External Factors in Business Decisions

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Questions and Answers

What is the primary reason UK food producers have experienced difficulty recruiting domestic seasonal workers for crop picking and processing since 2016?

A shift in domestic labor preferences away from seasonal agricultural work. (correct)

A rise in overseas job opportunities for UK workers.

Stricter immigration policies implemented after 2016.

Increased automation in agricultural practices.

Which of the following best describes the trend in consumer awareness of global issues?

Consumers are more informed about global issues than ever before. (correct)

Consumer awareness of global issues has remained stagnant.

Consumers are less informed than they were in the past.

There is no significant data available regarding the change in consumer awareness.

What is the main implication of an ageing population for businesses, as described in the text?

It requires more rapid technological progression due to a loss of experienced workers.

It signals a reduction in potential customer base.

It leads to an increased dependency on younger generations to fill employment positions.

It creates new markets for businesses catering to older demographics. (correct)

What is a potential benefit for businesses that hire older workers?

Businesses may benefit from the loyalty of older workers. Signup and view all the answers

What is the primary effect of political stability on business activities?

It allows businesses to plan and invest with less uncertainty. Signup and view all the answers

Which of the following best describes the primary goal of sustainable practices?

To meet present needs without diminishing resources for future use Signup and view all the answers

How do government trade agreements or joining trade blocs typically benefit businesses?

They facilitate easier trade of goods and services. Signup and view all the answers

What is one way businesses can reduce resource depletion, according to the information provided?

Designing packaging for reuse or recycling Signup and view all the answers

What is the main purpose of implementing carbon taxes?

To encourage manufacturing and energy businesses to reduce emissions. Signup and view all the answers

How can education impact the economy according to the text provided?

It can lead to economic diversification through development of new sectors Signup and view all the answers

What is the primary reason a government might close tax loopholes?

To increase tax revenues and improve fairness in the tax system. Signup and view all the answers

What does urbanization typically provide for businesses operating in cities?

An increase in available labor and new markets Signup and view all the answers

Why might governments restrict the sale of certain products to other countries?

To fulfil national security or strategic interests. Signup and view all the answers

What specific action was the UK government looking to take in 2024 regarding online marketplaces?

Require online marketplaces to report sellers' revenues. Signup and view all the answers

Based on the provided text, what is a potential consequence of a lack of lower-skilled labor in some countries?

Significant operational challenges for businesses Signup and view all the answers

What is the main purpose of environmental permits as described in the text?

To allow businesses to pollute up to a certain limit. Signup and view all the answers

What role do environmental groups like Greenpeace play in the context of business?

They publicize environmental damage caused by businesses, affecting their reputation. Signup and view all the answers

How can a business address the increasing skills requirements in the modern marketplace?

By hiring better educated employees Signup and view all the answers

What does the acronym PEST stand for in relation to factors impacting business?

Political, Environmental, Social, Technical. Signup and view all the answers

What is the relationship between a highly educated population and the location of multinational companies, as seen in the example of India?

Multinationals invest more where they can find significant pools of skilled labor Signup and view all the answers

What is a common restriction placed on arms manufacturers?

They are prohibited from selling weapons to unstable foreign regimes. Signup and view all the answers

What are protectionist measures often imposed on imported goods?

Tariffs and quotas. Signup and view all the answers

What do governments typically set budgets for concerning public services?

Key areas such as education, healthcare, transport and national security. Signup and view all the answers

Which of the following economic trends have been noted?

Increased spending on public services while labor costs have fallen. Signup and view all the answers

How might government steps to promote environmentally friendly transport impact businesses in the short term?

May require them to upgrade to electric vehicle fleets, increasing costs. Signup and view all the answers

What is one consequence of stricter regulations regarding manufacturing waste disposal?

Businesses may face higher charges for disposal and limits on waste volume. Signup and view all the answers

What is a potential long term benefit for businesses switching to green energy?

Lower and more consistent energy costs. Signup and view all the answers

What impact may global warming have on businesses located in high-risk areas?

More frequent disruption due to floods or intense heat conditions. Signup and view all the answers

Which of the following is NOT a way governments typically control business impact on the environment?

Voluntary business-led initiatives. Signup and view all the answers

What is the primary purpose of governments imposing fines on businesses that break environmental regulations?

To impose financial penalties on businesses that break environmental regulations. Signup and view all the answers

What is a potential adjustment businesses may make to attract workers with disabilities?

Varying working contracts and access arrangements. Signup and view all the answers

How can IT technology primarily impact business operations?

By enhancing communication and supporting administrative tasks. Signup and view all the answers

Which of these is NOT a typical use of IT to improve business functions?

Maintaining only physical transaction records. Signup and view all the answers

How does automation in manufacturing affect labor in some industries?

Reduces the number of workers in production. Signup and view all the answers

What is one advantage of electronic banking for businesses?

Reduced need for physical cash and improved security. Signup and view all the answers

What financial effect can keeping up with new technology have on businesses?

May increase capital expenditure costs and require external finance. Signup and view all the answers

Besides financial transactions, what is an additional impact of online technologies?

Online marketing and rapid sharing of data. Signup and view all the answers

What is a disadvantage of in person banking compared to digital?

Time consuming and possibly less accurate Signup and view all the answers

Study Notes

External Factors Affecting Business Decisions

Business decisions are influenced by external factors, such as the UK's departure from the European Union's trading bloc.
Businesses may adjust products or workplace structures to adapt to challenges and opportunities presented by social, political, environmental, or technological factors (PEST).

Political Factors

Political pressure, like that from environmental groups (e.g., Greenpeace), can impact a business's reputation due to publicized environmental damage.
Government decisions significantly influence business activities.
Stable political environments allow businesses to plan investments with less concern about unexpected changes.
Governments create trade agreements and blocs that can benefit businesses through easier trade of goods/services.
Tax rates can be adjusted by governments to meet their goals.
Governments implement carbon taxes to encourage businesses to reduce emissions.
Tax loopholes can be closed to increase tax revenues and fairness. (e.g., UK's 2024 measure requiring online marketplaces to report seller revenues).

Environmental Factors

Changing consumer preferences and government actions impact business operations in diverse ways.
Governments are pushing for more environmentally friendly public transport and electric vehicles, which may involve higher upfront costs for businesses.
Public transport improvements can boost business accessibility for workers and customers.
Strict regulations on waste disposal help prevent pollution and increase business costs.

Global Warming & Climate

Global warming is causing permanent changes (e.g., frequent flooding) to the world's climate.
Businesses in high-risk areas experience frequent disruptions; their insurance premiums often increase.
Some businesses may relocate to avoid disruptions.

Government Control & The Environment

Governments can control business environmental impact through legislation, fines, and limitations on activities.
Laws create illegal environmentally damaging practices and set standards.
Fines punish businesses that break environmental regulations.
Regulations limit businesses' polluting capacities.

Societal changes require businesses to adapt by conducting ongoing research to meet stakeholder needs.
Education levels affect skill sets within an economy, influencing sectors and income potentials.
Skilled workforce development is also key to innovation.
Population shifts (urbanization) can create new markets and change labor forces.
Increased longevity and healthier lifestyles extend time in the workforce.
The increasing number of individuals with disabilities are driving the demand for more flexible work options.

Technological Factors

Technological advancements significantly impact business operations.
IT technology leads to improved communication and administrative functions.
Businesses use technological tools to enhance communication and management processes, handling finances and data efficiently.
Use of robots and automation in industries like manufacturing and agriculture has increased productivity, reduced costs, improved worker safety, and decreased workforce needs (resulting in lower wage costs).
Electronic banking replaces large-scale currency transactions, improving security, reducing costs, and enhancing accounting accuracy.
Keeping pace with the rapid advancements may require businesses to invest more in capital expenditure.

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Description

Explore how external factors like political changes, environmental pressures, and technological advances influence business decisions. This quiz covers the PEST framework and its significance in strategic planning. Understand the impact of government actions and societal trends on business operations.