External Environment
External environment
External Factors (environment) - It is the external forces that are beyond the control of the individual business A number of external factors can affect business (STEEPLE analysis) - economy - These are factors outside the business - political/government policy that may affect its - social decisions. - External factors that - technological may present opportunities - ecological or threats to - legal a business - ethics
Economy – business need to observe the economic indicators constantly because eco. indicators is the external factors that determines the demand for their product and therefore their profitability. Eco indicators : - eco growth - Inflation - unemployment - balance of payment
What effect do they each have on business and why does business need to watch them carefully?
• • • • • •
Eco growth – rate of growth of output and income The level of employment or unemployment The rate of inflation The exchange rate The balance of payment The impact of government policy on business organisation: - policies relating to interest rate - taxation - government expenditure - the exchange rate.
Economic growth is defined as an increase in the productive capacity of the economy or a rise in real national income per head. As it provides the means achieving higher living standards
Economic growth is obviously beneficial to private sector firms - new market opportunities will be created - birth of new firms - the expansion of existing ones
Growth can be measured by changes in national income. National income is the total amount of income, output/ spending in the economy.
It can be measured in a number of ways :- GDP - GNP
The importance of GDP • shows how much has been earned within a country over a year • Shows how much money is flowing around the economy • A rise from 1 year to the next is usually an indication of growth By studying changes in national income, it is possible to understand what is happening in the
External Factors (environment) - It is the external forces that are beyond the control of the individual business A number of external factors can affect business (STEEPLE analysis) - economy - These are factors outside the business - political/government policy that may affect its - social decisions. - External factors that - technological may present opportunities - ecological or threats to - legal a business - ethics
Economy – business need to observe the economic indicators constantly because eco. indicators is the external factors that determines the demand for their product and therefore their profitability. Eco indicators : - eco growth - Inflation - unemployment - balance of payment
What effect do they each have on business and why does business need to watch them carefully?
• • • • • •
Eco growth – rate of growth of output and income The level of employment or unemployment The rate of inflation The exchange rate The balance of payment The impact of government policy on business organisation: - policies relating to interest rate - taxation - government expenditure - the exchange rate.
Economic growth is defined as an increase in the productive capacity of the economy or a rise in real national income per head. As it provides the means achieving higher living standards
Economic growth is obviously beneficial to private sector firms - new market opportunities will be created - birth of new firms - the expansion of existing ones
Growth can be measured by changes in national income. National income is the total amount of income, output/ spending in the economy.
It can be measured in a number of ways :- GDP - GNP
The importance of GDP • shows how much has been earned within a country over a year • Shows how much money is flowing around the economy • A rise from 1 year to the next is usually an indication of growth By studying changes in national income, it is possible to understand what is happening in the