Business Impact of External Factors

The video tutorial discusses various external factors that impact businesses, such as competition, economic conditions, and demographic changes. It highlights how these factors influence demand, costs, and market dynamics. The tutorial also covers the importance of understanding demographic and environmental factors, as well as the nature of products and markets. Businesses must adapt to these influences to remain competitive and sustainable.

What is the primary focus of a business when considering the external environment?

• Demand for their product and costs

• Technological advancements

• Employee satisfaction

• Internal management strategies

How does increased competition in a supplier's market affect a business?

• Decreases the quality of materials

• Increases the business's market share

• Reduces costs for the business

• Increases demand for the business's products

In a highly competitive market, what strategy might businesses use to maintain their position?

• Reduce costs or develop unique selling points

• Increase product prices

• Ignore marketing efforts

• Focus solely on quality

What effect does an increase in disposable income generally have on product demand?

• Leads to higher product prices

• Decreases demand

• Increases demand

• Has no effect on demand

How do higher interest rates typically affect consumer spending?

• Encourage more borrowing

• Have no effect on spending

• Reduce spending power

• Increase spending power

Which demographic factor can have a long-term effect on product demand?

• Distribution of specific age groups

• Seasonal changes

• Short-term economic trends

• Temporary market fluctuations

How might changes in the distribution of specific skills impact a business?

• No impact on the business

• Alteration in labor costs

• Decrease in labor costs

• Increase in product demand

What is a potential cost implication for businesses adopting environmentally friendly practices?

• Reduction in product quality

• No change in costs

• Increase in costs due to expensive materials

• Decrease in production costs

What is the purpose of fair trade agreements?

• To eliminate tariffs on all goods

• To increase competition in developed countries

• To ensure fair prices for goods from less developed countries

• To reduce the quality of imported goods

What should businesses consider when judging the impact of external factors?

• The nature of the product and market location

• Short-term market trends

• Internal management preferences

• Only the current economic conditions