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Unit 1.5 - External environment (STEEPLE) - Coggle Diagram
Unit 1.5 - External environment (STEEPLE)
SOCIAL
E.g. multiculturalism = companies can expand and create new products to better suit more cultures in one country
values and attitudes of society towards a wide range of different issues (such as business ethics, social welfare, women, religion or animal rights)
E.g. social attitudes - more women prioritising career over having children OR societies with more liberal attitudes towards women in the workforce = companies have greater labour force
POLITICAL
Political stability
- e.g. war / govt corruption
Policies implemented
Fiscal policy - the use of taxation and government expenditure policies to influence business activity
Deflationary = higher taxes and reduced government expenditure policies when the economy experiences high economic growth & inflation
Expansionary = used to boost business activity, perhaps to get the economy out of a recession through a combination of tax cuts and increased public sector spending = creating business opportunities.
Monetary policy - use of interest rate policy to affect the money supply and exchange rates in order to influence business activity
implementation of high interest rate = less appealing for businesses to take loans = reduces disposable income = slows down economic growth
// threat for local businesses - increased demand for currency (increased exchange rate) = foreign exporting more expensive = less demand
TECHNOLOGICAL
Opportunities
Better advertising abilities
Job creation
Cheaper & more efficient production
New products & new markets
Threats
Costly equipment
Job losses - replacement of human jobs
Unreliable technology - hacking etc.
Internet
Opportunities
Reduction of language & cultural barriers e.g. Google Translate
Speed of access to information (found online)
Overcome geographical limitations
Reduced costs - e.g. e-commerce & trading can happen anywhere at any time
Threats
Online crime
- hacking, scams etc.
Price transparency
- prices could be stated online = consumers can easily compare prices and may choose cheaper option = business loss for other company
Higher production & maintenance costs
- to maintain quality of tech
Reduced productivity
- distractions from social network sites / social media affects workforce productivity
LEGAL
Govt sets up rules and regulations to ensure the protection of customers from adverse business practices
E.g. Consumer Protection Legislation - illegal for businesses to provide false or misleading descriptions of their products and service, has to pass a degree of quality checks, businesses held liable for any damage / injury from defective products
ENVIRONMENTAL
Society's changing attitude towards the environment
- more customers are starting to support the more environmentally-friendly brands
Opportunity
- switching to environmentally-friendly packaging and production could boost brand reputation and long-term profitability
Threat
- switching to environmentally-friendly could incur greater losses due to how expensive it may be = possible decrease in brand rep if the company chooses not to change packaging etc.
Natural disasters / Diseases
- negatively affect businesses (e.g. floods destroy farms = agricultural sector affected, SARS outbreak = suffering for many people and less manpower)
Weather / Seasonal changes
- e.g. monsoon / winter
Opportunity
- e.g. tour operators - plan trips for different seasons
Threat
- several weathers such as drought could halt agricultural business
ETHICAL
Business ethics - the moral principles that are, or should be, considered in business decision-making
E.g. corruption / paying on time / ensuring there is a good working environment for employees
Opportunities:
1) attracting + retaining good quality workers (e.g. due to good working conditions + amenities and facilities)
2) attract + retain customers (more customers likely to support ethical businesses)
3) good publicity + good relations - brand rep increases due to the 'goodness' of the business
Threats:
1) ethical choices may be more expensive (e.g. cheaper supplier but with unethical practices, chose to have more ethical supplier = pay more but better business reputation
ECONOMICAL
refers to the state of the economy in which businesses operate
Government's economic objectives
3. Economic growth
measured by the change in the economy's total output - Gross Domestic Product (GDP)
1. Controlled inflation
Inflation = continual rise in the general level of prices in an economy
if there is a high inflation rate, businesses may suffer due to high resource costs and increased competitiveness
may also affect overseas trading (less price-competitive overseas) = all in export earnings, lower national output and higher unemployment
4. Healthy international trade balance
records the value of a country's export earnings and its import expenditure
e.g. changing of exchange rate = change in export prices
high exchange rate = high export price
lower exchange rate = may be good for domestic companies but pay higher price for imported products
Protectionist measures - set by government to protect domestic businesses against competition from foreign companies = threat to foreign companies trying to establish themselves in overseas market
2. Reduced unemployment
e.g. by reducing corporate tax to increase business activity + expansion of companies to create more job opportunities