- Term Papers and Free Essays

External Factors Affecting Business

Essay by   •  January 25, 2017  •  Research Paper  •  1,117 Words (5 Pages)  •  731 Views

Essay Preview: External Factors Affecting Business

Report this essay
Page 1 of 5

External Environmental Analysis

Assignment #2

Meenakshi Chaudhry

Student #300888191


Professor Leesa Butler

External factors affecting business

1 Economic factors- There are several economic factors need to be taken into account when determining the current and expected future value of a business or investment portfolio. For a business, key economic factors include labor costs, unemployment level, salary rate, consumer confidence level.

  • Consumer confidence lowest in 15 years- This will affect the business negatively because Consumer confidence is an economic indicator that measures overall consumer confidence about the state of the economy. Confident consumers tend to be more willing to spend money as compared to consumers with low confidence. It may force company to cut costs to maintain profits in this case of low customer confidence (Consumer Confidence, n.d.)

  • Unemployment Nationally 7%- Unemployment level affects the demand and supply of good and services in an economy, higher the unemployment level in economy lower will be the demand for goods and services and vice versa.

2 Political factor- Political factor is related to government policy and its administration that has the potential to change or influence a business. New legislation is one example of a political factor because it can impact the company's operations by either requiring or prohibiting it to act in a particular way.

  • Canadian Government limits imports to 30% of all products sold in Canada-In this case the demand for the company’s products may rise due to the reduction in the availability of the imported products in India.

  • Canadian Government limits all T.V. advertising directed to people 25 years and younger -This will have a negative effect on the business due to this implication the advertisements will only reach a number of people due to age restriction, this may lead to lack of awareness among people about the product.

3 Social Factors- Social factors are the factors that affect lifestyle, such as religion, wealth or family. It is important for businesses to be aware of these factors as they change because it is an important component in proper marketing.

  • Teen available spending power continues to rise- This will have a positive effect on the business as the spending power of teenagers rise, the demand for the company’s product tend to increase.
  • 62.5% of Canada’s newest immigrant population live in one of Canada’s three largest cities – Toronto, Montreal and Vancouver- An increase in population will cause the demand for goods to rise and labor availability will increase as well. As the demand for company’s product may rise this will eventually have a positive effect on the business.

4 Competition- In economics, competition is the rivalry among sellers trying to achieve goals such as increasing their profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion.

  • Canadian Market place is being dominated by large U.S. retailers- This will have a negative effect on the business, because the demand for local products will fall as it is being dominated by U.S retailers.

  • There is a big emphasis on reducing consumer prices with discount offers- This will also have a negative effect on the business as the company will have to give discount offers on its products as to compete the rivals due to the current marketing trend.

5 Demographic factors -Demographic segmentation is that kind of market segmentation which is according to age, race, religion, gender, family size, income, and education. Demographics can be segmented into several markets to help an organization target its consumers more appropriately. (demographic segmentation)

  • Baby Boomers are working longer, have higher disposable income, and limited technical skills- This could have both negative and positive effect on the business. Baby boomers are more dedicating and experienced of all generations but the drawback is that they have less knowledge of technology.
  • Generation ‘X’ will continue to have busy lives with young families- Generation x is the first to grow up in the Internet era, got the benefits of technology. almost 50 percent owns smartphones and over 10 percent owns tablets. Almost 80 percent of the Xers use internet for banking, over 70 percent for researching companies and products, and around 80% have made purchase online however, generation X keeps their family as priority and this affects the business negatively. (An overview of generation X, n.d.)

6 Technological factors- Technologies such as the web, mobile phones, social media, and customer relationship management systems greatly affect modern marketing.

  • Tablets: +52% early stage rapid unit growth (Morgan Stanley Research May 2014)- looking at technology from a positive perspective instead of a ‘necessary evil’. Traditional models are changing and advantages can be achieved by investing in modern technology but just purchasing technology for the sake of having it is not enough, implementing a strategic plan is the key in order to succeed. (technological factorts affecting business, n.d.)

  • Mobile Data Traffic +81% accelerating = strong driver (Cisco Visual Networking Index May 2014) - integrating modern technology solicits identifying the business requirements and evaluating the business processes according to its objectives and goals. These changes should benefit the company and the consumers. (technological factorts affecting business, n.d.)


The first and foremost goal of every business is to maintain goodwill in the market and make higher profits. There are various external factors that are discussed above that affects the stability of the business and henceforth marketing strategies. The current situation of this business is stable although there is a number of strategies that can make the company’s performance better and help it compete with rivals. The first objective for this company must be earning goodwill in the market. It is also important to update company’s technology resources and adopt different strategies for advertising. To maintain the goodwill the company must provide quality goods and establish new distribution channel for higher sales. By implementing the marketing plans discussed below it will be easier for the company’s to earn back customer confidence and stability in the market.



Download as:   txt (7.8 Kb)   pdf (202.3 Kb)   docx (210.2 Kb)  
Continue for 4 more pages »
Only available on
Citation Generator

(2017, 01). External Factors Affecting Business. Retrieved 01, 2017, from

"External Factors Affecting Business" 01 2017. 2017. 01 2017 <>.

"External Factors Affecting Business.", 01 2017. Web. 01 2017. <>.

"External Factors Affecting Business." 01, 2017. Accessed 01, 2017.