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N#tion#l 5

Extern#l f#ctors
Businesses c)n’t control extern)l f)ctors but must
respond to them. These politic)l, economic, soci)l,
technologic)l, environment)l )nd competitive f)ctors
)re represented by the )cronym PESTEC.
P)rt of Business m#n#gement Underst#nding business

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Economic f#ctors
riguarda
Economic f)ctors )re )ll concerned with the so c)lled
leve ‘levers’ of the economy. These include: Text

economic growth
1. Give a definition of economic growth
interest r)tes
2. In what can economic growth
unemployment
represent an external factor?
infl)tion
3. What are interest rates?
exch)nge r)tes

Economic growth

If there is economic growth then more

jobs will be cre)ted )nd more t)x will be
p)id.
prende Interest r#tes
re a
prestit When interest r)tes )re high, businesses
o borrow less )nd invest less. However ad ogniText
modo
they receive more interest on money
s)ved in the b)nk.
lend=prestare
When interest r)tes )re low, businesses m)y borrow )nd
invest more, but will receive less interest on money in
the b)nk.

Unemployment

If unemployment is high, then firms h)ve more potenti)l

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