Syllabus: Pearson Edexcel GCSE Business
Module: Understanding External Influences on Business
Lesson: 1.5.5 External Influences

Introduction

Businesses don’t operate in a vacuum – they constantly adapt to a changing world around them. This topic brings together what students have learned about technology, legislation, and economic factors to explore how successful businesses respond to these external pressures. It’s about turning potential threats into opportunities and understanding that adaptability isn’t just nice to have – it’s essential for survival in today’s business environment.

Key Concepts

According to the Pearson Edexcel GCSE Business syllabus, the key concepts under External influences include:

• The Importance of External Influences on Business:

  • Understanding why businesses must monitor and respond to external changes
  • Recognizing that external factors are largely beyond a business’s control but require strategic responses

• Possible Responses by Businesses to Changes in:

  • Technology: How businesses adapt to technological innovations and digital transformation
  • Legislation: How businesses comply with and adapt to new laws and regulations
  • Economic climate: How businesses navigate changing economic conditions

• Response Strategies:

  • Proactive vs. reactive approaches to external changes
  • Short-term tactical responses vs. long-term strategic adaptations
  • Cost-benefit analysis of different response options

These concepts help students understand that successful businesses don’t merely react to external changes but anticipate and strategically respond to them, often turning potential threats into competitive advantages.

Real-World Relevance

External influences shape business decisions students can observe in their daily lives:

• Technology Responses:

  • Netflix transformed from DVD rentals to streaming when they saw where technology was heading – not after it arrived. Students who’ve never even seen a DVD rental store can understand this evolution.
  • High street retailers like Next didn’t just create websites; they developed sophisticated apps and click-and-collect services to blend online convenience with physical stores.
  • The local coffee shop that now takes orders through an app isn’t just being trendy – it’s responding to the same technological shifts that global chains face.

• Legislation Responses:

  • When students notice their favorite drinks taste different, that might be companies like Coca-Cola reformulating products after the sugar tax – a perfect example of legislation driving product development.
  • Those cookie consent popups that appear on every website? That’s every business responding to GDPR legislation – from tiny blogs to tech giants.
  • The increasing number of electric delivery vehicles shows how businesses are adapting to environmental regulations – legislation visibly changing business operations.

• Economic Climate Responses:

  • Aldi and Lidl’s expansion during economic downturns shows how some businesses thrive when consumer spending habits change.
  • The local restaurant that pivoted to takeaway during COVID restrictions demonstrates how businesses adapt to sudden economic shocks.
  • When UK holidays became “staycations” after Brexit affected exchange rates, that was the travel industry responding to economic changes.

These examples show how external influences aren’t abstract concepts but visible forces shaping businesses students interact with every day.

How It’s Assessed

In exams, students will typically encounter:

• Multiple-choice questions: Testing basic knowledge of how businesses respond to external changes.

• Short-answer questions: Explaining specific business responses to external influences, such as how a named business might respond to a new technology.

• Case study questions: Identifying appropriate responses to external changes in business scenarios and explaining the reasoning.

• Extended response questions: Discussing how businesses might respond to multiple external influences, weighing different options and their potential impacts.

Students need to know specific response strategies, understand their appropriateness in different contexts, and evaluate their potential effectiveness. Command words to watch for include “identify,” “explain,” “analyse,” and “evaluate,” with higher marks for balanced arguments that consider both advantages and disadvantages of different approaches.

Enterprise Skills Integration

Understanding external influences builds practical skills students can use beyond exams:

• Adaptability: Seeing how businesses must be flexible in changing conditions helps students develop this essential skill for any workplace.

• Problem-solving: Analyzing how businesses respond to external challenges develops creative problem-solving applicable in various contexts.

• Decision-making: Evaluating different response options builds the ability to make informed decisions based on multiple factors.

• Risk management: Understanding how businesses mitigate risks from external changes develops risk assessment skills valuable in any career.

• Innovation: Exploring how businesses turn technological changes into opportunities encourages creative thinking.

These skills are valuable in any workplace where responding to change is required – which is virtually everywhere in today’s economy.

Careers Links

Knowledge of external influences connects to numerous career paths:

• Business Strategy: Strategic Planners, Business Analysts, and Management Consultants advise on how to respond to external changes effectively.

• Product Development: Product Managers and R&D Specialists monitor external trends to develop relevant products and services.

• Compliance and Legal: Compliance Officers, Legal Advisors, and Regulatory Affairs Specialists help businesses navigate changing legislation.

• Economic Analysis: Economists, Market Analysts, and Financial Forecasters help businesses understand and respond to changing economic conditions.

• Change Management: Change Managers and Organizational Development Specialists implement responses to external influences effectively.

Understanding how businesses respond to external influences is relevant to almost any business career path students might consider.

Teaching Notes

• Start with current news stories about businesses responding to external changes – perhaps a local business adapting to new technology or economic conditions. This makes the topic immediately relevant.

• Use the Netflix/Blockbuster comparison to show how different responses to the same technological change led to dramatically different outcomes.

• Try simulation activities where student teams develop response strategies for a fictional business facing multiple external changes. This brings abstract concepts into practical focus.

• Create debate opportunities on the most effective responses to specific external influences. Should a restaurant invest in delivery apps or focus on enhancing the in-person experience?

• Watch for the misconception that businesses can control external influences rather than just respond to them, or that there’s always a single “correct” response to an external change.

• For extension, have students research how businesses in different industries respond differently to the same external influence, like how various sectors adapted to pandemic restrictions.