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 Form 1 Business Studies: Business and its environment online lessons

Examples of external business environment

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Answer Text:
External business environment :
-Refers to factors that can affect the business negatively or positively from outside. Business has little or no control over them.
-Legal environment:Refers to laws that govern business operations.
-Political environment:Refers to the
ruling political parties and political climate.
-Technological environment:Refers to the technical knowledge, efficient use of tools and equipment used in production of goods.
-Economic environment:things such as level of capital, interest rates, price of goods and services has an effect to the
purchasing power of customers.
-Demographic environment: This is population changes which include; population size, geographical distribution, age and gender and also death and birth rates.
-Socio-cultural environment: refers to the nature and social organizations of groups of people around the business.
-Competitive environment: this is environment whereby firms try to outdo each other as they compete for market. Competition can be into two forms:
a)Generic competition:where products serve the same purpose but are different.
b)Enterprise competition:where different firms produce similar products so they compete for
the same consumers. E.f locally produced cars and imported cars.
-physical environment: include factors such as climate, roads, water sources, electricity etc.
-Intermediaries: the channels through which business products are distributed to consumers.