1. R061 Business and Enterprise
LO4 – external factors
R061 Business and Enterprise

2. USUALLY THE FINAL ESSAY QUESTION !
EXTERNAL FACTORS S T E E P L E
Legal
Ethical
Economic
Social
Political
Technological
Environmental

3. How does this affect HVS?
S – social
include fashions, tastes and trends, and also demographic factors such as the ageing population of the UK. This has seen the rise of what is called the 'grey pound' – an increased number of wealthier older people with a disposable income.
The higher the population, the more sales/higher spending. What are the characteristics of the population?
Social factors and business objectives
Population
Disposable income
Trends
Households and families
Do the population have disposable income to spend on the product?
The number of people within a household – the more people, the cheaper they will shop
Trends such as fashion – is the business up to date with the latest fashion?
How does this affect HVS?
Up to date with the latest trends – are people wanting electric cars?
Wealthier older people with disposable income more likely to buy

4. How does this affect HVS?
T - technological
Technology can create many opportunities for businesses:
Marketing & sales:
Viral marketing
Social networking
E-commerce
Website
Product development:
New machinery
Product development
How does this affect HVS?
More methods of advertising, some of them being free. Will cut cost of advertising
New machinery – will this cut the number of jobs needed to fill?

5. E – environmental & ethical
Mainly concerned with being sustainable and being ethical. Examples of these issues are the recycling of used products, whether products are bio-degradable and the disposal of industrial waste. BEING GREEN!
How does this affect HVS?
They are becoming more environmentally friendly through the introduction of electric cars
Selling old parts that still work

6. How does this affect HVS?
p - political
The government can change the way businesses work and influence the economy either by passing laws, or by changing its own spending or taxes
The main types of tax include:
Income tax taken off an employee's salary. This results in less money to spend in the shops.
Value added tax (VAT) added to goods and services. A rise in VAT increases prices.
Corporation tax is a tax on company profits. A rise in this tax means companies keep less of their profits leading to less company investment and the possible loss of jobs.
National Insurance contributions are payments made by both the employee and the employer. They pay for the cost of a state pension and the National Health Service. An increase in this tax raises a company's costs and could result in inflation.
Local government collects rates from firms and can use the law to block planning permission for new premises.
How does this affect HVS?
If income tax rises, people will have less disposable income to spend

7. How does this affect HVS?
l - legal
The way in which legislation in society affects business
Minimum wage
Consumer protection
Equality and Discrimination Act
Legislation
How does this affect HVS?
Health and safety for workers – garage, working with machinery
Employment law
Health and Safety Act
Sale of Goods Act

8. e – economic What is the economy like?
Economic factor
What is it?
Level of employment
The number of people who are working
if we have a job we have money to spend
spending creates further jobs
Interest rates
How much it costs to borrow money
businesses borrow money to invest in new machines, premises as well as to start up
customers sometimes borrow to buy things
How much we get for saving money
will customers spend their money or save it?
Inflation
A general rise in prices
if inflation is high the price of our shopping goes up
affects the price of businesses buying raw materials
will workers want higher wages?
Exchange rate
The cost of £s in terms of another currency e.g. $
does a business sell abroad
does a business buy materials from abroad
does the business sell to tourists?
How does this affect HVS?
Exchange rates as they are buying products from abroad – if the exchange rate is higher, they have more costs!
New machines – need interest rates to be low when borrowing the money