how physical environmental issues might influence business behaviour
6.1 External Influences – Environmental 🌍
Objective: Understand how physical environmental issues can influence business behaviour.
Key Environmental Factors
- 🌡️ Climate Change: Rising temperatures, changing rainfall patterns, and extreme weather events.
- 🌪️ Natural Disasters: Hurricanes, floods, earthquakes, and wildfires that can damage assets and disrupt supply chains.
- 💧 Resource Scarcity: Limited water, raw materials, or energy supplies.
- 🌬️ Pollution: Air, water, and soil contamination that can affect product quality and public perception.
- ⚡ Energy Costs: Fluctuating prices of electricity, gas, and renewables.
Business Impact – Quick Reference
| Factor | Business Behaviour |
|---|---|
| Climate Change | Shift to sustainable sourcing, invest in green tech, adjust marketing to eco‑friendly image. |
| Natural Disasters | Develop disaster recovery plans, diversify supply chains, increase insurance coverage. |
| Resource Scarcity | Seek alternative materials, improve efficiency, negotiate long‑term contracts. |
| Pollution | Upgrade production processes, comply with regulations, engage in corporate social responsibility. |
| Energy Costs | Adopt renewable energy, implement energy‑saving measures, pass on costs strategically. |
Analogy – The Business Garden 🌱
Think of a business as a garden. The soil is the physical environment. If the soil dries out (water scarcity) or becomes too acidic (pollution), the plants (products/services) struggle to grow. Businesses must water (invest in resources), fertilise (innovate), and sometimes replant (pivot strategy) to keep the garden thriving.
Exam Tips & Sample Questions
Tip 1: Define each environmental factor clearly before giving examples.
Tip 2: Use the PESTEL framework to structure your answer: Political, Economic, Social, Technological, Environmental, Legal.
Tip 3: Always link the factor to a concrete business response (e.g., “a hotel reduces water usage by installing low‑flow taps”).
Sample Question: Explain how climate change can affect the tourism industry and suggest two strategies businesses can adopt to mitigate these effects.
Sample Answer Outline:
- Define climate change and its key impacts (e.g., rising sea levels, extreme heat).
- Explain specific effects on tourism: beach erosion, heat‑related health risks, seasonal shifts.
- Strategy 1: Diversify attractions (e.g., develop indoor activities).
- Strategy 2: Invest in sustainable infrastructure (e.g., solar panels, water‑saving systems).
- Conclude with the importance of proactive adaptation for long‑term viability.
Revision
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