Mhay Gilyn D.

Natal
BSTM 3B

Chapter 4 Video Presentation (Reaction Document)

This explains the role of the external environment in the context of H and T business

1. Geographic : These include location-specific aspects that can affect a business, such as climate, terrain,
natural resources, and proximity to markets. For example, a ski resort business heavily relies on
favorable snowfall and terrain conditions in its geographic area.
2. Social Factors: These encompass cultural norms, demographics, lifestyle preferences, and societal
trends. For instance, a company selling eco-friendly products may thrive in regions where environmental
consciousness is high among consumers.
3. Legal Factors: These refer to laws, regulations, and legal frameworks governing business activities.
Examples include labor laws, taxation policies, environmental regulations, and intellectual property
laws, which can significantly impact business operations and strategies.
4. Political Factors: Political factors relate to government policies, stability, and political ideologies that
influence business environments. Changes in government leadership or policies can affect trade
regulations, taxation rates, and investment incentives, impacting businesses differently. For example, a
sudden imposition of tariffs by a government can disrupt international supply chains.
5. Institutional Factors: These involve the presence and effectiveness of institutions such as government
agencies, trade unions, industry associations, and regulatory bodies. For instance, a business operating in
an industry with strong regulatory oversight may face higher compliance costs.
6. Technological Factors: These encompass advancements in technology and innovation that can shape
industries and business processes. Examples include automation, digitalization, artificial intelligence,
and block chain technology, which can lead to new opportunities or disruptions in various sectors.
7. Competitive : These include factors such as market structure, competition intensity, and the bargaining
power of buyers and suppliers. A highly competitive market may require businesses to innovate
constantly and offer competitive pricing to maintain market share.
8. Economic Factors: Economic factors encompass macroeconomic indicators such as inflation rates, GDP
growth, unemployment rates, interest rates, and currency exchange rates. Economic conditions influence
consumer purchasing power, investment decisions, and overall market demand.
9. Financial Factors: These include factors related to financing and capital markets, such as access to
capital, interest rates, and investor sentiment. For example, a business’s ability to secure funding for
expansion projects may depend on prevailing interest rates and investors’ confidence in the economy.

Each of these external influences interacts with the internal dynamics of an H and T (Hospitality and Tourism)
business, shaping its strategies, performance, and adaptation to the environment. Understanding and effectively
responding to these external factors are crucial for business success and resilience.