External FactorsFactors outside the control of the enterprise that can impact positively or negatively on costs and revenues. These can include:
> Changes in the cost of energy > Changes in the cost of marketing > Government changes i.e. new regulations, tax, NLW > Competitors > Consumer confidence in the economy > Changing consumer behavior > Changes in consumer legislation Watch the following theory videos on the different types of external factors which can impact a business. Also read the theory on BBC bitesize & test your knowledge on their MCQ. |
External Factors for Business - Business A-level Revision Video - Study Rocket
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Examples
Consider what external factors have impacted the following firms:
What went wrong at Thomas Cook?
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The Real Reason Jamie Oliver's Restaurant Empire Is Collapsing
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What would Brexit mean for UK business? | FT Business
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Assignment
Task 1:
You will need to explain ways in which external factors are important for business success for two SME's of your choice.
Task 2:
Then analyse using a SWOT analysis how the external factors determine the success of one of your selected enterprise. See the videos below to help with this.
Task 3:
Then evaluate the most significant external factor currently affecting a selected enterprise.
You will need to explain ways in which external factors are important for business success for two SME's of your choice.
Task 2:
Then analyse using a SWOT analysis how the external factors determine the success of one of your selected enterprise. See the videos below to help with this.
Task 3:
Then evaluate the most significant external factor currently affecting a selected enterprise.

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Mr Cosmetics
Your tasks is to explain ways in which external factors are important for Mr Cosmetics business success.
You can use the interview with the owner as well as your own research on external factors which relate to the industry in which he operates. You will need to consider a range of factors that might include: > changes in the cost of energy, raw materials, borrowing, premises > changes in costs of marketing or selling > governmental changes – new regulations, changes in taxation. > competitors – new competitors, changes made by existing competitors > consumer confidence in the economy – growth/recession, level of employment > changing consumer behaviour – social trends, taste > changes in consumer legislation, sales and labelling of products the misuse of information. Remember when explaining their effects on either cost and/or revenue, it must be applied to his business using evidence which you reference in your report. |
Mr Cosmetics External factors P5
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Scrummy Yummy Cupcakes
You will now need to repeat the external influences analysis for Scrummy Yummy Cupcakes.
Watch the video to support your analysis on the impact of the current external environment. You will then need to research and apply your analysis with regards to making and selling cakes for the following: > Changes in cost of energy and materials (What are these in baking?) > Changes in costs of marketing (How does Scrummy Yummy Cupcakes promote?) > Government changes (What legislation could be introduced on cakes?) > Competitors (Research the other sellers both local and national) > Consumer confidence (How might current concerns over hours and employment impact orders?) > Consumer behavior (What are the current social trends in our diets and baking?) > Changes in consumer legislation (Why is the labeling on food ingredients so important?) |
Scrummy Yummy P5 ingredients costs
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P5 external factors interview
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