1.2 EXTERNAL BUSINESS ENVIRONMENT
EXTERNAL BUSINESS ENVIRONMENT
1. WHAT DIMENSIONS (OR TYPES/ ASPECTS)
ARE IDENTIFIED TO THE EXTERNAL BUSINESS
ENVIRONMENT?
 Those which include the following factors:
 - political
 - economic
 - social / cultural
 - technological
2. WHICH POLITICAL ACTION AFFECTS THE
TOBACCO INDUSTRY?

The ban on smoking in public places
3. WHICH OF THOSE 4 FACTORS IS THE
INTRODUCTION OF NEW TAXES?

-economic
4. WHAT DOES THE MICROECONOMIC
ENVIRONMENT INCLUDE?

All the ECONOMIC factors specific to a firm
operating in its own market
5. WHAT IS MACROECONOMIC ENVIRONMENT?

The national and international situation in
which business as the whole operates
6. WHICH ASPECT OF THE BUSINESS
ENVIRONMENT CONCERNS PEOPLE’S ATTITUDES
AND VALUES?

- social / cultural
WHAT IS PESTLE?
PEST
+
 Legal
&
 Environmental
factors

7. WHICH FACTORS ARE CONSIDERED IN THE PEST AND IN
THE STEEPLE ANALYSES?







- Political
- Economic
- Social
- Technological
+ Ethical
+ Legal
+ Environmental
8. WHAT IS A THREAT AND AN OPPORTUNITY OF
A GREENER APPROACH?
- higher costs
 - improved image and better sales

9. EXAMPLES OF LEGAL FACTORS
-industrial relations legislation
-product safety standards
 -regulations for pricing in the privatised
industries
 -laws preventing collusion between firms

10. WHY DO SOME FIRMS ADOPT A MORE
SOCIALLY RESPONSIBLE ATTITUDE?
They are under pressure to do so.
 Business ethics and corporate responsibility
are their major concern.

11. WHAT IS PEST FRAMEWORK USED FOR?

It’s used to audit the firms’ business
environment and establish a strategic approach
to business activities
12. WHICH ECONOMIC FACTORS ARE
DETERMINED BY TECHNOLOGICAL ONES?
-costs
 - productivity

13. WHAT HAS NOW BECOME THE MARKET FOR
MANY COMPANIES?

- the world
14. WHAT IS GLOBALISATION?

The process whereby the economies of the
world are becoming increasingly integrated
15. HOW DID THE COMMUNICATIONS
REVOLUTION HAPPEN?

Through the Internet and computer linking
allowing companies to communicate with
customers, suppliers, subsidiaries, etc.
16. WHICH MACROECONOMIC FACTORS TEND
TO BECOME GLOBALLY SIMILAR?
-interest rates
 - inflation rates
 - tax rates

17. TWO EXAMPLES OF GLOBAL ETHICAL
FACTORS
- concern for human rights
 - concern for decent employment conditions


Classifying industries-
18. WHAT IS PRIMARY PRODUCTION?
Production and extraction of natural resources
 Agriculture

20 WHAT IS SECONDARY, AND TERTIARY
PRODUCTION?

-Secondary: the output of the manufacturing
and construction sectors of the economy

-Tertiary: the production from the service sector
of the economy
GDP
The value of output produced within a country
during one year
 The Gross domestic product of the United
Kingdom in 2019 was 2.21 trillion British
pounds, an increase of about 200 billion
pounds when compared with the previous year.
From 2000 to 2008 the UK's GDP increased
each year, except for 2009

-DEINDUSTRIALISATION

A decline in the share of the secondary sector
in Gross Domestic Product
20. WHAT INDICATES THAT THE UK ECONOMY IS
MATURE?

Growing tertiary sector. People become richer
and consume more services.
21. WHAT IS INDUSTRY? WHAT IS AN
INDUSTRIAL SECTOR?
- Industry: a group of firms producing a
particular product or service
 - Industrial sector: a grouping od firms
producing similar products or services

22. WHAT MAY HAPPEN IF WE DRAW BOUNDARIES OF
AN INDUSTRY TOO NARROWLY?

ignoring the effects of competition from
another closely related industry
23. WHAT IS STANDARD INDUSTRIAL
CLASSIFICATION?

The classification of firms into industries used
by the government to collect data on business
and industry trends
24. WHICH MANUFACTURING INDUSTRIES
HAVEN’T EXPERIENCED DEINDUSTRIALISATION?
- instrument engineering
 - electrical engineering

25. WHAT DOES THE STRUCTURE-CONDUCT
PERFORMANCE PARADIGM ILLUSTRATE?

… that the structure of an industry depends on
a number of basic conditions concerning
market supply and demand
26. WHAT IS THE RELATIONSHIP BETWEEN
CONDUCTING A FIRM’S ACTIVITIES AND
COMPETITIVENESS OF THE MARKET?
 The more competitive the market is, the more
aggressive the business may have to be, in
order to sell its products
28 WHY DOES A FIRM WHICH FACES LITTLE
COMPETITION TENDS TO HAVE NOT ONLY
HIGHER PROFITS, BUT ALSO HIGHER COSTS?

Price fixing (collusion) is possible: its high
profits are secured, so it doesn’t need to
minimise costs
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