External influences

• Changes in technology create both opportunities and threats for businesses:

  • Opportunities: developing technology brings opportunities for new products or new uses for existing products, allowing businesses to be first to market with innovative products
  • Threats: old products are likely to become obsolete, requiring businesses to develop new products to stay competitive
• Businesses may need to respond to changes in technology by:

  • Creating social media teams to interact with customers and manage negative comments
  • Reducing costs through using new communication technologies like electronic documents instead of printed ones
  • Addressing environmental issues by promoting remote working and video conferencing to reduce travel and carbon footprint
• Technology has enabled businesses to reduce costs through using electronic documents instead of printed ones
• Businesses have used technology to address environmental issues by promoting remote working and video conferencing to reduce travel and carbon footprint
• Businesses have little control over changes in government legislation; they should be notified of any changes before implementation and respond by taking necessary steps to comply with new rules
• Failure to comply with changes in legislation could result in penalties such as fines or imprisonment, as well as bad publicity affecting sales
• Examples of laws that affect all businesses and require a response include:

  • Consumer protection: The Consumer Rights Act (2015) updated consumer law to include digital content for the first time, requiring businesses to ensure their products meet quality standards
  • Employment: National Minimum Wage Act (1998) sets the minimum hourly wage, leading businesses to consider reducing staff, increasing prices, or making cost reductions
  • Health and safety: Changes may require additional staff training or safety equipment, like the need for drone tests and registration for businesses using drones over 250g
  • Tax: Changes in tax regulations and rates can impact profits, with options like reinvesting extra money back into the business
• Individual businesses have no control over the economic climate, which includes the general level of wealth, consumption, and activity within a particular area or region
• When the economic climate changes, businesses must be able to respond accordingly, which may include making appropriate changes to products, targeting different markets, or adjusting prices
• Changes in the economic climate are usually characterized by changes in the unemployment rate, interest rates, and exchange rates
• Consumers and businesses may respond differently to changes in the economic climate, such as higher or lower unemployment rates, increased or decreased interest rates, and changes in exchange rates