Enterprise · Both
External Environment & Ethics
Businesses operate in a changing external environment. Successful firms adapt.
External influences
• Economy – interest rates, unemployment, incomes
• Technology – e-commerce, automation, data
• Legislation – employment law, consumer protection, health & safety
• Environment – sustainability pressure, waste, carbon
Ethics
Fair treatment of workers and suppliers, honest marketing, environmental responsibility.
Ethical choices can cost more short-term but protect brand and long-term sales.
Worked example
How can higher interest rates affect a firm?
Solution: Borrowing costs rise; consumer spending may fall – sales and investment pressure.
Practice questions
1. Name three external influences on business.
2. Why act ethically?