Analysis of 7 External Environmental Forces:

How do the forces impact business?

The impact can be either positive or negative.

1 Political & Legal  Federal, Provincial or Municipal levels

 Laws, regulations, bills, by-laws
 Policies
 Political stability
 Trade
 Taxes
 Crown corporations
 Bureaucracy
 Funding and grants, subsidies, bailouts
 Examples of laws: employment law, health and safety, business law,
environment law, immigration law, consumer protection laws, copyright law,
antitrust laws, discrimination laws, etc

2 Economic  The state of the economy:

 Great Recession, recession, slow growth, boom
o Interest rates
o Exchange rate
o Unemployment rate
o Inflation rate
o Gross domestic product (GDP)
o Supply and demand
o Disposable income (consumer spending)

3 Technological  Technology of all types:

o Manufacturing
o Robotics
o Automation and standardization
o Computers and information systems
o Internet

4 Societal  Social attitudes, values, or trends on issues such as work, health, leisure,
religion, culture, lifestyle, ethics, habits, etc
 Customer needs, tastes and preferences; buying trends
 Demographic differences: ethnicity, age, culture

5 Environmental  Sustainability issues:

(Sustainability) o Pollution of land, air and water
o Weather, climate
o Pressures/influences from non-profit organizations
o Recycling, plastic bags, etc

6 Labour  Availability of skilled and unskilled labour

 Union influences
 Cost of labour

7 Global  Everything from above with a global/foreign aspect

 Example: political = cross border trade

Memory Tip:
Use mnemonics (phrases, short forms, etc) to help you remember key words or ideas.
Example: “PETS that don’t go well together are Elephants and Little Goldfish”