Enterprise · Higher
External Influences on Business
Businesses operate in a changing external environment – successful firms scan and adapt.
Key factors
Economy: interest rates, inflation, unemployment, exchange rates.
Law: employment law, consumer protection, health and safety.
Technology: e-commerce, automation, data.
Environment & ethics: sustainability, reputation.
Impact
Rising interest rates increase borrowing costs.
New laws may raise compliance costs but protect consumers.
Worked example
How might a weaker pound affect a UK importer?
Solution: Imports cost more in pounds – higher costs or higher prices.
Practice questions
1. Name three external influences.
2. Why do interest rates matter to businesses?