Cost of Energy, Raw Materials, Borrowing, Premises
Enterprises can be affected by many different factors that they will not be able to control. These factors can help them positively, or can have a negative effect. You have already learned that effective planning and contingency plans can help an enterprise to overcome the impact of internal factors, which are individual to that enterprise. However, external factors may end up having an impact on many enterprises. An example of this is a rise (or fall) in costs, which includes things such as:
Energy costs (have the prices of gas and electricity increased or decreased recently?)
• Cost of raw materials – the items an enterprise needs to produce its products
• The cost of borrowing money (what is the current interest rate? Has it recently increased or decreased?)
• Rates of renting premises – the enterprise will have to pay rent for the space it rents and business rates to the local authority
The rising and falling of costs is known as fluctuation. Enterprises need to be prepared for costs to fluctuate and should understand the effects this might have.
Lesson 1 External factors rent rates borrowing and premises.pptx