External Constraints - these are factors outside the control of the business that restricts it from achieving its aims and objectives. The affects of external constraints mean that a business may not able to achieve its aims and objectives.

The affects of external constraints are;

changing consumers tastes

People want new products and services as soon as they come on to the market. They like to change to match whatever is trendy at the time. If this happens then a business may find its sales fall and it may no longer be PROFITABLE or not even SURVIVE.

competitors' actions

Businesses bring out new products all the time to try to compete. They launch new advertising campaigns and promotions to win over competitors customers. If consumers start to buy the new products because of competitors' actions then unless there is a counter campaign some businesses may loose customers and no longer be PROFITABLE or not even SURVIVE.

interest rates

If interest rates rise then this means that if a business has borrowed money then they will have to repay more interest. This may mean that it reduces PROFITABILITY and may stop any plans to GROW and expand.

Interest rates could make borrowing cheaper and therefore encourage GROWTH.

exchange rates - the value of the pound against other currencies

This constraint affects businesses that trade abroad. A change in exchange rates could make their products more expensive to buy. If this happens then a business may not be as PROFITABLE or even not SURVIVE the change in interest rates.

A change in exchange rates may make the product cheaper abroad and therefore sales may increase and the business may be more PROFITABLE.

consumer and business confidence

Lack of confidence in a product may mean that sales fall and the business can no longer be PROFITABLE or even not SURVIVE unless confidence returns.

legal constraints

All organisations have to make sure they operate within the laws of the land. If they don't then the government has measures which it may use that could stop the business trading.

social attitudes

As people become more aware of how pollution affects the environment they start to buy products that are environmentally friendly. This in turn may lead to organisations which pollute not SURVIVING due to pressure groups making consumers aware of these issues.

 

 

pressure groups

As people become more aware of how pollution affects the environment they start to buy products that are environmentally friendly. This in turn may lead to organisations which pollute not SURVIVING due to pressure groups making consumers aware of these issues.