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External Influences
Business Studies
Term | Definition |
---|---|
Geographic | Refers to the effects the climate, natural resources, topography, physical infrastructure, and location have on a business. |
Financial | Changes in the global and domestic financial markets will influence the cost of borrowing money and therefore directly affect the level of investment by a business. |
Social | Refers to the social attitudes, values, and tastes that impact a business. Changes to fashion and culture, have the capacity to affect business sales and profits. |
Political | Refers to the attitudes derived from state and federal government policies and include free trade policies and the process of deregulation. |
Legal | Legal influences are the regulations (legal framework) within which a business must operate. |
Economic | Economic influences on a business relate directly to their economic environment, which is dependent on changes in economic growth. These changes are characterised by boom and recessionary periods in the economic cycle. |
Institutional | Places that influence business include government, regulatory bodies, and other groups such as trade unions and employer associations. |
Technological | Refers to the technological advancements that impact the function, operation, and productivity of the business. |
Markets | Changes in financial, labour and consumer markets. |
Competitive Situation | Factors influencing a business's competitiveness include the ease of entry into a market for a new business, local and foreign competition, and the number of competitors. |