Theory question 104
Business Environment and Social ResponsibilityCommerce 2 (answer any five questions)
(a) Identify four environmental factors that affect business.
(b) Explain how each of the factors mentioned in 4(a) above affects business operations.
Show the model answer
(a) Any four: economic; political/legal; social/cultural; technological; physical/natural (geographical); competitive.
(b) Effects (for the four chosen): economic – inflation, income levels, interest and exchange rates, unemployment affect demand and costs; political/legal – stability, government policies, laws, taxes and regulations decide what firms may do and their costs; social/cultural – customs, religion, tastes, population size and education decide what people buy; technological – new machines and methods affect efficiency, products and costs, old technology makes a firm uncompetitive; physical – climate, raw materials, terrain affect location and production; competitive – number and strength of rivals affect prices and market share.
Name four factors and, in (b), show how each one helps or limits a business.