3.1.3: Understanding that businesses operate within an external environment

Question	Answer
Macro-environment:	factors entirely outside a business' control, often referred to as PESTLE
PESTLE:	P - Political E - Economic S - Social T - Technological L - Legal E - Environmental/Ethical
P - Political	-Government policies at home or abroad e.g. Burger King in India, alcohol age limits
E - Economic	-Taxes (an increase -> people have less disposable income -> spend less) -Interest rates (same as above)
S - Social	-Lifestyle -Age -Behaviours -Target market
T - Technological	-Production techniques change -Investment in research/development e.g. Apple pay
L - Legal	-Food standards/regulations e.g. Ingredients list in full
E - Environmental/Ethical	-Sustainability factors -Car emissions -Pollution controls -Waste control -Fair trade
Micro-environment:	influences from within a firms immediate business environment i.e. its market or industry
Porters Five Forces:	1) Existing competitive rivalry: How intense is the competition? What are they capable of? How many? 2) Threat of substitute products: How easy is it for a customer to switch to another product/service? High/low risk? 3) Threat of new entrants: How easy is it for a competitor to enter the market? Are there and barriers to entry? 4) Power of buyers: impact price? 5) Power of suppliers: Number of suppliers in market? Control over their prices? (in relation to supply and demand)

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	Created by Ashleigh-Jade Jones about 7 years ago