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Business Objectives and Strategy

Impact of external influences

  • 7 things to know
  • Paper 2 and Paper 3

Overview

PESTLE analysis across political, economic, social, technological, legal and environmental factors, and Porter's five forces on the competitive environment.

What you need to know

Answer each one before you reveal it.

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Key term

What are the six categories in a PESTLE analysis, and what do political factors cover?

Process

Which technological and legal factors does PESTLE examine?

Key term

Which legal factors must a business monitor?

Key term

Which environmental factors affect strategy, and what changes the competitive environment?

Evaluation

What are barriers to entry, and which of Porter's forces covers suppliers?

Evaluation

Which force in Porter's framework assesses the power that customers have in negotiations?

Key term

Which of Porter's forces focuses on competition between firms already operating in the industry?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What are the six categories of external factors examined in a PESTLE analysis?

    Model answer

    Political, economic, social, technological, legal, and environmental factors.

  2. 2

    In PESTLE analysis, what type of external influences do political factors represent?

    Model answer

    Political factors represent government-related influences such as policy decisions, taxation, trade regulations, political stability, and government spending priorities.

  3. 3

    Give five examples of political factors that would be considered in a PESTLE analysis.

    Model answer

    Government policy, taxation, trade regulations, political stability, and government spending priorities.

  4. 4

    How might changes in government spending priorities affect business decisions?

    Model answer

    They can redirect demand towards or away from certain sectors, affecting sales opportunities, contract availability, and investment decisions.

  5. 5

    What category of PESTLE analysis covers influences like interest rates, inflation, and unemployment?

    Model answer

    Economic factors.

  6. 6

    List six economic factors that form part of a PESTLE analysis.

    Model answer

    Interest rates, exchange rates, inflation, unemployment, economic growth, and consumer income levels.

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