Responding to external influences

Overview

How businesses respond to new technology, changes in the law such as allergen labelling, recessions, interest rate rises, a strong pound and inflation, and why speed matters.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What are external influences on a business?

   Model answer

   External influences are factors outside a business that it cannot control. Technology, legislation and the economic climate are external influences.

2. 2

   Why must a business respond to external influences?

   Model answer

   External changes can create threats that cut sales or raise costs. External changes also create opportunities that alert businesses can seize.

3. 3

   How might a business respond to a new technology used by its rivals?

   Model answer

   The business could invest in the same technology to keep up. The business could train staff to use it and update its marketing mix.

4. 4

   How might a high street retailer respond to more customers shopping online?

   Model answer

   The retailer could open its own website with home delivery. The retailer could offer click-and-collect or reduce the number of stores.

5. 5

   Why might a business decide not to adopt a new technology straight away?

   Model answer

   New technology is expensive and may not yet be reliable. A business that waits can learn from others' mistakes, though it risks falling behind.

6. 6

   How might a business respond to a rise in the National Living Wage?

   Model answer

   The business could raise its prices to cover the higher wage bill. The business could cut staff hours or invest in machinery to need fewer workers.

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