External Environment

• What is the external environment?

  external conditions which affect how the business is operated
• what are the external conditions?

  • Market conditions

  • Competition

  • Fair trade

  • Interest rates

  • Consumer Incomes

  • Demographics
• What is the market conditions?

  the defining characteristics of the market e.g levels of sales, trends and degree of competition
• what is competition?

  the number and relative power of firms trading in the same or similar markets
• what are interest rates?

  the cost of borrowing or the reward for saving
• what will falling interest rates have an effect of?

  raising income,

  increased spending,

  higher investment,

  lower employment
• what will rising interest rates have and effect of?

  falling incomes,

  less spending,

  lower investment,

  higher unemployment
• what are incomes?

  the earnings of customers that will direct influence spending power
• what are environmental issues?

  the variety of factors that impact on the environment due to the operations of business e.g pollution
• what is fair trade?

  established with the intention of providing procedures with a ‘living wage’ for the production of crops such as coffee, tea, banana, cocoa and cotton.