Syllabus: SQA - Higher Course Spec Business Management
Module: Understanding Business
Lesson: External Factors
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Introduction
Understanding how external factors shape business decisions is a core part of the SQA Higher Business Management course. This section, “Understanding business – External factors,” equips learners with the skills to analyse real-world business challenges, respond to external pressures, and evaluate organisational responses. It’s directly aligned with the SQA Higher specification, which encourages students to link theoretical frameworks to current business climates, and builds their ability to interpret, evaluate, and communicate economic reasoning across familiar and unfamiliar contexts.
Key Concepts
Students are expected to understand how the external environment impacts business activity. Key areas include:
Political – Government policy, changes in legislation, taxation, and Brexit impacts.
Economic – Interest rates, inflation, exchange rates, and levels of employment.
Social – Changing demographics, consumer behaviour, cultural trends.
Technological – Advances in tech, automation, and digital transformation.
Environmental – Sustainability practices, climate change, ethical sourcing.
Competitive – Rival businesses, market saturation, pricing strategies.
These six broad factors—often taught using the acronym PESTEC—form the lens through which learners evaluate business strategy and performance.
Real-World Relevance
To bring this topic alive, consider using case studies like:
Greggs’ response to changing social and health trends, with its vegan sausage roll hitting headlines and boosting market share.
The impact of interest rate hikes on UK retail, such as the effect on consumer borrowing and spending during periods of economic uncertainty.
Fast fashion brands like Boohoo and Shein, navigating environmental criticism by launching “conscious” ranges under public and regulatory pressure.
Encouraging students to track news stories or corporate press releases can make these factors feel immediate and actionable.
How It’s Assessed
In the SQA Higher exam, this content appears in both the question paper and the assignment. Students might be asked to:
Explain how specific external factors influence business decision-making.
Analyse how changes in the external environment create opportunities or threats.
Evaluate a business’s strategic response to external pressures.
Key command words include describe, explain, analyse, and evaluate. Students should be confident identifying PESTEC factors in scenarios and making informed judgements.
Enterprise Skills Integration
This unit naturally integrates several enterprise capabilities:
Problem-solving – Interpreting how shifts in the external environment create challenges for businesses.
Decision-making – Considering how a manager might respond to external threats.
Critical thinking – Evaluating multiple factors and weighing their importance.
Adaptability – Recognising the need for agile business strategies.
A practical way to embed these skills is through simulations or group challenges—tasking students with acting as consultants for a local business reacting to a policy change or new competitor.
Careers Links
Understanding external business factors links directly to careers in:
Marketing and market research – Spotting and reacting to trends.
Management consultancy – Advising businesses on strategic decisions.
Public relations – Navigating political, social, and environmental expectations.
Finance – Analysing the impact of economic indicators on performance.
This topic supports Gatsby Benchmark 4 (linking curriculum learning to careers) and Benchmark 5 (encounters with employers if guest speakers or case studies are brought in).
Teaching Notes
Start local – Begin by exploring how a nearby business has responded to a local planning law or economic trend.
Use news headlines – Give students a stack of recent business news and ask them to identify the PESTEC factor in play.
Common misconceptions – Students often confuse internal and external factors. Clear examples and comparison tasks help here.
Stretch tasks – Ask higher-attaining students to rank the PESTEC factors by impact on a business in a given sector and justify their decision.
For plug-and-play value, use short roleplays or hot seating where students act as CEOs responding to breaking news. This adds immediacy and deepens understanding.
