Business Chapter 3 notes

Chapter 3 notes- external environment 

External environment = 

All businesses whether large or small or whether supplying services or goods, operate within an external environment.

Factors changing the external environment= 

Consumers income, interest rates, environmental and ethical reasons, growth in sales, competitions, migration, birth and death rates

1: Market Conditions: 

- A number of factors that affect a market

- These can have a positive or negative impact on the business

Some conditions could be demand, rivals entering or leaving the market, product launches

2: Incomes: 

Consumers’ incomes are determined by the level of a nation’s gross domestic product. A rise in GDP will increase the incomes received by many customers.

- GDP = Measures the value of a country's total output of goods and services over a period of time, normally one year. 

- A rise in income will increase demand for a product, especially for non essential products

3: Interest rates:

The price of borrowed money

- Interest rates affect the amount a customer will spend/ save and so changes demand for a product

- A rise in interest rates will increase the costs of production…