External Factors PESTEC
Learn how external factors such as government decisions, economic changes, societal trends, technological advancements, environmental factors, and competitive actions can impact businesses positively or negatively. Explore ways in which businesses can respond to these factors to adapt and thrive in a dynamic environment.
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Presentation Transcript
External Factors PESTEC Business Management Use the challenge questions on each slide to get you thinking
Success Criteria (Whole Topic) Describe how the government can have an impact on a business. Consider how changing laws or levels of taxes can benefit or challenge the business Outline how changes in the economy can change how people spend their money Outline what happens when people s tastes and lifestyles change Describe the impact that new technology has on a business Outline how the weather can have an impact on the business Consider how weather affects what people buy Consider how weather can affect the delivery of raw materials Outline how the actions of other businesses can have an impact on the business Describe how another business can get competitive edge
External Factors External Factors There are things that happen outside the business that will have an impact on them These EXTERNAL FACTORS can have a positive or negative effect on the business they might create an opportunity or a threat The business has no control over these factors all they can do is respond to them These factors may be Political, Economic, Social, Technological, Environmental or Competitive ..the PESTEC factors
Watch The News All of the decisions now being made by the government will have an impact on businesses Political Political Many government decisions will have an impact on the business They may change the LAW and businesses may have to change the way they do things so they don t break the law The government might change the amount of TAX businesses have to pay Businesses pay tax on their profits, so if the government lowers the rate of tax then the business owner gets to keep more of the profits Challenge Question: How has the government s decision to make businesses such as pubs, restaurants and shops close affected businesses?
YouTube Recession Proof Businesses Why do some products do well during a recession? Economic Economic When we looked at sectors of industry we talked about what a healthy economy looks like When the economy is doing well people are in work, paying their taxes and buying goods and services When the economy is experiencing a recession, there may be higher levels of unemployment which means people have less money to spend Challenge Question: If there is a period of high unemployment; what will happen to sales of products?
Social Social People s tastes change over time. The products you liked last year, the things you watched, the people you admired will have changed Fashion moves on A business that is making products people don t want any more will see their sales falling (think about what we know about the decline stage of the product life cycle) The most successful businesses will try to anticipate what the next big thing is going to be so that they can get their product out on the market first Challenge Question: How can the business keep up to date with changes in people s tastes?
YouTube How Disney will force Netflix to change streaming (also useful for competitive factor below) Technological Technological Technology is always changing, how many of us still have a video, DVD or CD player? A business that does not keep up with changes in technology may end up making products people no longer want or need New technology or machinery is always emerging that means the business can make their product quicker or more efficiently or to a higher standard If you don t invest in new technology and the competition does then you may find yourself less competitive Challenge Question: Can you think of any companies that have been affected by music and video streaming technology?
YouTube Connecting Weather to Business Profitability Environmental Environmental The business should consider the impact is has on the environment by recycling more, reducing its waste and using renewable energy The environment can also have an impact on the business When the weather is good, people spend more on goods than when the weather is bad. The weather will also change the kinds of products that people want. Extreme weather can also have an impact on deliveries, very poor weather may mean supplies can t make it to factories or to customers. Droughts can also make food products more expensive because they are difficult to grow if there is little rain. Challenge Question: Why do you think people spend more on products when the weather is good?
Competitive Competitive All businesses are interested in what the competition is doing Other businesses may do something that gives them a competitive edge and lures customers away such as by launching an exciting new product or by changing their pricing, having special offers or new adverts Challenge Question: How can a business respond when they see that the competition has launched an exciting new promotional campaign?
Activities Read the information, watch the class clips and complete the test at the end www.bbc.co.uk/bitesize/guides/zgfrpbk/revision/1 LKStStephens quizziz called PESTEC
Questions 1. What are the things that happen outside the business but that will have an impact on how the business operates called? Can external factors be controlled by the business? What does PESTEC stand for? Who can change the laws which will impact the business? How can a spell of very bad weather impact the business? What is the impact on the business of a period of high unemployment (lots of people out of work)? Why is the business interested in what the competition is doing? What is the effect of the government increasing the amount of tax the business has to pay? What can a business do to keep up to date with people s changing tastes and lifestyles? 10. What happens to a business that does not keep up to date with what people want? 11. How could a business respond when a new piece of technology is developed that will enable them to make their product quicker. 2. 3. 4. 5. 6. 7. 8. 9.
Jennys Ice-Creams Change External Factor Impact on Jenny s Ice-Creams There has been a long, sunny spell The local ice-cream van has recently been upgraded and has expanded their product range A company has introduced a new machine that allows ice-cream to be formed into different shapes The government has introduced a sugar tax on sweet products which includes ice- cream People are more interested in healthy, low fat and dairy free products The slow down in the economy has left a lot of people in the town out of work
