What Are The External Factors That Affects Your Business?

By Guest Author | SWOT | April 19, 2021

Running a professional enterprise needs you to work smart besides physical labor. To achieve that, you need to improve upon various areas, from planning, management to execution. Periodic reviews are also essential to judge the market trends and analyze how close your products/services fulfill the consumers’ expectations.


A company may have its goal-setting in place, but you can never overlook the unexpected tide that may hit your business one fine day. Your organization may run on a sound strategy, but external factors can cripple your meticulous business. That’s why you need to make suitable adjustments to your marketing efforts in line with several micro and macro factors. Let us get a better understanding of the likely external influences on business through the PESTEL analysis.

(P) Political Environment

The political environment plays a significant role in the growth and sustainability of the business firms operating in the nation-state. Political stability is an essential factor guiding business growth concerning international trade, taxation, and regulations. Restriction relaxation on recreational marijuana and trending online cannabis stores sheds light on the political forces behind marijuana policy liberalization.

(E) Economic Conditions

Consumption patterns can influence economic growth and decline and change interest and inflation rates. It also influences the employment rate and can cause an economic downturn to a healthy economy. The COVID-19 crisis has brought the world’s largest economic shock highlighting the need for urgent action and setting the stage for a permanent recovery.

(S) Sociological Forces

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Social factors vary with locations and refashion lifestyle patterns, buyers’ habits, and value perceptions. Age, population growth, disposable income, literacy levels, more female workforce shape consumers’ attitudes, opinions, and beliefs towards products, relationships, and green consciousness.

(T) Technological Innovations

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The pandemic is making urban consumers adapt themselves to technology advancements and enhancements. Technology awareness of tablets, devices, and hand-held gadgets is showing a new high. Capital-based technology like AI and Machine Learning and outsourcing business models like BPO, KPOs, etc., are changing the technological landscape.

(E) Environmental Issues

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Climate changes, greenhouse gas emissions, global warming, pollution, waste disposal, natural disasters like earthquakes, forest fires, and hurricanes can disrupt business. Environmental consequences can harm agriculture and fisheries and hike raw material costs leading to direct and indirect inflation, property destruction, and civil unrest. 

(L) Legal Challenges

Areas such as intellectual property, information sharing, network security, health and safety policy, immigration are legally sensitive and can lead to lawsuits on lack of proper legal documentation. Proper licensing, if unobtained, or choosing the wrong business structure can cause the business to shut down. Hence, a dire need for copyright, trademark, or patent protection.


Stay updated on external factors affecting your business by conducting environmental scans after every quarter. Small and medium-sized businesses should take it up as a valuable exercise to address upcoming threats before they become weighty problems.