External business factors
(STEEPLE)
Social factors
Attitudes to work
Disposable income
Demographic issues
Level of education
Income level
Gender
Economic status
Race
Level of employment
Age
Sotto e Sopra (fashion) use materials that are
comfortable for women during the menopause
Harley-Davidson have a 3 wheeled motorcycle
Design and font size of European menus reflect
the mainly over 50 population
If attitudes are high, attendance is high
Statistics showing reasons for absenteeism, employers can take actions to reduce this
Generally positive attitude in the UK
Total income minus all taxes
Amount of money available to spend on goods/services
Helps businesses to decide
Where to locate a shop
Which pricing strategy to use
What type of product/service to provide
Social trends
Value system, beliefs and practices
E.g. Nintendo Wii Fit - developed due to concerns of childhood obesity
Businesses should identify social trends for long-term survival
Cultural Beliefs
Businesses must understand beliefs of target market
Language, values and cultural practices
Dunkin Donuts - Redesigned 'charcoal' design when it was deemed racist
Ebay lost success to Tabobao in China as it allows consumers to personally contact sellers
Technological factors
Automation
Machines are more accurate, reduce waste, are quicker and minimise costs (cheaper than workers)
High initial costs, fewer jobs and more redundancies
E.g. machines used for repetitive tasks
Communication
Vital to smooth running of a business
With employees, suppliers, contractors and consumers
E.g. Jaguar Land Rover converted its UK IT system to a global one allowing engineers to work collaboratively
Purchasing/sales
Some businesses have an inventory control system that triggers a need to re-order stock
Changed the way consumers purchase goods/services
60% of consumers do research online before purchasing a product
It's become essential for businesses to have a website
Mobile
Banks provide mobile contactless payment systems
Businesses must think about their method of payments
Consumers often do mobile research of products
Economic Factors
Affect consumer spending and demand
Unfavourable - Low levels of revenue/profit
Favourable - high levels of revenue/profit
Interest rates
Cost of borrowing money/return on savings
Interest rates low
Less interest on loans
Lower costs
Higher customer demand for borrowers
Less return on savings
Interest rates high
Business costs higher
Higher customer demand from savers
More return on savings
Higher interest on loans
Exchange rates
Value of one currency compared to another
Impact depends on the type of business
Weak pound
Favourable for UK business exporting
Goods are cheaper on the global market
More competetive
Profit margins can be increased
Strong pound
Favourable for UK importers
Able to buy more goods with the same amount of money
0.74 EUR to 1 GBP
1.2 EUR to 1 GBP
Inflation
Rate of increase in the price of goods/services
Rate of inflation - How the prices have changed over time
Increased inflation
Costs increase e.g. gas/electricity
Less money to spend on other things
Unfavourable for businesses and consumers
Reduces demand
Unemployment
Rate of people who don't have a job but are able to work
High unemployment
People have less disposable income
Decreased demand and sales revenue
Wider pool of labour to choose from
Wage levels will be lower
Long term unemployment
Serious effects
Workers made redundant
Redundancies increase unemployment rate further lowering sales and profits
Taxation
Amount of money paid to the government on earnings or goods and services
Earning's taxes
National insurance
Corporation tax
Income tax
Certain % of income paid to the government
Employer/worker tax to fund state benefits
A tax on profits/capital gains]
Goods/services taxes
VAT (value added tax)
Import duties
Charged when goods are sold
Increases every time value is added in the production process
Tax imposed on all imports
Increased income tax - people will have less money to spend
Less demand for products and services
Increased corporation tax - less retained profits
Unfavourable - less money to invest in the future
Environmental factors
Energy Management
Lowers costs
Have to meet government requirements
Saving energy in the workplace
Carbon emissions
CO2 is a greenhouse gas, contributing to global warming
Fossil fuel usage should be limited
Taxes, reliefs and schemes to help businesses reduce carbon footprint
Waste Reduction
Reducing packaging materials
Can reduce costs and improve reputation
Get things right first time (quality control)
Recycling
Reduces cost of handling waste
Reduces landfill tax imposed
Converting waste into useful materials
Decreases spending on buying materials
Improves profitability and reputation
Pollution
Reduces cost - and risk of having to pay compensation
Increases reputation
Land, air, water, noise
Political Factors
Political instability
Can cause economic downturns - less revenue and profit
Suppliers may be in a politically unstable area
Chances of collapse of a government - leading to riots/demonstrations/strikes/coup
Disruption in supply chain
Failure to meet customer demand
Businesses must have contingency plans
Change of government
New government = new policies/practices which may not favour some businesses
Can lead to changes - reduced profit and increased cost
Government initiatives
E.g. 2015 Enterprise Bill
Legislation, actions or projects to benefit the population
Small business commissioner - helps small businesses solve late payment disputes
Using regulators to contribute to cutting £10billion admin costs
Speeds up insurance payments
Legal factors
Business framework
Shows how a business is structured, organised and run
Partnership Act 1890
Companies Act
Relevant to Ltds including reducing administration e.g. making yearly account available to shareholders online
Smaller companies benefit from not having to have a company secretary
Ltds do not have to have an AGM
Can be formed through working together, an oral agreement or written contract
Each partner gets an equal share of profit
2-inifnity partners
Partnership dissolved if a partner dies
England - partners are jointly liable for debts/obligations
Consumer Protection
Aim to make sure goods are safe, of reasonable quality and don't have a misleading description
Consumer Protection Act
Consumer Rights Act 2015
Businesses must not supply unsafe goods
The manufacturer/seller is responsible for faults
Local councils can stop sale of/seize unsafe goods
What should happen when a business acts in a way that isn't competitive
False/misleading information can be a criminal offense
What should happen when goods are faulty
Clear rights for faulty digital content to be replaced
Employee protection
Protect people at work, so they are treated equally, safely and fairly
Health and Safety at Work Act
Equality Act
Equal pay, sex, disability, age, race, religion/beliefs, sexual orientation
Implications in every part of a business
Consequences - financial and reputation damage, worsening employee-employer relationships
Workplace is safe/healthy for employees
E.g. risk assessments must be carried out
Sets out duties employers have
Employees are expected to take reasonable care if provided safe conditions
Working Time Directive
For under 18's this is 40hrs
Protects from stress/illness
Not allowed to work 48+ hrs a week if you don't want to
Entitled to a 20 minute break if the working day is 6+hrs
5.6 weeks paid holiday per year (most workers)
National Minimum Wage Act
Depends on age
Data Protection Act
Protects personal data
Data should be:
Kept only when necessary
Handled according to data protection rights
Kept safe and secure
Not transferred without protection
Accurate
Used only when relevant
Used for specific purposes only
Used fairly
Information Commissioners Office
All businesses using data have to register
Every business should have protocols to follow
Not complying can lead to fines and criminal charges
Copyright, Designs and Patents Act
Legal rights granted to the creator
Protects interests of creator
Businesses must have licenses for software before installing
Planning Permission
Local council need to be asked before alterations made
E.g. change of use, extensions, changes to shop fronts, erecting signs, installing new security shutters
Enforcement notice could be issued if permission isn't gained
Ethical Factors
Moral issues - e.g. exploiting the workforce, child labour, minimum wage etc.
Being environmentally friendly
E.g. recycling, reducing carbon footprint etc
Corporate social responsibility activities
E.g. charitable donations
Offering health/welfare schemes improves attendance/productivity leading to higher profits
Hosting cultural events shows a business cares about employees and consumer lives
Consequences of not acting ethically
Loss of customers and sales
Will shop elsewhere
Decrease in sales and market share
Impact more severe if competitors have ethical practices
Damage to reputation
Long term damage if publicised
Affects ability to attract new customers/keep old ones
Difficult and costly to regain consumer trust
Damage to employee motivation/productivity
Especially if it affects the workplace
Higher costs and lower efficiency
Absenteeism and high staff turnover, increasing costs and decreasing profits
Competitor factors
Analysis could include research into strength of competition, market share, competitor behaviour and position in market
The purpose is to find out the impact of competition and how to respond
Market share - proportion of the total market the business sells too