Evaluate how external factors, over a specified future period, may impact on the business activities, strategy, internal structures, functional activities and stakeholders of a specified organisation (D2)
External factors could affect the business through a number of ways. With the upcoming events both businesses will be affected through one way or another. The businesses will need to change how they work in order to survive these changes. During the next 5 to 10 years there will be big changes that both businesses will need to make in order to survive, business activities including ownership is one of the external factors which can change the business in a big way.
Over the next 10 years a number of things can affect the business activities such as Economical factor, Political factor, social factor, Legal factor and environmental factor. The recession is a major factor that could affect the business ownership over the next 5 to 10 years.
The economy has not been as strong as what it was before because of the recession, this has impacted on the consumers on how much they would normally spend outside, because of losing jobs and businesses becoming insolvent. The recession impacted CostCutter with profits lower than previous years, lower levels of investments and an increase on unemployment, it puts a pressure on them to create more jobs and lower prices just to keep up and boost the economy, by helping families keeping in their budgets and more promotional offers.
Environmental issues are one of the main factors relating to pollution and global warming. The environmental issues have impact on the operation of business. There is little doubt that the importance of the environment as an issue for businesses has grown over the last 10 years.
The extraction of natural resources is expensive and often damaging the environment. Higher levels of recycling can reduce the need to extract more raw materials. It also reduces the amount of waste material that needs to be dumped. CostCutter and Lalos today are proud to display the recycling logo that tells the customer the firm is trying to minimise its use of primary/raw materials and use more recycling materials such as CostCutter cutting down on material for their carrier bags and Lalos cutting down on the amount cardboard and recipes they are using.
The political and legal factor relates to government that has the power and authority to make decisions or changes for the country that can have an effect on something. Majority of business operators will keep a watchful eye on any political factor. The political factor can affect a business either positively or negatively depending on the situation in the country. This can involve local government e.g. borough and councils, who will make decision on education library and council tax, Central government who will create laws and make major decisions about the economy. Political factors depend on the stability of the government and the Government type (dictatorship, democratic, monarchy, etc) which can change the trade policy as well. it is good for the government and the dictatorships as they are regulating the economic and what comes in and out the country, what is legal and how businesses should be run, but however it isn’t very popular and many people disagree because it is like a censorship and a lack of freedom and choices.
The future period can have a drastic impact with new dictatorship which could bring in new laws, rules which businesses would have to follow because they are trading within the country, there could be new Taxes, higher VAT charge rates which would have to be kept up to date, because of any mistake could result in the business becoming insolvent or consequence for their actions. The stability of the government is the main task businesses have to keep in mind because of a lot of competition, during the future the government could be on the way to another recession which businesses would have to make budget cuts and lower sale prices which could have an impact on jobs. Another factor is employment law. This is a law which covers employees. Employers need to update themselves continually on changes in legislation relating to employees job title or description date - began working for the company, the place of work and address of employer and holiday pay entitlement and because we are a part of the E.U new or updated regulations that concern employees and employers, could take in place, the stakeholders benefit from this as it protects them at work from being discrimination because of gender, age, sex, gaining more money from working overtime and being replaced by a different employee.
Such as at the moment the EU has put in force a number of employment directives, including minimum wage regulations which could change due to inflation increase or decrease and EU race equality which is now becoming more and more multi cultural. Social factor this is important to businesses and should take in consideration. A social factor is a society with many factors that affect our life style, the way we think and perceive things with different types of factors we should take into consideration. Some important social factors are religion, ethnicity, family, skin colour, body type, education, what type of society you’re living in and political system. This impacts on businesses as some social factors are considered to be biased or unacceptable like discriminating people based on their religion or skin colour etc, but this is beneficial to business as they can offer a range of products for all types of people such as clothing and food this will help gain popularity for businesses.
As we are progressing, we are living in a multicultural society, communities, religions, population – Increase or decrease and education are changing slowly but impact the future. Businesses need to supply the demands of the consumers for their Likes and needs and the changes are always changing so businesses need to keep up with their communities and their target markets, keeping up to date with today’s lifestyle and demands.