Key Factors That Influence The Business Environment

Question 1

List 6 factors that influence a business environment

Answer 1

Political, Economic, Social, Technological, Legal, Environmental

Question 2

What are the political factors that can influence a business environment? And how can they affect a business?

Answer 2

Political factors are anything that involves the government.

• Government policy: the government can change the way a business has to function, as well as influence the economy.
• Foreign trade policy: a government can put tariffs, subsidies or quotas or the government could sign up for a bilateral trade agreement or even impose trade sanctions and/or embargos against other countries.
• Tax policies: government could increase or decrease taxes (Income tax, National Insurance contributions, VAT, Corporation Tax).
• Cross party focus and agendas: Could influence a businesses relationship with other countries.

Question 3

What are the economic factors that can influence a business environment? And how can they impact a business?

Answer 3

Economic factors can have an impact on businesses, how they spend their money and how they make business decisions. Affecting goods, services, and money

These Economic factors can be:
- Interest rates
- Exchange rates
- Consumer trends
- Periods or recession

Question 4

What are the social factors that can impact a business environment? And how can they impact a business?

Answer 4

The social factors that can influence a business are:
- social mobility: which is a term that describes how an individual’s social status is judged to be changing.
- social status: is a theoretical concept based on education, occupation, income and religous or political standing. Businesses can influence social mobility by making opportunities equally available to individuals regardless of their initial social status.
- Market trends: changes in the market
- Cultural expectations: the cultural practices of a certain area may influence a business
- socioeconomic aspects: cultural and economic factors combined can influence a business

Question 5

What are the technological factors that can influence a business? And how can they influence a business?

Answer 5

Businesses use emerging technologies to:
- reduce costs
- improve efficiency
- reduce errors
- manage resources effectively
- increase profitability

Question 6

What are the legal factors that can influence a business? And how can they influence a business?

Answer 6

Legislation may change and, if operating abroad, it may be very different to that in the UK. It is vital that businesses are clear about the applicable legislation in all parts of the world in which they operate.

Consumer law provides protection for customer from poor-quality products or fraudulent activity.

Health and safety regulations vary in different countries and can result in significant fines

Question 7

What are the Environmental factors that can influence a business? And how can they influence a business?

Answer 7

• Carbon footprint: is the impact a business has on the environment, which has to be reduces by businesses using ways such as using renewable energy.
• Digital waste: unlike other waste digital waste contains rare earth materials and strong chemicals that need to be disposed properly as they can have a big impact on the environment.