Managing external influences
A First Group case study

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Page 2: External influences

Running a business would be simple if the directors and managers only had to think about what went on inside the business. They could concentrate on internal decisions, such as determining routes, timetables and operating buses. However, business planners have also to understand what goes on outside the business.

Businesses are able to identify external changes that may affect it by carrying out a PESTEL analysis. This is a business tool in which each of the letters in PESTEL describes a type of change that takes place in the external business environment.

Many of these external changes may be outside the control of the company, for example, new government legislation. Some changes may present a threat to the business, such as a competitor using new or improved technology.

Social changes may bring opportunities, for example, migrant workers bringing new skills to the employment market. Environmental impacts, such as those caused caused by carbon dioxide (CO2) emissions or the management of waste, are of particular concern to businesses like First.

Business strategy

A business must assess what external changes are likely and which it needs to react to or take advantage of. Business planners can then create strategies to help the business respond effectively. We use the term “business strategy” to refer to a plan for a group of related products. First”s strategy relates to its transportation plans and takes into account all of the PESTEL factors in its environment.

First Group | Managing external influences