Responding to External Factors Flashcards

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Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

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What is an external factor in business?

A change outside the business that it cannot control, like new laws, technology, or the economy.

What does responding to external factors mean?

Making changes to how the business works to match outside changes.

Why should a business monitor external factors?

They can change costs and demand. Early action helps the firm stay legal and keep customers.

How can a business respond to a new law?

Check the rules, update policies, train staff, change labels or equipment, and keep records to show you follow the law.

How can a business respond to new technology?

Invest in new tools, train staff, sell online, and improve online security.

How can a business respond to changing customer tastes?

Do market research, update product features, add new ranges, and adjust price and adverts.

How can a business respond to more competition?

Offer something unique (a USP), improve quality or service, run promotions, and cut waste to lower costs.

How can a business respond to a fall in consumer incomes (a recession)?

Offer value ranges, smaller pack sizes, more discounts, and delay expansion.

How can a business respond to rising interest rates?

Borrow less, delay big purchases, use fixed‑rate deals, and focus on cash flow.

How can a business respond to rising inflation?

Find cheaper suppliers, improve efficiency, raise some prices with care, and agree longer contracts.

How can a business respond to pressure group or environmental concerns?

Cut packaging, use sustainable materials, check suppliers, and publish clear policies.

What could happen if a business does not respond to external change?

It may lose sales, face fines, get bad press, and fall behind rivals.