Area of Study 2 External environment
The external environment consists of all elements outside a business that may act as pressures or forces on the operations of a business. Students consider factors from the external environment such as legal, political, social, economic, technological, global and corporate social responsibility factors and the effects these may have on the decisions made when planning a business. Students investigate how the internal environment relates to the external environment and the effects of this relationship on planning a business.
Outcome 2
On completion of this unit the student should be able to describe the external environment of a business and explain how the macro and operating factors within it may affect business planning. To achieve this outcome the student will draw on key knowledge and key skills outlined in Area of Study 2.
Key knowledge
- an overview of the factors within the external (macro and operating) environment and internal environment that affect business planning.
Macro factors affecting business planning
- an overview of key legal and government regulations affecting businesses in the planning stage
- societal attitudes and behaviour such as values, beliefs and trends
- economic conditions such as how interest rates, tax rates, business and consumer confidence levels affect business planning
- technological issues such as how the market may change in the future and developments in technology
- global issues such as overseas competitors, overseas markets, offshoring labour, exchange rates, patenting, copyrights, trademarks and online sales
- corporate social responsibility issues such as environmental considerations and planning the production of goods and services which are in society’s best interests.
Operating factors that affect business planning
- customer needs and expectations
- competitors’ behaviour
- suppliers and the supply chain, such as the resources required for a business and considerations about where these resources are sourced and how they reach the business
- special interest groups such as environmental lobby groups, business associations and unions.
Key skills
- define, describe, and apply relevant business management concepts and terms
- acquire, record, interpret and share business information and ideas
- research and analyse case studies and current examples of business management applicable to planning a business
- apply business management knowledge to practical and/or simulated business situations
- explain the benefits and costs of corporate social responsibility management practices with respect to business planning.
