising interest rates?
Cost-cutting or delaying expansion.
What is the impact of adopting new technology on business operations?
It can improve efficiency but requires investment.
How does responding to social trends affect a business?
It strengthens brand image and aligns with CSR.
