External Greggs
The External Environment affects the internal operations of all businesses. What’s happening in the world of politics, economics, socially and technologically impacts how a business has to act in order to survive. External elements that affect the inner working of a business are known as PEST factors. ‘PEST’ is an acronym for Political, Economic, Social and Technological.
Politics may affect the ability of a business to achieve its aims and objectives and changes in laws may mean a company has to change the way in which it operates. For example, the annual rising of minimum wage each year may result in a business being unable to employ as many people as they would have done in the past.
The state of the economy has a great impact on a business as it affects, for example, how much of a disposable income their customers have, and, consequently, how much of it comes to them. Interest rates contribute to a business’s success, as it impacts how much they have to reinvest into their business. For example, in Feb 2009, the interest rate was at 1%, this dropped of 0.5 % by March. This may not seem like much, but imagine: if Greggs borrowed £500 000 from the bank over 3 years, with an interest rate of 1%, they’d be required to pay back £515 000. With the interest rate of 0.5%, they’d only be paying back £507 500. The £7500 saved could be used on a new marketing campaign, which may boost their annual turnover.
Social trends affect the success of Greggs. For example, in early, there was a horse meat scandal in the UK: in January, it was discovered that horse meat – predominantly from Eastern Europe – was imported to the UK and being sold as beef. As a result, all across the UK, sales in beef products dropped significantly, as people became more wary about they ate. Furthermore, today’s society is a lot more health conscious than previous generations, meaning some people would rather spend £3 getting a healthier lunch i.e. a Caesar Salad than a Greggs pastry.
Politics may affect the ability of a business to achieve its aims and objectives and changes in laws may mean a company has to change the way in which it operates. For example, the annual rising of minimum wage each year may result in a business being unable to employ as many people as they would have done in the past.
The state of the economy has a great impact on a business as it affects, for example, how much of a disposable income their customers have, and, consequently, how much of it comes to them. Interest rates contribute to a business’s success, as it impacts how much they have to reinvest into their business. For example, in Feb 2009, the interest rate was at 1%, this dropped of 0.5 % by March. This may not seem like much, but imagine: if Greggs borrowed £500 000 from the bank over 3 years, with an interest rate of 1%, they’d be required to pay back £515 000. With the interest rate of 0.5%, they’d only be paying back £507 500. The £7500 saved could be used on a new marketing campaign, which may boost their annual turnover.
Social trends affect the success of Greggs. For example, in early, there was a horse meat scandal in the UK: in January, it was discovered that horse meat – predominantly from Eastern Europe – was imported to the UK and being sold as beef. As a result, all across the UK, sales in beef products dropped significantly, as people became more wary about they ate. Furthermore, today’s society is a lot more health conscious than previous generations, meaning some people would rather spend £3 getting a healthier lunch i.e. a Caesar Salad than a Greggs pastry.