Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
1.3 Understanding that businesses operate within an external environment PESTLE Analysis 1 Learning outcomes Understanding the nature and purpose of business What you need to know: • How the external environment can affect costs and demand. 2 The external environment: Starter The external environment is the factors that can influence a business's activities and can determine its success or failure. Task: With a partner, try to list as many factors outside of the business’s control that may influence its activities and performance. ? ? ? External factors ? ? ? ? 3 How the external environment can affect cost and demand The external environment comprises those external forces that can influence a business's activities. Factors influencing costs and demand include the effect of: • Market conditions and competition • Incomes • Interest rates • Demographic factors • Environmental issues and fair trade. 4 Market conditions and competition • • Market conditions are the features of a market, such as the level of sales, sales growth, price levels, the number and strength of rivals, their market position and market share, etc. Demand is the amount of a particular good or service that consumers or organisations want and are able to afford to purchase. It is a good determinant of how desirable a market is for firms. Task: What are the ideal market conditions for success? Consider the following features and describe the best situation for a firm to grow and make high profits. • Sales figures and level of demand • Price levels • Level of competition including the number of competitors, size and market share • Barriers to entry – How difficult is it for new entrants to the market? • Consumer incomes • GDP and economic growth - Gross domestic product (GDP) is the total value of a country's total output of all goods and services over time. 5