MGT603 Assignment No:1 Solution 2011

After you line up financing, find a suitable location, hire staff and organize a potentially
successful business plan, you must turn to external factors to effectively predict your
future. There are a slew of factors to take into consideration that usually are beyond your
control. While you may have contingency plans in place to deal with outside influences
that affect your business, sometimes the best you can do is improvise when they occur.
Economy
The global economy is one of the biggest external factors that will, at some time, affect
your business. Market fluctuations based on politics, terrorism attacks, wars and currency
devaluation eventually trickle down to most commercial enterprises.
Finance
Wall Street and the solvency of big banks and financial institutions may not seem to have
much to do with your business, but eventually they may affect your ability to continue
doing business. Interest rates, the availability of credit and consumer loans are external
factors you rarely can control.
Weather
If man could control the weather, vacation resorts would know exactly when to charge
the highest room rates. Storms, tornadoes, hurricanes and wildfires are outside your
purview of controllable business factors. In addition to the direct impact a
storm may have on your ability to open your doors at any given time, widespread weather
events often carry a substantial trickle-down effect to a wide range of businesses.
Infrastructure
Zoning laws, highway construction and housing development are particularly important
to retail establishments, restaurants, manufacturers and other businesses that rely on a
location for success. Changes in the local infrastructure may prove either disastrous or
fortuitous to your company.
Laws
State, local or federal changes in the laws can have a direct impact on your business if the
service or product becomes highly regulated or outlawed. Cigarette manufacturers
learned this lesson when public smoking was outlawed in many areas and smoking
indoors has become practically nonexistent. Government regulations such as
those that affect the environment or communication are beyond your control and could
have a direct impact on your business.
Trends
While you may spend a good part of your profits on marketing in the hopes of favorably
influencing trends, some are beyond your control. An increase in technology use by your
customers may be built into your strategic planning, but you may not have planned for
the widespread use of social media that could affect your business. Celebrities who
become advocates for a cause or decide to boycott a certain business practice can start a
trend that could seriously affect your business if you're on the wrong side of the trend.

Customer Base
Your target customer base may change suddenly or slowly over a period of time. The
changing makeup of your neighborhood that attracts more singles or young renters can
affect your business for example if you cater to a more upwardly mobile, family-oriented
customer base. Cultural implications of a changing neighborhood may affect your
business negatively or positively depending on your ability to meet the needs of changing
demographics.