External Environment

• What does the external environment refer to in business?

  Factors outside the business's control
• How do environmental issues affect businesses?

  They influence costs and demand
• What are some factors in the external environment?

  Environmental issues, demographics, interest rates
• What is the effect of competition on marketing costs?

  More competition increases marketing costs
• How does a monopoly affect marketing efforts?

  Monopolies require less marketing effort
• What happens to demand in a market with lots of competition?

  Demand is likely diluted among rivals
• How does competition affect price elasticity of demand?

  High competition leads to elastic demand
• What is the price elasticity of demand in a monopoly?

  It is extremely inelastic
• How does high unemployment affect businesses?

  It increases the supply of workers
• What is the impact of seasonality on the hospitality industry?

  Summer months lead to increased demand
• How do increasing incomes affect demand for luxury goods?

  Higher incomes increase demand for luxury goods
• What happens to interest costs when interest rates are high?

  Interest costs on loans increase
• How do low interest rates affect consumer behavior?

  They encourage spending over saving
• What is the effect of high immigration on the labor market?

  It increases the supply of workers
• How does an aging population affect demand in certain industries?

  It increases demand for age-appropriate products
• What is the impact of fair trade on business costs?

  It may lead to higher costs
• How can fair trade influence consumer demand?

  It can increase demand due to ethical considerations
• What are the key influences on business costs and demand?

  • Competition
  • Market conditions
  • Incomes
  • Interest rates
  • Demographic factors
  • Environmental issues
• What are the effects of competition on demand and marketing?

  • High competition leads to diluted demand
  • Increased marketing costs
  • Elastic price sensitivity
• How do economic factors influence business operations?

  • High unemployment increases worker supply
  • Increasing incomes boost demand for luxury goods
  • Interest rates affect loan servicing costs
• What demographic changes can impact businesses?

  • High immigration increases labor supply
  • Aging population increases demand for specific products
• What are the implications of environmental issues for businesses?

  • Fair trade can increase costs
  • Ethical practices can enhance consumer demand