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?

<p>Businesses may benefit from the loyalty of older workers. (B)</p> Signup and view all the answers

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

<p>It allows businesses to plan and invest with less uncertainty. (C)</p> Signup and view all the answers

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

<p>To meet present needs without diminishing resources for future use (A)</p> Signup and view all the answers

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

<p>They facilitate easier trade of goods and services. (B)</p> Signup and view all the answers

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

<p>Designing packaging for reuse or recycling (B)</p> Signup and view all the answers

What is the main purpose of implementing carbon taxes?

<p>To encourage manufacturing and energy businesses to reduce emissions. (B)</p> Signup and view all the answers

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

<p>It can lead to economic diversification through development of new sectors (B)</p> Signup and view all the answers

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

<p>To increase tax revenues and improve fairness in the tax system. (B)</p> Signup and view all the answers

What does urbanization typically provide for businesses operating in cities?

<p>An increase in available labor and new markets (C)</p> Signup and view all the answers

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

<p>To fulfil national security or strategic interests. (A)</p> Signup and view all the answers

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

<p>Require online marketplaces to report sellers' revenues. (B)</p> 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?

<p>Significant operational challenges for businesses (B)</p> Signup and view all the answers

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

<p>To allow businesses to pollute up to a certain limit. (A)</p> Signup and view all the answers

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

<p>They publicize environmental damage caused by businesses, affecting their reputation. (C)</p> Signup and view all the answers

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

<p>By hiring better educated employees (C)</p> Signup and view all the answers

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

<p>Political, Environmental, Social, Technical. (B)</p> 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?

<p>Multinationals invest more where they can find significant pools of skilled labor (A)</p> Signup and view all the answers

What is a common restriction placed on arms manufacturers?

<p>They are prohibited from selling weapons to unstable foreign regimes. (D)</p> Signup and view all the answers

What are protectionist measures often imposed on imported goods?

<p>Tariffs and quotas. (D)</p> Signup and view all the answers

What do governments typically set budgets for concerning public services?

<p>Key areas such as education, healthcare, transport and national security. (B)</p> Signup and view all the answers

Which of the following economic trends have been noted?

<p>Increased spending on public services while labor costs have fallen. (D)</p> Signup and view all the answers

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

<p>May require them to upgrade to electric vehicle fleets, increasing costs. (A)</p> Signup and view all the answers

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

<p>Businesses may face higher charges for disposal and limits on waste volume. (A)</p> Signup and view all the answers

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

<p>Lower and more consistent energy costs. (C)</p> Signup and view all the answers

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

<p>More frequent disruption due to floods or intense heat conditions. (A)</p> Signup and view all the answers

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

<p>Voluntary business-led initiatives. (A)</p> Signup and view all the answers

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

<p>To impose financial penalties on businesses that break environmental regulations. (D)</p> Signup and view all the answers

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

<p>Varying working contracts and access arrangements. (D)</p> Signup and view all the answers

How can IT technology primarily impact business operations?

<p>By enhancing communication and supporting administrative tasks. (C)</p> Signup and view all the answers

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

<p>Maintaining only physical transaction records. (A)</p> Signup and view all the answers

How does automation in manufacturing affect labor in some industries?

<p>Reduces the number of workers in production. (D)</p> Signup and view all the answers

What is one advantage of electronic banking for businesses?

<p>Reduced need for physical cash and improved security. (A)</p> Signup and view all the answers

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

<p>May increase capital expenditure costs and require external finance. (D)</p> Signup and view all the answers

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

<p>Online marketing and rapid sharing of data. (D)</p> Signup and view all the answers

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

<p>Time consuming and possibly less accurate (A)</p> Signup and view all the answers

Flashcards

External Factors

External factors are things outside of a business's control that can influence its decisions and outcomes.

Business Response to External Factors

Businesses might adapt their products, change their operations, or even relocate to better deal with changing conditions.

PEST Analysis

PEST stands for Political, Economic, Social, and Technological. It's a framework for analyzing the external environment that affects businesses.

Political Pressure on Businesses

Political pressures can come from governments, pressure groups, or even public opinion.

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Political Stability

Political stability allows businesses to plan long-term and make investments confidently.

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Trade Agreements

Trade agreements can make it easier and cheaper for businesses to trade goods and services across borders.

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Tax Policies

Governments can use tax rates to encourage or discourage certain behaviors, like reducing emissions through carbon taxes.

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Export Restrictions

Governments may restrict the export of certain products to protect domestic markets or resources.

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Arms Export Restrictions

Government actions to limit the sale of weapons to certain countries, often those deemed unstable or posing a threat to global security.

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Protectionist Measures

Policies designed to protect domestic businesses from foreign competition, often using tariffs (taxes on imports) or quotas (limits on imported quantities).

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Public Service Spending

Government spending on public services like education, healthcare, transportation, and defense.

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Trade Surplus

A situation where a country's total exports exceed its total imports, potentially indicating economic growth and competitiveness.

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Foreign Direct Investment (FDI)

Direct investments from one country into another, usually for business expansion or setting up new enterprises.

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Environmental Factors Impacting Business

Environmental factors that can impact business operations in various ways, including adapting to regulations and resource availability.

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Government Control and the Environment

Government measures to control the environmental impact of businesses, often through legislation, fines, and limits on harmful activities.

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Environmental Legislation

Specific rules, laws, or regulations designed to protect the environment and ensure businesses operate sustainably.

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Environmental Fines

Financial penalties imposed on businesses that violate environmental regulations, acting as a deterrent against harmful practices.

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Environmental Limits

Restrictions or limitations placed on business activities that can harm the environment, aiming to reduce pollution and resource consumption.

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Labor Shortages

A situation where companies struggle to find enough workers, especially for seasonal jobs.

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Informed Consumers

Customers are increasingly aware of global issues like environmental concerns and ethical production.

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Meeting Consumer Needs

Businesses need to adapt their offerings to appeal to consumers who care about ethical and sustainable practices.

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Ageing Population

As people live longer, businesses see opportunities to cater to an aging population.

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Increased Labour Supply

More women and people with disabilities entering the workforce provides businesses with a larger pool of potential employees.

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What is Pollution?

Pollution refers to the contamination of the environment by harmful substances, such as chemicals, waste, or noise. It can have detrimental effects on humans, animals, and the ecosystem.

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How can businesses minimize their environmental impact?

Businesses can reduce their environmental impact by using sustainable practices like designing reusable packaging, adopting energy-efficient equipment, and using renewable energy sources.

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What are social factors?

Social factors refer to the beliefs, values, customs, and trends that shape how people behave and interact in society. These factors influence how businesses operate and market their products.

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How does education impact economic growth?

A skilled and educated workforce can boost a country's economic growth by leading to more efficient production, higher productivity, and increased innovation.

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How does urbanization affect businesses?

Urbanization, the movement of people into cities, creates opportunities for businesses by increasing the demand for products and services, as well as providing a larger workforce.

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What are the implications of a shortage of skilled workers?

A lack of skilled labour can hinder economic growth as businesses struggle to find qualified workers. This can lead to higher costs, reduced productivity, and difficulties in competing globally.

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What is sustainable development?

Sustainable development means meeting the needs of the present generation without compromising the ability of future generations to meet their own needs.

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How does the concept of sustainable development apply to businesses?

The concept of sustainable development emphasizes the importance of balancing economic growth, social equity, and environmental protection. It encourages businesses to adopt practices that are environmentally friendly, socially responsible, and economically viable.

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How IT Enhances Business

Technology helps companies communicate better, manage data efficiently, and automate tasks, improving their overall operations.

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Robots and Automation in Production

Robots and automation in manufacturing and agriculture increase productivity, reduce costs, and improve safety by taking over some tasks.

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Benefits of Electronic Banking

Electronic banking reduces the need for physical cash, improving security and reducing costs for businesses.

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Increased Capital Expenditure with Technology

Advanced technologies can require more investment for businesses, leading to higher capital expenditure.

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Workplace Accessibility for People with Disabilities

Companies may need to adjust their working arrangements and contracts to attract employees with disabilities, promoting inclusivity.

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How Databases Improve Business

This technology allows for efficient storage, retrieval, and analysis of large amounts of data, making it easier to find information.

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E-commerce, Marketing, and Data Sharing Online

These technologies allow businesses to sell products and services online, reach a wider audience, and share information quickly.

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Benefits of Email and Messaging

This technology allows for efficient and convenient communication, speeding up processes and improving collaboration.

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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.

Social Factors

  • 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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External Factors PDF

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.

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