1. EXTERNAL ENVIRONMENT
No. 11
The external environment in which a business
operates consists of the operating or task
environments together with the macro or
broad environment

2. EXAMPLES OF THE EXTERNAL
ENVIRONMENT
• Customers
• Suppliers
• Competitors
• Special interest groups ie. trade unions
and employer groups

3. Factors to consider when dealing
with the external environment
• CULTURAL or SOCIAL FACTORS
• Relate to people and groups and the way they
interact which each other.
– What is the climate or feeling in the community
towards a product.
– What are the attitudes of the buyers, their values and
beliefs.
– Examples ?

4. TECHNOLOGY FACTORS
• Technology is used to transform the
inputs into desired outputs.
• Effects the cost of production
• Effects time it takes to produce goods
• Effects communication
• Effects competition
– Can you think of an example of this?

5. ECONOMIC FACTORS
The current state of the economy is shown in indicators such as:
• Consumer spending – how much consumers spend
• Unemployment - % not in the workforce
• Inflation - % of price increases
• Investment by private investors – foreign ownership and domestic
buyers
• Interest rates – to encourage investment
• Exchange rates – to encourage imports and exports
Economic conditions can have a profound effect on the business.
Why?
When conditions are good, standard of living is high and people spend
money. However when economic conditions are poor, standard of
living falls and can hurt business.
• LETS DISCUSS THE CREDIT CRUNCH IN THE US AND GLOBALLY IN
2008.

6. Question (research)
• In Australia at the present time, what is
the official interest rate to consumers? Is
this high or low? What effect would
interest rates have on the economy and
business in general?

7. POLITICAL AND LEGAL
ENVIRONMENT
• Laws can directly impact an enterprise. These include.
– Building regulations
• WHY?
– Anti discrimination laws
• WHY?
– Competition Policy
• WHY?
– Health and Safety Laws
• WHY?
– Fiscal policy
• e.g. Tax laws for example the GST

8. Ecological Factors
• Businesses are improving their
environmental management practices by
responding in positive ways to minimise or
eliminate ecological issues such as water
shortage, greenhouse emissions and
pollution.
• Examples?

9. QUESTIONS
• Pg 49 q1 and q2
• Pg 50 q1, q3 and q4
• Question 5 (as a group)
• If time permits do game on page 52, Q9.