UB6 : External Factors

Question 1

P

Answer 1

Political factors - includes new legislations such as the national minimum wage and setting tax rates such as VAT or Corporation Tax.​
The government can have many influences on the economy as a whole or on individual businesses.​

Question 2

(1) E

Answer 2

Economic Factors - refers to anything that encourages people to spend or not to spend money. ​
Economic factors that affect firms are inflation and unemployment, interest rates and exchange rates (if importing or exporting goods aboard).​

Question 3

S

Answer 3

Social factors - includes fashions, trends, and also demographic factors such as the ageing population of the UK. ​
Consider the impact of social change. eg changes in fashion trends and tastes, demographics, customers, etc.​

Question 4

T

Answer 4

Technological Factors - technology is changing very rapidly and has a huge impact on business, such as retailing online and e-commerce. ​
There has been an increase of new technology. Businesses must keep up-to-date with this change in order to remain competitive.

Question 5

(2) E

Answer 5

Environmental Factors - organisations need to adapt to environmental factors such as adverse weather conditions. For example, storms, floods, pollution, etc.​
There is also huge pressure to consider the environment and operation in an ethical way.​

Question 6

C

Answer 6

Competitive Factors - With the increase of e-commerce, businesses are under increasing threat from not only local competitors, but also regional and even global organisations.​