External and Internal Factors Effecting a Business

Topics: European Union, Stock market, Stock Pages: 5 (1859 words) Published: October 9, 2012
International Factors Affecting Patton Group
Changes in the international economic environment have an effect on the Patton Group in a variety of different ways. Some changes can have quite a large and significant impact. For example, a change in oil prices will have a large knock-on effect on the Patton Group, as they, like every other company in industrialised nations, require oil to run their machinery and vehicles in order to work effectively. Uncertainty about oil creates a concern that countries cannot maintain supply, pushing prices up as demand increases although supply decreases. Countries start to demand more oil which also pushes up the price, and if a country gets too greedy with their oil supply, it can increase tension between nations. When there is a price increase in oil, it has to be passed on to the consumer via the Patton Group. This could push the cost of the project over the edge and Patton group may end up losing jobs. War and political instability also causes issues which can affect businesses. Countries become unstable and there is an uncertainty which affects global trade and markets. If a business such as the Patton Group is operating in an unstable country when war is declared, it may lose investments which have been made in that country, and it will also lose time and progress on the work being carried out, as they must try to get all their employees home as safely and quickly as possible. Investors in that country will hold on to their money until the crisis is over – this causes a slowdown in world trade. Even if the Patton Group isn’t operating in an unstable country, it will still be affected by a global slowdown in trade, which can lead to a worldwide recession if it is not managed correctly. Environmental concerns and actions are also a factor of changes in the international economic environment that affects the Patton Group. There are tight controls from the UK & EU on pollution and waste management. The Patton Group must not pollute the environment with any bi-products of their construction work, as there are large fines and penalties that they will face. Economical waste management and disposal comes at a cost, increasing the Patton Group’s expenditure. Staff must be aware of legislation surrounding waste management, therefore they must be educated about it. This also comes at a cost to the Patton Group. However, there are various opportunities involved in effective, economical waste management. The Patton Group can maximise their exposure by building eco-friendly buildings and forging a reputation for building quality, new-age buildings as they progress. New technologies require the user to be educated, but by training their employees to use the most recent technological advances in construction, they allow themselves to save time and labour as new technology makes the job easier and more efficient. The government will also give grants to companies using renewable energy sources and disposing of their waste responsibly, which increases the Patton Groups sales. Major corporate failures are failures that would impact on the construction industry, such as problems with the banking sector. A problem in the banking sector would have an impact on the accessibility of business loans to cover costs – the cost of a loan may increase for the business by way of a higher interest rate. If the Patton Group needed to take out a business loan in order to buy new machinery, for example, the raised cost of obtaining and paying off the loan would have to be passed on to clients of the business in able to make it financially effective. It would also be more difficult for people to get mortgages in order to purchase property, leading to a knock-on effect in the construction industry as consumers are not selling their current home to move into a new house or to build their own. The lack of demand for building and renovating drops as consumers don’t have money to spend on things that would be seen as...
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