External influences on business

There are a large number of external influences that can impact upon the success of a business. These influences are likely to result in the business changing the way that it works in order to keep up with the market and continue to make money. If a business cannot keep up with this change and alter its approach in order to offer exactly what its clients need then it will run the risk of losing money and potentially failing in its goals.

The economic environment

As an economy changes so will the demands of customers. Other things that are influenced by the economy will include taxes, inflation and interest rates. When an economy is strong it provides many opportunities for businesses as it is easier to get finance from banks and other lenders, customers are happy to spend their money and exchange rates will be good for a company that purchases goods from overseas. However, an economy that is underperforming can make a lot of people be careful with their money. This will lead to a decrease in spending from both banks and individual customers which can impact a business massively.

Technology

The emergence of new technology will have an impact on all businesses. A lot of people think that it is just technology based companies that need to keep up with the latest technologies, but this is not true. All companies can learn new techniques that will help to streamline their operations and run more smoothly with the help of advanced methods.

Technology is now used in almost every sector in business. This will include the primary sector, where raw materials are farmed or collected from natural states. The latest mining technology uses state-of-the-art equipment to be able to locate areas of interest for primary sector businesses that collect materials. As well as this, farming equipment is becoming more and more advanced with heavy machinery reducing the costs of production and increasing profits.

New technology used in farming and the primary sectors have made it more efficient to collect and process raw materials.

Secondary sectors, who take raw materials and manufacture them into products, will make use of technology in assembly lines and production. This could include robotic systems that can work quicker and to a higher level of accuracy than factory workers that do things by hand. It is also cheaper to buy technology that produces goods rather than employ staff in the long run as, once purchased, robotic assembly lines can run 24/7.

In sales (also known as the tertiary sector), goods and services are sold directly to customers. These customers can be either individuals or businesses. Technology will play a part here as new ways of selling are used such as e-commerce, apps and the use of customer management systems that make the sales process more efficient. Payments themselves may also be changed by technology as things are purchased through new technology that is safer and easier for a customer. Examples of these include online card payments, e-wallets (such as PayPal) and contactless card payments.

Legislation and social aspects

As changes in society are implemented, a business must be able to react and change its approach. New legislation may come into force that bans certain products or puts limitations on manufacturing methods. A good example of this is the banning of small ‘microbeads’ that are added to a lot of cleansing products such as face washes. Changes in legislation are set to ban these from products, so companies will need to come up with new products to take the place of existing ones which cannot be sold.

As well as legislation, social aspects must be considered by a company. Although a product may be legal, it might not be desirable for customers since it is bad for the environment or is unsustainable. Products such as this will not be wanted by customers who are socially conscious. Businesses must keep a close eye on the desires of customers at all times to ensure they are at the forefront of what their market wants.