external factors

• Urbanisation


  Process of constructing more and more buildings on a land
• Capital-intensive


  Use of relatively more machinery than labour in production
• Businesses have to adapt to any changes that occur in society
• Increased consumer awareness


  • Consumers have higher expectations than ever before
  • They have easy access through the Internet to lots of information about products
  • They are more aware of their rights
  • Many businesses have become more customer-focused as a result
• Changing demand patterns


  • Changes in society bring about changes in demand for products
  • Modern lifestyles mean many people expect goods to be delivered to their doors
  • There has been a growth in home delivered goods, such as takeaway food and a whole range of personal, domestic and other services
  • The rapid growth in online businesses has also led to changes in these demand patterns
• Increased numbers of women at work


  • More and more women have abandoned the traditional childcare role and have combined family life with employment and running businesses
  • This has increased the supply of labour and helped to increase the number of new businesses
• More part-time workers


  • There has been a huge increase in the number of people taking on part-time work
  • This has helped to improve flexibility in business organisations because part-time labour is more adaptive
• Urbanisation


  • In some countries, very large numbers of people have left rural areas to live in towns and cities
  • This has provided businesses with more labour and created additional markets to which goods and services can be supplied
• Development of new technology


  • New technology results in new products, which in turn provide new market opportunities
  • New technology means production becomes more capital-intensive and costs are reduced
• Technology in the primary sector


  • Tractors
  • Mechanical harvesters
  • Grain-drying machines
  • Automatic feeding systems
  • Chemicals and pesticides
• Technology in the secondary sector


  • Robots on production lines
  • Computers used to design products and feed information into CNC machines
• Technology in service industries


  • Automatic check-in facilities in hotels
  • Internet banking
• Use of IT


  • Computers can carry out many routine tasks quickly
  • Huge amounts of data can be gathered, processed, analysed, stored and accessed using computer databases
  • A wide range of different information can be sent electronically anywhere in the world instantly
• The rate of technological change seems to increase all the time
• Businesses usually welcome technological developments because they often provide new product opportunities or help to improve efficiency
• Changes in technology can shorten the amount of time products can be marketed for
• Developments in technology often mean that businesses can replace labour with capital
• New technology also lowers unit costs
• The development of social media has helped to improve communications between businesses and customers
• Evidence suggests that as economies grow environmental damage increases
• Businesses are often blamed for pollution and congestion
• Global warming


  • May be affecting weather patterns and climates
  • Some of the greenhouse gases, such as carbon dioxide, which contribute to global warming, come from factories
  • Economic development means that car ownership and air travel increases
  • The emissions from cars and aircraft also add to global warming
• Habitat destruction


  • Some business development destroys wildlife habitats and spoils the natural environment
  • Around one-half of the forests that once covered the planet are now gone
  • Forests are important for the survival of the planet
  • At least 120 out of 620 living primate species will be extinct in the next 10 to 20 years
  • Many other species are under threat, such as tigers, mountain gorillas and pandas
• Resource depletion


  • Oil, coal, gas and minerals are non-renewable resources and, therefore, cannot be replaced
  • As business development gathers pace, these resources are depleted
  • Fish stocks are falling
  • Fertile soil, which is needed to grow food, is being lost due to deforestation, poor farming practices, over-grazing, the increasing size of urban areas and land pollution
• Sustainable development


  Idea that people should satisfy their basic needs and enjoy improved living standards without compromising the quality of life of future generations
• Business development that denies future generations of resources is not sustainable
• If businesses take a sustainable approach, they will also find it easier to comply with regulations, reduce costs, improve their image and increase profits
• Ways businesses could respond to environmental issues


  • Design packaging that can be reused or recycled
  • Use more energy-efficient equipment or renewable energy sources
  • Explore ways of selling waste to other businesses as a by-product
  • Reduce business travel and use video conferencing for meetings
• Politically stable


  Key to change suddenly and become worse
• Pressure groups


  Group or organisation that tries to influence the opinions of ordinary people and persuade the government to do something
• Some parts of the world are politically unstable
• Businesses need to be cautious when they develop interests in politically unstable countries
• Political factors can also influence businesses in stable, democratic countries
• Political factors


  • Greece potentially leaving the EU in 2015
  • The UK voting to leave the EU in 2016
  • Measures designed to improve national security restricting the movement of goods, people and capital
  • Pressure groups like ASH aiming to eliminate the harm done by smoking
  • A new government being elected that is very pro-business