While differing customer preferences and changes in how they spend their money are creating trends that drive change in the industry, the economy also has internal impacts on restaurants.
Factors Affecting the Economic Environment of Business by Hunter Taylor - Updated November 21, Various internal and external factors affect the economic environment that a business operates in. The cost of labor, materials, processes and procedures, for example, have a massive impact on the bottom line.
These are all internal factors since the company has control over them and can improve them through company projects.
At the same time, certain external factors can also affect a company's chances of success. The business has less control over these factors and must work hard to account for them when positioning itself in the marketplace.
Tips The primary influences on a business are: Political Factors The political environment affects the economic environment of businesses.
Legislators at the local, state and federal levels may provide incentives or tax breaks to companies or they can impose regulations that restrict business transactions. In the latter case, for example, if a political body states that a company must include a certain chemical in its product, the cost of the product differs.
The company passes those costs on to the customer in the form of higher prices. The customer must determine whether he wants to purchase that product.
If he does not purchase the product, then the company does not receive the revenue. If a large number of customers decide not to purchase the product, the company may need to layoff employees.
Economic Factors The larger economic environment of a society is a factor that can affect a company's business environment. During a recession, consumers spend less on optional items such as cars and appliances. As a result, the business environment suffers.
On the other hand, if the economic environment is one of prosperity, consumers are more likely to spend money, not just on necessities, but larger items as well.
Video of the Day Brought to you by Techwalla Brought to you by Techwalla Social Factors Social factors that affect the economic environment of a business are the cultural influences of the time.
For example, a fashion designer that creates bell bottom, striped pants will not succeed in an environment where straight-leg, solid colored pants are desired. A social environment that tends to be more conservative will not support styles that appear to be trendy.
The fashion designer's business will suffer if he does not change the clothing style. The same would apply to the manufacturers that produce and stores that sell these wares.
Technological Factors Innovation and technology affect business environments. As technology advances, a business is forced to keep pace. For example, when computers were first invented, they were the size of a room.
Users were forced to employ punch cards to perform basic functions. Today, computers that are much more powerful can fit into the palm of a hand.
Businesses that do not keep up with technology risk increased costs of production and higher prices. If the company's cost to produce a product or service outpaces competitors, the company may soon find itself out of business. Legal Factors Often, a business will need to change how it operates for legal reasons.Many political factors have an influence on the business community, ranging from the philosophy of the governing party to political responses to economic trends.
When government leaders and agencies set policies, they start trends that often have a powerful influence on the legal structure within. the business (Obasan; ).Environment is always seen as the sum of the factors that affects, controls or decides the performance of a business.
Any business in the international or local market is directly affected by the political (P), Economical.
the different environmental factors that affect the business can be broadly categorized as internal ands has its own external factors internal factors internal factors are those factors which exist within the premises of an organization What Are The Environmental Factors That Affect Business?
Follow Upvote Report Question timberdesignmag.comCAL. Apr 23, · As the New Year begins, so does the business of planning for the upcoming year for most restaurants in the nation. According to the National Restaurant Association, saw a slow but steady growth for the reportedly fourth consecutive year in industry sales for the roughly , restaurants in the U.S.
Political Factors. The political environment affects the economic environment of businesses. Legislators at the local, state and federal levels may provide incentives or tax breaks to companies or they can impose regulations that restrict business transactions.
Factors like food and labor cost inflation are likely to continue to impact the restaurant industry in the foreseeable future.