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Responding to external influences
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External influences are outside a business's control. What it can control is how it responds.
What external influences are
Changes in technology, legislation and the economic climate happen outside the business.
They create threats but also opportunities.
They create threats but also opportunities.
Possible responses
Technology: invest in new equipment, sell online, train staff.
Legislation: change processes to comply, raise prices to cover extra costs, retrain staff.
Economy: in a downturn, cut costs, offer cheaper ranges or promotions; when incomes rise, launch premium products.
Legislation: change processes to comply, raise prices to cover extra costs, retrain staff.
Economy: in a downturn, cut costs, offer cheaper ranges or promotions; when incomes rise, launch premium products.
Why responses matter
A business that ignores change may lose customers to rivals who adapt.
A quick response can turn a threat into an opportunity, such as moving into e-commerce.
A quick response can turn a threat into an opportunity, such as moving into e-commerce.
A new law raises the minimum wage. Suggest two responses for a café.
- Its labour costs rise.
- It could raise prices or improve productivity, such as fewer staff on quiet shifts.
Answer: Raise prices slightly or reduce costs elsewhere.
External influences include technology, legislation and the economy. Businesses respond by adapting products, prices, costs and methods. Those who adapt survive; those who ignore change lose out.
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