Impact of External Factors on Business Decisions in the UK

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[UNDERSTANDING BUSINESS]

Contents
INTRODUCTION............................................................................................................................. 1
QUESTION 1 IMPACT OF EXTERNAL WORLD ON BUSINESS DECISION MAKING............................2
QUESTION 4 PLANNING YOUR CAREER..........................................................................................6
CONCLUSION................................................................................................................................. 8
REFERENCES...................................................................................................................................9

INTRODUCTION
The purpose of this report is to highlight the impact of the external world on business decision
making. A business environment is a combination of internal and external uncertainties
(Chittithaworn et al., 2011). The report provides insight into dealing with the aspect of different
uncertainties that will help in managing the business operation effectively. Also, it highlights the
rapid changes in the business environment and helps in successfully navigating the strategies so
as to achieve a competitive advantage.
The report also provides knowledge and understanding with respect to the impact of external
world impact on decision making. Moreover, it focuses on providing a reliable solution so as to
cope with the business challenges in the UK (Dhingra et al., 2016).

QUESTION 1 IMPACT OF EXTERNAL WORLD ON BUSINESS DECISION MAKING
Uncertainty refers to different types of the variant that tend to influence the decision making of
investors. Internal uncertainty can be referred to as the inability to know the facts surrounding
some event, however, an organization or business entity can have control over internal
uncertainty and hence can be minimized. It is important to measure the chances of an event
happening as well as gathering the fact associated with it while External uncertainty refers to
the variant that will take place in future (Janssen et al., 2017). Thus, it is important to assess
external uncertainty either on distributional mode or singular mode so as to make a plan for
better risk control.
Biggest challenges faced by UK businesses
The two most common challenges faced by UK businesses are:
 Impact of Brexit
Dealing with the Brexit is an immediate issue faced by businesses or corporations in the
UK. The issues related to Inflation, Consumer spending and productivity are tied to
Brexit (Sari and Bayram, 2015). Due to this, inflation has jumped to the highest level due
to which the price of everyday goods is rising.
Inflation is probably the biggest challenge that is faced by the UK economy. The
depreciation in the value of pound sterling has raised the prices of important goods and
thereby tends to diminish consumer purchasing power. This has slowed down the
growth of the UK economy. Thereby it is required by businesses in the UK so as to frame
competitive strategies for achieving growth and success (Dhingra et al., 2016).
Also, the rise in prices has forced households so as to borrow through personal loans
and credit cards. Thus, it is important to effectively tackle the issues of Brexit so as to
drive the productivity of the UK economy.

Figure: Depreciation in the pound due to Brexit
Source: Dhingra et al., 2016
 Paying taxes
The tax structure provided by the UK government is relatively tricky and complex. Most
businesses find it difficult to understand the company's legal system. The legislative
framework provides a huge number of tax obligation and other provisions which is
difficult to be understood by businesses in the UK (Kierzenkowski et al., 2016). Thereby,
every business is required to get support from a chartered accountant so as to pay the
local taxes and have a deeper understanding of the application framework with respect
to their businesses.
Apart from this, there is a certain factor that influences business and business decisions. These
factors consist of internal and external influences. Some of the internal influences are:

 Product influences- This tends to have an impact on a large majority of people, internal
structure and business operations in the UK. Thus, the type of goods or services that will
be produced by a business depends on internal structure.
 Location Influence- A location refers to the position where business activities will be
carried out. It is a critical aspect that can make or break the business. A Location can
also help in attracting potential and recognized customers (Majumder and Hossain,
2012).
 Resources- There are four common types of resources that tend to influence the
business or business decisions relating to the UK economy. Human resources plan an
important role in running the business operations smoothly. An information resource
consists of all the IT equipment and technology for efficient functioning (Dhingra et al.,
2016). The physical resources consist of necessary tools and equipment that need to be
considered. Apart from this, financial resources are essential in order to run the
business operations smoothly.
Some of the external factors that tend to influence business decisions:
Political
Influence
The political influence consists of political policies and tax rate
prevailing in the existing structure of the UK economy. The
introduction of GST tends to impact the supply of good or services.
Thus, it is required by businesses in the UK to identify the
deregulation policies and political stability (Majumder and
Hossain, 2012).
Economical
influence
Every business in the UK needs to consider the economic aspect with
respect to the economic cycle. The booming economy tends to enhance the
productivity of the business and also help to generate newer employment
opportunities.
Social Influence It consists of several influencing factors such as taste and preference of the
customer. Besides this, an external factor with respect to changes in fashion
also influences business decisions.

Technological
Influence
Technology is probably one of the most significant that tends to impact
business operations in the UK. It is required to use robots for performing
repetitive and boring jobs. Thereby, the advent of new technology needs to
be considered for improving productivity and business efficiency (Sari and
Bayram, 2015).
Financial
Influence
Every business in the UK required identifying the financial policies and other
regulations with respect to the financial aspects of the business so as to
improve the competitiveness in the external market.
Legal influence The legal action against the business can influence business decisions. Thus,
it is required by every business in the UK to take due care of the legal issues
in order to maintain the reputation in the eyes of the customer
(Chittithaworn et al., 2011).
Strategic planning is essential in order to anticipate the impact of changes and also finding out
the strategies that will help in dealing with the change with respect to the internal and external
environment. Moreover, a business manager is required to actively engage in modifying
business activities so as to gain the maximum advantage of change. This will further help to
grow or prosper the business in the UK economy.

QUESTION 4 PLANNING YOUR CAREER
A career plan is essential so as to provide guidance and direction to the individual in an effective
manner. It also helps to evaluate own strength and weakness for the purpose of achieving
future goals. Thus, a career plan is an essential part of personal growth and development (Noe
et al., 2017).
I chose to develop my career in the field of Human resource management. The HR department
plays an important role in the day to day operations of the business and also helps in choosing
the right set of employees for a particular job role. As an HR manager, I am required to handle
the selection and recruitment process of an organization so as to choose the best-fit candidate
with respect to organizational work culture (Noe et al., 2017). Besides this, I will also be
responsible to manage the payroll sheet of every employee in the organization after taking
consideration the relevant provisions of Provident fund, ESIC and other provisions related to
employees.
I am also responsible to provide adequate training and development program to the
employees in order to encourage and motivate them for providing their best to the
organization (Boxall and Purcell, 2011).
Digital marketing plays a significant role in today's competitive environment. The technology
enables the HR department so as to manage the pool of talent and achieve the best result from
the use of technology.
The best Digital marketing strategies that could be used by the HR department are:
 The use of social media sites and other media channels can help the recruiters so as to
identify potential candidate for the specific job profile.
 It helps in identifying the target audience based on demographics, aptitude, behaviour
and other practices.

 Digital technology enables the HR department to use LinkedIn that will help in
identifying professionals so as to provide new job opportunity (Majumder and Hossain,
2012).
Apart from this, the aspect of legality needs to be considered by human resource management
in day to day operations of the business. The HR manager is required to manage the functions
of the business within the legal framework and also required to do compliance of labour related
laws. As an HR manager, I am also required to deal with the issues of employee's investments,
TDs and pension plan (Noe et al., 2017).
The HR career offers a wide range of existing choices so as to choose career options. This will
help me to reach the top level position in the management and provide me with the
opportunity to advance my career skill in the field of human resource management (Ryan,
2016).
Thus, I choose this career option due to sufficient jobs available in this field and it provides me
with the opportunity to build a network and prove my managerial ability. This will further help
in boosting my visibility.

CONCLUSION
The report concluded that there are several internal and external factors that tend to influence
business decisions. It is important to handle the business challenges successfully and thereby
further leading to achieve competitive advantage in the industry (Janssen et al., 2017).

REFERENCES
 Boxall, P. and Purcell, J., 2011. Strategy and human resource management. Macmillan
International Higher Education.
 Chittithaworn, C., Islam, M.A., Keawchana, T. and Yusuf, D.H.M., 2011. Factors affecting
the business success of small & medium enterprises (SMEs) in Thailand. Asian Social
Science, 7(5), pp.180-190.
 Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J., 2016. The impact of Brexit on
foreign investment in the UK. BREXIT 2016, 24, p.2.
 Janssen, M., van der Voort, H. and Wahyudi, A., 2017. Factors influencing big data
decision-making quality. Journal of Business Research, 70, pp.338-345.
 Kierzenkowski, R., Pain, N., Rusticelli, E. and Zwart, S., 2016. The economic
consequences of Brexit.
 Majumder, M. and Hossain, T., 2012. Human resource management practices and
employees' satisfaction towards the private banking sector in Bangladesh.
 Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M., 2017. Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
 Ryan, D., 2016. Understanding digital marketing: marketing strategies for engaging the
digital generation. Kogan Page Publishers.
 Sari, A. and Bayram, P., 2015. Challenges of Internal and External Variables of Consumer
Behaviour towards Mobile Commerce. International Journal of Communications,
Network and System Sciences, 8(13), p.578.