R061 Business and Enterprise LO4 – external factors R061 Business and Enterprise

USUALLY THE FINAL ESSAY QUESTION ! EXTERNAL FACTORS S T E E P L E Legal Ethical Economic Social Political Technological Environmental

How does this affect HVS? S – social include fashions, tastes and trends, and also demographic factors such as the ageing population of the UK. This has seen the rise of what is called the 'grey pound' – an increased number of wealthier older people with a disposable income. The higher the population, the more sales/higher spending. What are the characteristics of the population? Social factors and business objectives Population Disposable income Trends Households and families Do the population have disposable income to spend on the product? The number of people within a household – the more people, the cheaper they will shop Trends such as fashion – is the business up to date with the latest fashion? How does this affect HVS? Up to date with the latest trends – are people wanting electric cars? Wealthier older people with disposable income more likely to buy

How does this affect HVS? T - technological Technology can create many opportunities for businesses: Marketing & sales: Viral marketing Social networking E-commerce Website Product development: New machinery Product development How does this affect HVS? More methods of advertising, some of them being free. Will cut cost of advertising New machinery – will this cut the number of jobs needed to fill?

E – environmental & ethical Mainly concerned with being sustainable and being ethical. Examples of these issues are the recycling of used products, whether products are bio-degradable and the disposal of industrial waste. BEING GREEN! How does this affect HVS? They are becoming more environmentally friendly through the introduction of electric cars Selling old parts that still work

How does this affect HVS? p - political The government can change the way businesses work and influence the economy either by passing laws, or by changing its own spending or taxes The main types of tax include: Income tax taken off an employee's salary. This results in less money to spend in the shops. Value added tax (VAT) added to goods and services. A rise in VAT increases prices. Corporation tax is a tax on company profits. A rise in this tax means companies keep less of their profits leading to less company investment and the possible loss of jobs. National Insurance contributions are payments made by both the employee and the employer. They pay for the cost of a state pension and the National Health Service. An increase in this tax raises a company's costs and could result in inflation. Local government collects rates from firms and can use the law to block planning permission for new premises. How does this affect HVS? If income tax rises, people will have less disposable income to spend

How does this affect HVS? l - legal The way in which legislation in society affects business Minimum wage Consumer protection Equality and Discrimination Act Legislation How does this affect HVS? Health and safety for workers – garage, working with machinery Employment law Health and Safety Act Sale of Goods Act

e – economic What is the economy like? Economic factor What is it? Level of employment The number of people who are working if we have a job we have money to spend spending creates further jobs Interest rates How much it costs to borrow money businesses borrow money to invest in new machines, premises as well as to start up customers sometimes borrow to buy things How much we get for saving money will customers spend their money or save it? Inflation A general rise in prices if inflation is high the price of our shopping goes up affects the price of businesses buying raw materials will workers want higher wages? Exchange rate The cost of £s in terms of another currency e.g. $ does a business sell abroad does a business buy materials from abroad does the business sell to tourists? How does this affect HVS? Exchange rates as they are buying products from abroad – if the exchange rate is higher, they have more costs! New machines – need interest rates to be low when borrowing the money