This document outlines several factors that can affect businesses: political/legal factors like government policy and legislation; economic factors such as unemployment, interest rates, and inflation; socio-cultural factors including demographic changes and lifestyle trends; technological factors like advances in IT; environmental factors from groups and climate change; and competitive factors from assessing rivals and developing a unique selling point.

1. Political/Legal Factors
• Implementation of government
policy and legislation in the UK,
Scotland and locally e.g.
• Changes in EU funding
• Directly affects public sector
• Taxation affects all organisations
• Smoking ban impact on pubs

2. Economic Factors
• Unemployment levels / disposable
income impacts sales
• State of the economy (boom or bust?)
• Interest rate increases makes it dearer
for the organisation to borrow money
• Exchange rate changes the cost of
importing and exporting – the stronger
the pound, the harder it is to export UK
goods to other countries
• Inflation (increases in general prices)
can make raw materials/labour and
transport costs much more expensive

3. Socio-cultural Factors
• Demographic changes
• Slow-growing, ageing population
• Socio-cultural changes (lifestyle and
attitude changes) e.g.
– increasing number of working mums
– growth of car and home ownership
– concern for environmental welfare
– more leisure time
• Structure of labour market
– increase in part time work
– increase in tertiary sector jobs

4. Technological Factors
• Rapid pace of change in Information
Communication Technology costs
money to keep up-to-date
• Need to keep up with competitors
• Use of Internet to sell to customers and
buy from suppliers
• Software improvements e.g. databases
for customer details
• Greater use of computer-controlled
production processes to reduce costs

5. Environmental Factors
• Pressure groups
• Climate change and pollution
• Media attention on ‘bad
business behaviour’
• Social Responsibility objectives
e.g. Co-op Fair Trade

6. Competitive Factors
• Need to constantly assess actions of
competitors to protect sales and
profits
• Desire to create and maintain a
competitive edge over rivals
• Establish a Unique Selling Point
(USP)