BusinessStudiesOnline:Slide1

External Factors That Affect Businesses

External Factors That Affect Businesses
Allbusinesseswillbeaffectedbythingsthathappen
outsidethebusinessthattheycannotcontrol
ThesearecalledEXTERNALfactors
Thereareanumberofthesefactors,oftenreferredto
asSLEPTAnalysis
Thisacronymstandsfor:
Social
Legal
Economic
Political
Technological
BusinessStudiesOnline:Slide2
Social Factors
Social Factors
Thereare2typesofsocialfactorsthataffect
businesses
SocialFactors
Demographics Lifestyle
InternalAffects ExternalAffects
SocialCost&
Benefits
BusinessStudiesOnline:Slide3
Demographics
Demographics
Demographyisthestudyofthepopulation
Thereare2areasthatbusinessesareconcernedwith:
TheWorkingPopulation
Peopleagedbetween16and65,whoareabletowork.
Thisisimportanttofirmssinceitwilldeterminethenumberof
workersavailabletothem.
ThePopulationStructure
Differentagegroupsbuydifferentproductssochangesinthe
populationaffectthedemandforproductsthatfirmsmake.
BusinessStudiesOnline:Slide4
Changes in the UK Population
Changes in the UK Population
ThestructureoftheUK
populationhaschanged
considerablyinthelast40
years
Thiscanhaveamajor
influenceonbusinesses
E.g.closureofmiddleschools
Usethepopulationpyramid
giventolistbusinessesthat
will(a)dowelland(b)suffer
becauseofthecurrent
structureoftheUK
population
BusinessStudiesOnline:Slide5
Lifestyle
Lifestyle
Thisisconcernedwith3factors
Fashionsandtrends
Tasteschange,sobusinessesmustbeabletoreactquickly
E.gMcDonaldsofferingmorehealthymeals
Beliefsandattitudes
Whatsocietyseesasacceptablechanges
E.g.theneedformorechildcareprovision
Ethics
Customersaremuchmoreawareoftheenvironmentandare
againstexploitation
E.g.Nikehashadtojustifythewagesandconditionsofthe
workersinsomeofitsfactories
BusinessStudiesOnline:Slide6
Social Costs and Social Benefits
Social Costs and Social Benefits
Whenafirmmakesdecisionstheywillhave2effects:
PrivateCostsandPrivateBenefits
thesearethecosts/profitsthefirmhas
ExternalCostsandExternalBenefits
thesearethecosts/benefitsobtainedbypeople
outsidethebusiness
So:
and
Social Costs Private Costs = + External Costs
Social
Benefits
Private
Benefits
= + External
Benefits
BusinessStudiesOnline:Slide7
The Role of Government
The Role of Government
Wehavelittlecontroloverlocalbusinessesdecisions
Withoutgovernmenttheycoulddowhattheywant
So,oneofthegovernmentsrolesistomakesurethat:
socialcosts<socialbenefits
Forexample:
WhenWolvesredevelopedtheirstadiumtheyincurredthe
financialcosts,andnowbenefitfromincreasedrevenues.
However,theirdecisionwouldalsoaffectthelocalresidents,
whohadtoendurethenoiseanddustofthebuildingwork!
Presumablythesocialcostswerelessthanthesocialbenefits
sotheyweregivenpermissiontodoit!
BusinessStudiesOnline:Slide8
The Role of Pressure Groups
The Role of Pressure Groups
APressuregroupisagroupofpeoplewhohave
similarviewsandbeliefs
TypesofPressureGroups
E.g.
Wolverhampton
AirportAction
Group
E.g.Which
(TheConsumers
Association)
Local International
E.g.Greenpeace
National
BusinessStudiesOnline:Slide9
What Do Pressure Groups Do?
What Do Pressure Groups Do?
Knowingthatbusinessesdonotlikeittheywilltryto
causeasmuchbadpublicityaspossibleusing:
Advertising/Leaflets/Posters
PublicMeetings
Petitions
LobbyingMPs
Boycottingproducts
Organisingdemonstrationsorsitins