1. External Influences on Business
Businesses are influenced by a range of factors over which they have little control – these are called external influences.

2. Political factors Economic factors PEST Analysis Social factors
PEST analysis is a tool for helping businesses evaluate external influences:
Political factors
Economic factors
Social factors
Technological factors

3. Political Legislation (laws and regulations)
Political and legal factors can have significant impacts on businesses. Government policies affect business activities through:
Legislation (laws and regulations)
Taxation eg income tax and VAT rates
Interest rates (the cost of borrowing)

4. Political Government legislation affecting businesses includes:
Health and safety laws
Employment laws
Consumer protection
Environmental protection
Competition laws

5. Economic
The current or expected economic climate will affect businesses. Factors include:
Inflation (rising cost) increasing the selling price of goods
Unemployment causing demand for goods to decrease
Interest rates (the cost of borrowing)
Value of £ affecting ability to trade with foreign countries
Recession is the slowing down of an economy
Task 3

6. Social (Socio-cultural)
Social influences include factors relating to both workers and consumers such as:
Demographics (size and structure of the population)
Changing trends and tastes
Changing working patterns (part-time, flexitime, working mothers)
Ethical issues
Task 4

7. Technological
New technologies can prove to be both opportunities or threats to organisations in terms of, for example:
Marketing
Communication
Production methods
New product development
Organisational culture
Task 5

8. PEST can be PESTEC
Additional influences
Environmental
Competition

9. Environmental
Environmental factors are mainly concerned with being sustainable and being ethical.
Recycling of used products
Are products bio-degradable
Disposal of industrial waste
Impact of weather conditions
Task 6

10. Competition
Competitive factors is concerned with rival firms' affect on a business.
Product range
Pricing
Production methods
Task 7