External

analysis
Social, environmental and
technological factors
Social and
demographic factors
Demographic trends
The word demographics refers to the composition of
the population in any given area – whether a country or
an area within a country.
There are a number of important demographic issues
that businesses will need to monitor. These include:
• Population size
• Population composition
• Population location
• Wealth
• Education
• Health
Social trends

This examines how society changes over time. There are a

number of key ways in which this change occurs, including:
• social structure (A social class refers to a group of people who have the
same social, economic or educational status. )
• values (Social values are the accepted behaviours and norms that help
to bind a social group together.)
• attitudes (Attitudes represent a person or group’s like or dislike for
something.)
• Tastes (Taste refers to an individual’s personal preferences or patterns
of choice. )
Social influences

• Population demographics
• Income distribution
• Social mobility
• Lifestyle changes
• Consumerism
• Level of education
Government
policy

• Population structure
• Housing
• Employment
• Health
Environmental factors
How can a business affect or be affected by its physical environment?
 The ways in which
businesses can limit
damage to the
environment
• Redesign of products to use fewer raw
materials
• Reduction in packaging on products
• Recycling
• Improving energy efficiency
• Careful production planning
Sustainability
• Sustainability means that organisations should use resources in such a
way that they do not compromise the needs of future generations.
Technological
factors
• Technological changes can
affect a firm in many different
ways, such as:
• Organisational structures
• Product developments
• Production changes
• Marketing
 Technological change has affected organisational structure in a number
of key ways:
• Some administrative and managerial roles have been replaced by
Impact on more effective IT systems.
• Some production roles have been replaced by the use of robots and
organisational automated production lines. This has also reduced the need for as
many supervisors.
structure • Improved communications (email, use of secure intranets, wireless
networks) mean that employees can work out of the office/at home
allowing more flexible work arrangements.

These have resulted in downsizing and delayering in firms.

Downsizing
• Downsizing is a term used for reducing the number of employees
in an organisation without necessarily reducing the work or the
output.

Delayering
• Delayering is the process of removing layers of management. This
is usually to change the organisation from one with a rigid
hierarchical framework with numerous layers of supervisory
grades into a ‘flatter’ organisation with minimal layers of
management. Such organisations tend to emphasise team
working, with people taking on different roles in different teams.
Outsourcing

Outsourcing means contracting out aspects

of the work of the organisation, previously
done in-house, to specialist providers.
There are four key types of IT outsourcing:
• Total
• Ad-hoc
• Partial
• Project management
 Technological advances allow many products to
become increasingly more sophisticated
Impact of New technology can lead to the emergence of
technological substitutes

change on Some industries have seen their business model

completely transformed
products Customer support is often provided by call
centres in countries where wage rates are lower
 • The most obvious way that
technology has affected production is
Impact of the use of robots and automated
technological production lines.
• IT systems have also been used for
change on more efficient scheduling and
production monitoring of production, resulting in
lower inventory levels, higher quality,
processes elimination of bottlenecks and lower
costs.
 Pricing
Impact of Promotion
technological
change on
marketing Distribution
Market research
 E-commerce

Home shopping
Impact of
technological Home banking
change on
society as a
Home learning
whole
Home enterntainment

Teleworking/telecom muting.