External influences

• External factors are factors that are outside of the business and can affect the business. The business cannot control external factors
• Pestec stands for political , economic , social , technological , environmental and competitive
• Political factors involve the decisions and laws that governments make
• Political factors like tax can impact a business as governments can raise or lower tax which will impact profits
• Political factors such as laws can impact a business as the government can introduce new laws like National Minimum Wage which impacts on profits and employment rights
• Economic factors are all concerned with the so called ‘ levers ‘ of the economy
• One economic factor that can impact a business is inflation . This is because if the price of goods and services increase , customers may stop buying luxury goods and focus on essentials
• Economic factors such as employment can impact a business as when there’s low employment there’s less workers to choose from and a business has to offer higher wages
• Social factors are the things that affect the habits and spending of customers
• One social factor that can impact a business is lifestyle as lifestyles are constantly changing . For example people are becoming more health conscious leading to an increase in healthy products in the market
• One social factor that can impact a business is tastes and trends as they are constantly changing . This means a business has to adapt its products and services to meet their customers wants and needs
• Technological factors such as e commerce can impact a business as more people are buying online than ever and if a business doesnt offer this they miss out on big profits
• One technological factor that can impact a business is internet access as broadband speed may impact a businesses ability to communicate
• Environmental factors cover the physical conditions a business has to deal with and also the green credentials of global business
• Environmental factors such as weather can impact a business as bad weather can spoil crops , reducing supply and decreasing profits
• Environmental factors such as natural hazards can impact a business as they can have a devastating impact on companies caught up in them
• Environmental factors such as green credentials can impact a business as there’s more pressure to recycle and firms want to reduce their carbon footprint as consumers seek eco friendly businesses
• Competitive factors such as imitators can impact a business as other companies can create similar products
• Competitive factors such as price wars can impact a business as competitors can lower their prices to try and beat competitors and steal their profits