There have often been over the year’s external influences, which have affected the business. Some random some not, for example the collapse of the twin towers, due to a terrorist attack in America on 11th September 2001 had a huge affect on the travel industry. This external influences would of certainly affected EasyJet, even though EasyJet didn’t fly as far as America the tourists and businessmen would have been sceptical of flying. Transatlantic flights slumped; the knock on affect was that travel agents lost money, companies that made planes lost out, and the tourist industry suffered.Thankfully external influences are not generally so random the following are external influences, which are a little more predictable.Business CompetitionRival companies may bring out a cheaper or better product or service.
In a competitive market where many businesses offer the same or similar product, businesses must battle for a share of the market this is often achieved by offering a slightly different products or services. Possibly with better safety enhancements, additional services, loyalty or discount schemes for regular customers.There are many things, which make a product or service competitive:* Price* Quality* AvailabilityPriceAway of drawing in customers and being competitive is to offer special promotions on certain items for example, buy now pay later 0% interest on finance (this means you can buy over a longer periods of time without paying interest).
Buy one get one free deals or discountsQualityGood quality is not only what the customer wants but is also a legal requirement. Even the cheapest clothing must not fall apart in a matter of days.Businesses often try to convince its customers that their products are of a superior quality and in some cases worth paying more for.Selling a better quality of goods or services can enhance a company’s reputation, which in some case to some customers may be more important than price.AvailabilityAvailability of a product or service is also important feature of competitiveness.
Staying open late so customers can come and shop after work, Sunday opening is an advantage for those who work long hours, maintaining stock availability, offering home delivery, or internet shopping means that people can shop for products or services at a time which suits them.Economic influencesThe economy can affect the price of goods and services and the general publics ability to pay for these goods or services. If interest rate are low and borrowing is cheap people are more inclined to spend (this is called buoyant economy) money. If interest teas are high or jobs are scarce people are less inclined to buy therefore stock remains on the shelves, businesses have less money so they produce fewer goods.People and businesses affect the economy of a country the three main changed are:* Interest rates* Prices* Exchange ratesInterest ratesInterest is the cost of borrowing money. Most businesses will have to borrow money at some stage either to expand, buy new equipment or machinery or to develop new products.If interest rates raise then the cost of borrowing will be greater, if interest rates go down the cost of borrowing will be cheaper.
Should the interest rates rise dramatically than businesses could find that they are paying out more than they are making by selling the product or service they originally borrowed the money for,Interest rates also affect the businesses and customers, which buy. This could lead to a downfall in sales.Consumers may be less likely to want to borrow money to purchase goods if rate are too high.Prices.Changes in prices and services can rise or fall. If prices at the rate of which rise is known as inflation. If prices rise to quickly people on fixed incomes may not be able to keep up with the increasing cost of living.
Trade unions (people elected to suppose the rights of the workers) offer to negotiate for pay rises for employees, which are in line with inflation.If inflation is high consumers may prefer to buy cheaper imported goods, the knock on affect of this is that UK business sales will slump and companies may need to lay off staffIf inflation is low consumers demands for goods will increase if it increases to fast businesses may not be able to supply goods fast enough they will then put their prices up.If there is a lack of competitiveness for certain products or services a business can charge higher prices.
Changes in the exchange rate.The only time individuals are likely to be interested in exchange rates is when they go on holiday. When changing British currency to a foreign currency if the exchange rate is good you will have to move money to spend on holiday if it is poor you will have less money to spend.The same applies to British goods being sold abroad if the pound is strong British goods will cost foreigners more. If foreign currency is good then British goods will cost less. The same works on reverse for us in the UK when buying goods from abroad.Environmental influence.
In recent years many laws have been passed which affects how businesses can operate or dispose of their waste in order to protect our environment.Many years ago business and individuals did not think much about how they operated, noise levels, pollution levels or how they disposed of their waste.Since then attitudes have changed thanks to pressure groups and scientists businesses and the general public are more aware of environmental issuesGovernments are starting to realise that if we don’t change the way we live, work and use natural resources we may permanently damage our planet.Laws now control some business practices to prevent further damage being caused. Laws, which govern such things as:* Air pollution, the prevention of dangerous or harmful gasses being released into the air* Noise pollution, the level of noise emitted by machinery, etc which can be harmful. Noise is measured in decibels. Health organisations recommend a maximum of 55 decibels during the day.
* Water pollution, water pollution occurs when hazardous or dangerous chemicals are discharged into rivers, streams, lakes or seas. The main source of water pollution is industry and farming