3.1.4 Impact of External Influences

• What does the acronym ESTEP stand for in the context of external influences on businesses?

  Economic, Social, Technological, Environmental, Political
• Changes in economic conditions affect total costs, as shown by the formula $C =$$MC +$$TC$
• How do economic factors such as inflation and interest rates affect business investment decisions?

  Increases costs, reduces demand
• Environmental factors such as climate change influence supply chains, production methods, and consumer perceptions
• What is the primary impact of political factors on businesses?

  Legal compliance, market access
• Order the external influences categorized into ESTEP factors:

  1️⃣ Economic

  2️⃣ Social

  3️⃣ Technological

  4️⃣ Environmental

  5️⃣ Political
• Businesses must monitor external influences to ensure competitive advantage.
• How do social trends and demographics affect business strategy?

  Changes in consumer behavior
• Unemployment is a key economic factor that affects business demand
• What role do technological advancements play in shaping business strategy?

  Affects production efficiency
• Environmental sustainability is influenced by resource scarcity and climate change.
• Match the external influence with its effect on businesses:

  Political ↔️ Government policies, regulations

  Economic ↔️ Interest rates, inflation

  Technological ↔️ New technologies, automation

  Social ↔️ Consumer preferences, cultural trends
• What is the primary goal of businesses when adapting to external influences?

  Ensure competitive advantage
• What are external influences on businesses categorized as?

  ESTEP
• Match the ESTEP factor with its key aspects:

  Economic ↔️ Interest rates, inflation, unemployment

  Social ↔️ Consumer preferences, cultural trends, demographics

  Technological ↔️ New technologies, automation, communication advancements

  Environmental ↔️ Climate change, resource scarcity, sustainability regulations

  Political ↔️ Government policies, regulations, trade agreements
• New technologies and automation fall under the technological factor.
• Climate change is a key aspect of the environmental factor.
• Changes in economic conditions affect total costs according to the formula C = MC + TC</latex>.
• How do interest rates affect businesses?

  Financing costs
• Political instability can affect investment decisions and operational security.
• What are the key aspects of inflation?

  Price levels, purchasing power
• Economic growth can drive sales and expansion opportunities.
• How do demographics influence business objectives?

  Market segmentation
• Social media affects customer engagement and brand visibility.
• Businesses must conduct thorough market research to adapt to social trends.
• What do technological advancements improve for businesses?

  Efficiency, product offerings
• Which social trend includes factors like age, gender, income, and education?

  Demographics
• Businesses must conduct thorough market research to understand and adapt to evolving trends
• Technological advancements can improve efficiency, product offerings, and market reach.
• Match the technological advancement with its impact on business strategy:

  Automation ↔️ Reduces costs, increases output

  E-commerce ↔️ Expands market access, enhances customer experience

  Data Analytics ↔️ Provides insights for better decisions

  Mobile Technology ↔️ Enables mobile marketing, improves communication
• Amazon uses automation in its fulfillment centers to process orders more efficiently
• What are three key technologies that impact business strategy?

  AI, cloud computing, IoT
• Climate change, resource scarcity, and environmental regulations are key environmental factors affecting business sustainability.
• Order the following environmental factors based on their primary impact on business:

  1️⃣ Climate Change

  2️⃣ Resource Scarcity

  3️⃣ Environmental Regulations
• What percentage did Unilever reduce its carbon footprint by between 2008 and 2017?

  36%
• The Sustainability Index is a measure of a company's environmental performance
• Match the ESTEP factor with its example:

  Economic ↔️ Interest rates

  Social ↔️ Cultural trends

  Technological ↔️ New technologies

  Environmental ↔️ Climate change

  Political ↔️ Government policies
• High inflation can affect purchasing power and supply chain costs.
• Environmental regulations influence operational costs and consumer perception
• What are four key economic factors that influence business strategy?

  Interest rates, inflation, unemployment, economic growth