Business AS Unit 1

1.3 The external environment

1.3 The external environment

This section will develop your knowledge and understanding of:

 Market conditions and how they can affect demand, business
decisions and profits

 How changes in the external environment can affect costs, demand,

business decisions and profits.
Market conditions and how they can affect
demand, business decisions and profits
• The degree of competition
• Competition can take different
forms:
• The number of competitor
business in a market. • 市场中竞争对手企业的数量
• The size of competitor business. • 竞争对手的业务规模
• The length of time in the market. • 进入市场的时间长短
• Important words:
• Competitor  竞争者
 Barriers to entry
• What are barriers to entry into a
market ?
• Competitor pricing • 竞争对手定价
• Economies of scale • 规模经济
• Customer loyalty • 客户忠诚度
• Start up costs • 启动成本
• Government restrictions and
• 政府限制和法规
regulations
• Trademarks or patents. • 商标或专利
 Competitors pricing
• Competitors pricing can be a • 竞争对手的定价可能会成为进入
barriers to entry because we can 壁垒，因为我们已经拥有一些规
already have some big and well 模庞大且成熟的业务。
established business. • 新公司将不得不面临降价形式的
• New companies will have to face a 竞争反应
competitive response in form of
price reductions.
 Economies of scale
• Similar as Competitors pricing , • 与竞争对手定价类似，较大的企
larger business can reduce their 业可以通过规模经济来降低成本，
cost by having economies of scale, 这意味着他们可以购买大量材料
meaning they can buy large 并降低总体生产成本。
quantity of materials and reduce
their overall cost of production.
• 当成本较低时，他们可以降低价
格并削弱竞争对手
• When costs are lower they can
reduce the price and undercut
their competitors.
 Market size, growth and decline
• Market size.
• Market size is the measurement of • 市场规模是对向该市场供
all the sales by all of the businesses
that are supplying to that market.
货的所有企业的所有销售
额的衡量
• This may be expressed in terms of
size by value – total amount spend • 这可以用价值规模来表示——
by customers on the product in the 市场上顾客在产品上花费的总
market and also in terms of 金额，也可以用价值来表示。
• size by volume – total quantity of • 按体积计算的规模——以吨、
product or services sold in terms of 升或单位数为单位销售的产品
tons ,liters or number of units.
或服务的总量
 Market growth
• Market growth is the absolute or • 市场增长是市场规模的绝对
percentage increase in the size of 增长或百分比增长。计算市
a market. Calculating market 场增长可以帮助业务提前规
growth can help business plan
ahead. 划。
 Market decline
• Market decline is the decrease in • 市场下降是指市场规模的减少，
the size of the market, in either 无论是绝对值还是百分比。
absolute or percentage terms. • 其计算方式与市场增长相同，
• It is calculated in the same way as 为负数
market growth, and is a negative
figure.
 Concentration ratio
• Concentration ratio is a • 集中度是对少数企业（通常是三、
calculation of the percentage of 四或五家企业）占据整个市场的
the total market held by a small 百分比的计算 .
number of businesses, typically
three, four or five businesses.
How changes in the external environment can affect
costs, demand, business decisions and profits
• Income
• Incomes can vary from time to time, • 收入会随着经济繁荣或萧条的基础
by increasing or decreasing base 天气的增加或减少而随时变化。如
weather economy is in boom or bust. 果该县的收入属于高奢侈品，那么
If the county's income is high luxury 与便宜的产品相比，更昂贵的商品
and more expensive goods are more 更有可能受到更高的需求，反之亦
likely to be in higher demand 然。
compared to cheaper products and
vice versa.
• 面对收入水平的变化，企业该如何
• What should business do when faced 应对？
with a change in the level of income ?

to be continued
 Income( 收入 )
• Costs
• If the wages of employees of the • 如果供应商员工的工资增加，工
suppliers are increasing this 资成本的增加可能会增加到向其
increase in wage costs might be 他企业供应的材料的价格中
added to the price of materials
supplied to other businesses.

• Important words:
• Cost  成本
 Income
• Demand
• When incomes increase, customers • 当收入增加时，顾客的支出就会增
have more spending and demand 加，对许多商品的需求可能会增加。
for many goods is likely to increase.
• Demand for some common goods
like salt or bread maybe wont see
an increase but demand for luxury • 对盐或面包等一些普通商品的需求
goods will more likely increase. 可能不会增加，但对奢侈品的需求
更有可能增加。
Important words:
Demand  要求
 Income
• Business decisions
Product-related decisions
When income decreases producers
of luxury goods may decide to
compete in other things than
reducing the price like creating
better brand reputation, and having
loyal customers.
• Employee-related decisions
• Increase in income can allow
business to increase their prices
and enjoy a higher profits.
• If an increase in income is very
high business may chose to
change labor force with robots
because they can be cheaper
option in the long run.
 Income
• Profit
• Increase in income might leave • 收入的增加可能会导致整体利润
overall profits to go down because 下降，因为企业需要支付更高的
business need to pay higher 工资。
wages.
• However, an increase in incomes
might lead to increased spending
by consumers and, therefore, an • 然而，收入的增加可能会导致消
increase in total profit. 费者支出增加，从而导致总利润
增加。
 Interest rates
• Interest rates are the cost of • 利率是借贷成本，例如银
borrowing, for example, bank loans or
mortgages. 行贷款或抵押贷款 .
• They are also the reward paid to
savers for putting their money into
savings accounts.
• Changes in interest rates can affect
businesses in various ways.
Important words:
Loans  贷款
Mortgages  抵押贷款
 Interest rates
• Costs
• Because most business finance • 由于大多数企业融资依赖于
depends on borrowing, high or 借款，高利率或低利率都会
low interest rates can affect their 影响其成本。
costs.
• If interest rates are low, business
will decide to borrow more money • 如果利率较低，企业将决定
and vice versa. 借更多的钱，反之亦然
 Interest rates
• Demand
• Demand is also affected by • 需求也受到利率的影响，如果利
interest rates, If interest rates are 率高，则会影响有抵押贷款或贷
high it will affect households who 款的家庭，从而降低其常规购买
have mortgages or loans reducing 力。
their regular purchasing power.
 Interest rates
• Business decisions
• An increase in interest rates might • 由于借贷成本较高，利率上升可
cause a business to postpone or 能会导致企业推迟或取消任何新
cancel any planned investment in 设备投资计划。
new equipment because of the
higher cost of borrowing.
 Interest rates
• Profit
• Since changes in interest rates • 由于利率变化会影响公司的借贷
affect the costs of a company that 成本，因此不可避免地会对公司
borrows, they inevitably have an 的利润产生直接影响。
immediate effect on the
company's profits.
 Exchange rates
• Exchange rates are the value of • 汇率是一国货币相对于另一国货
one country's currency relative to 币的价值。
the currency of another country.
 Exchange rates
• Any big change in exchange rate • 汇率的任何重大变化都会影响和
can affect and remove profits for 消除进口商或出口商的利润。
importer or exporter.
 Exchange rates
• Cost of inputs
• As we have seen, movement in the • 正如我们所见，汇率、收入和利
exchange rate, incomes and interest 率的变化都会对企业的投入成本
rates can all have an impact on the 产生影响
cost of inputs of a business
 Government policies
• Government policies can influence • 政府政策可以通过多种方式影响
business behavior and success in 商业行为和成功。
many ways.
• This can be in the form of intervening
in business activity for the good of • 这可以是为了经济和 / 或消费者
the economy and/or consumers. 的利益而干预商业活动的形式
 Government policies

• How the state might

intervene to constrain
business. • 如果出现以下情况，企业可能会
• A business may find its activities 发现其活动受到限制：
constrained if:
• 它的过程可能会破坏环境
• It has processes that may damage the
environment • 它没有公平对待员工
• It does not treat its employees fairly • 它变得太强大并且剥削人民。
• It has become too powerful and
exploits people.