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Title: IB Business Management 1.5
Description: Summary notes for topic 1.5 - External environment
Description: Summary notes for topic 1.5 - External environment
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External Environment
Opportunities
external factors that present chances for businesses
...
These factors affect businesses yet cannot be controlled by any individual
organisation
...
The opportunities and threats could be:
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Business Ethics
Social Welfare
Women
Religion
Animal Rights
Language
Demographic Changes
The organisation’s views on these issues could result in them being regarded as either
opportunities or threats
...
Advances in technology have improved productivity, however the high
cost of staying up-to-date with these advancements can cause problems
...
Examples of Opportunities
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New working practices
Increased productivity and efficiency gains
Quicker product development time
Job creation
New products and new markets
ETC
...
Economic
The economic environment refers to the state of the economy in which the business
operates/plans to operate in
...
The resultant state of the economy can be opportunities and threats, if it is
developing/developed with all objectives being satisfied to a certain extent, it could
present itself as opportunities, depending on the business
...
Without
government intervention, private sector businesses are unlikely to follow strict
environment-friendly practices, which could either be an opportunity or a threat to a
business
...
The extent to which businesses consider environmental issues depends on their aims,
attitudes, and likely impact on their profits and resources
...
Weather and seasonal changes are also important opportunities/threats, depending
on the industry of the firm, or the danger level of the location
...
Too many policies and the level of stringency can become a threat as it could become
more expensive and time consuming for businesses if taxes, for example, are higher
than usual
...
Policies
Fiscal Policy
The use of taxation and government expenditure to influence business activities the
economy
...
expenditure increases to stimulate consumption in the economy
...
The rates could be increased to raise the cost of
borrowing, as this would reduce the disposable income and therefore reduce
consumption to reduce inflation
...
Deregulation
The removal of government rules and regulations which constrain business activity
within a particular industry
...
Legal
The government imposes rules, regulations, and laws to ensure that the general
public is protected from adverse business activity
...
However,
it could be viewed as an opportunity as it ensures ethical and fair practices, if the
business could benefit from that
...
Firms that are ethical are usually socially responsible towards all of their
stakeholders, and this could end up benefitting them, as shown below:
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Attract and Retain good quality workers
Attract and retain existing ones
Social responsibility generates good publicity
Also generates good public relations
These could end up with the business earning higher profits
...
Conclusion
Therefore, these aspects of the STEEPLE Analysis provide a deeper and simpler
understanding of possible opportunities and threats, and can be very useful for
businesses if used correctly
Title: IB Business Management 1.5
Description: Summary notes for topic 1.5 - External environment
Description: Summary notes for topic 1.5 - External environment