EXTERNAL ENVIRONMENT No. 11The external environment in which a business operates consists of the operating or task environments together with the macro or broad environment
EXAMPLES OF THE EXTERNALENVIRONMENT• Customers• Suppliers• Competitors• Special interest groups ie. trade unions and employer groups
Factors to consider when dealingwith the external environment• CULTURAL or SOCIAL FACTORS• Relate to people and groups and the way they interact which each other. – What is the climate or feeling in the community towards a product. – What are the attitudes of the buyers, their values and beliefs. – Examples ?
TECHNOLOGY FACTORS• Technology is used to transform the inputs into desired outputs.• Effects the cost of production• Effects time it takes to produce goods• Effects communication• Effects competition – Can you think of an example of this?
ECONOMIC FACTORSThe current state of the economy is shown in indicators such as:• Consumer spending – how much consumers spend• Unemployment - % not in the workforce• Inflation - % of price increases• Investment by private investors – foreign ownership and domestic buyers• Interest rates – to encourage investment• Exchange rates – to encourage imports and exportsEconomic conditions can have a profound effect on the business. Why?When conditions are good, standard of living is high and people spend money. However when economic conditions are poor, standard of living falls and can hurt business.• LETS DISCUSS THE CREDIT CRUNCH IN THE US AND GLOBALLY IN 2008.
Question (research)• In Australia at the present time, what is the official interest rate to consumers? Is this high or low? What effect would interest rates have on the economy and business in general?
POLITICAL AND LEGALENVIRONMENT• Laws can directly impact an enterprise. These include. – Building regulations • WHY? – Anti discrimination laws • WHY? – Competition Policy • WHY? – Health and Safety Laws • WHY? – Fiscal policy • e.g. Tax laws for example the GST
Ecological Factors• Businesses are improving their environmental management practices by responding in positive ways to minimise or eliminate ecological issues such as water shortage, greenhouse emissions and pollution.• Examples?
QUESTIONS• Pg 49 q1 and q2• Pg 50 q1, q3 and q4• Question 5 (as a group)• If time permits do game on page 52, Q9.