Businesses are afected by an external environment as much as they are afected by the
compettors. These factors can have a major impact on the success or failure of any business. Global
factors infuencing business are legal, politcal, social, technological and economic. (PESTLE)
Other factors that also afect businesses include the business support systems that are used to help
businesses trade, and partcularly, methods of payment and the use of the internet.
External Inflennee
Politinal Fantore
These refers to the changes in government and government policies. Politcal factors greatly
infuence the operaton of business. The politcal infuence of the government of a country or the
president of a group of countries, such as the EU or APEC, has signifcant infuence on the way in
which the country does business and the type of businesses that are able to trade there on and
internatonal basis.
For example: companies operatng in the European Union have to adopt directves and regulatons
created by the EU. The politcal arena has a huge infuence upon the regulaton of businesses, and
the spending power of consumers and other businesses. Business must consider the stability of the
politcal environment, governmentss policy on the economy, etc.
China and Cuba are both communist states, so this means that trading with them is more challenging
than with other countries and potentally has more restrictons. ost countries around the world are
democracies rather than communist. However, even these countries are infuenced by diferent
politcal viewpoints with regard to internatonal trade. Some governments may seek to protect jobs
in their economies and, therefore, may be less positve about internatonal businesses coming into
their countries.
Enonomin Fantore
Internatonal businesses are also afected by the economic conditons of the country in which they
operate. Economic conditons can have a huge impact on the ability of customers to buy products in
that country and also on the business as a whole.
These factors involve changes in the global economy. A rise in living standards would ultmately
imply an increase in demand for products thereby, providing greater opportunites for businesses to
make profts. An economy witnessess fuctuatons in economic actvites. This would imply that in
case of a rise in economic actvity the demand of the product will increase and hence the price will
increase. In case of reducton in demand the prices will go down. Business strategies should be
developed keeping in mind these fuctuatons.
Other economic changes that afect business include changes in the interest rate, wage rates, and
the rate of infaton. In case of low interest rates and increase in demand businesses will be
encouraged to expand and take risks. Therefore, business strategies should have room for such
fuctuatons. Ii may afect internatonal businesses, as interest rates afect the amount it costs a
company to borrow money and also the amount of money that potental customers have lef over
afer they have paid their bills. High Ii means the costs of loans and mortgages are high and this
afect the spending power.
compettors. These factors can have a major impact on the success or failure of any business. Global
factors infuencing business are legal, politcal, social, technological and economic. (PESTLE)
Other factors that also afect businesses include the business support systems that are used to help
businesses trade, and partcularly, methods of payment and the use of the internet.
External Inflennee
Politinal Fantore
These refers to the changes in government and government policies. Politcal factors greatly
infuence the operaton of business. The politcal infuence of the government of a country or the
president of a group of countries, such as the EU or APEC, has signifcant infuence on the way in
which the country does business and the type of businesses that are able to trade there on and
internatonal basis.
For example: companies operatng in the European Union have to adopt directves and regulatons
created by the EU. The politcal arena has a huge infuence upon the regulaton of businesses, and
the spending power of consumers and other businesses. Business must consider the stability of the
politcal environment, governmentss policy on the economy, etc.
China and Cuba are both communist states, so this means that trading with them is more challenging
than with other countries and potentally has more restrictons. ost countries around the world are
democracies rather than communist. However, even these countries are infuenced by diferent
politcal viewpoints with regard to internatonal trade. Some governments may seek to protect jobs
in their economies and, therefore, may be less positve about internatonal businesses coming into
their countries.
Enonomin Fantore
Internatonal businesses are also afected by the economic conditons of the country in which they
operate. Economic conditons can have a huge impact on the ability of customers to buy products in
that country and also on the business as a whole.
These factors involve changes in the global economy. A rise in living standards would ultmately
imply an increase in demand for products thereby, providing greater opportunites for businesses to
make profts. An economy witnessess fuctuatons in economic actvites. This would imply that in
case of a rise in economic actvity the demand of the product will increase and hence the price will
increase. In case of reducton in demand the prices will go down. Business strategies should be
developed keeping in mind these fuctuatons.
Other economic changes that afect business include changes in the interest rate, wage rates, and
the rate of infaton. In case of low interest rates and increase in demand businesses will be
encouraged to expand and take risks. Therefore, business strategies should have room for such
fuctuatons. Ii may afect internatonal businesses, as interest rates afect the amount it costs a
company to borrow money and also the amount of money that potental customers have lef over
afer they have paid their bills. High Ii means the costs of loans and mortgages are high and this
afect the spending power.
