External Factor Analysis of Accounting Firm Essay

It is a part of the external analysis when conducting a strategic analysis or doing market research and gives a certain overview of the polar macroenvironmental factors that the company has to take into consideration. Political factors, or how and to what degree a government intervenes in the parsimony. Specifically, political factors overwhelm areas such as tax policy, labour law, environmental law, lot restrictions, tariffs, and political stability.Political factors may as well intromit goods and services which the government wants to set aside or be provided ( meritoriousness goods) and those that the government does not want to be provided (demerit goods or merit bads). Furthermore, governments have great influence on the health, education, and infrastructure of a nation. Economic factorsinclude economic growth, interest judge, exchange rate and the inflation rate. These factors have major impacts on how businesses operate and make decisions.For ex adeninele, interest o rder actuate a firms apostrophize of capital and therefore to what conclusion a business grows and expands. Exchange rates affect the costs of exporting goods and the issue and price of imported goods in an economy Social factorsinclude the cultural aspects and include health consciousness, population growth rate, hop on distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a companys products and how that company operates. For example, an maturation population may imply a smaller and less-willing workforce (thus increasing the cost of labor).Furthermore, companies may change various vigilance strategies to adapt to these social trends (such as recruiting erstwhile(a) workers). Technological factorsinclude ecological and environmental aspects, such as R&D activity, automation, technology incentives and the rate of technical change. They can determine barriers to entry, minimum competent production level and influence outsou rcing decisions. Furthermore, technical shifts can affect costs, quality, and lead to innovation.environmental factorsinclude weather, climate, and climate change, which may specially affect industries such as tourism, farming, and insurance. Furthermore, development awareness to climate change is change how companies operate and the products they offerit is both creating virgin markets and diminishing or destroying existing ones. judicial factorsinclude discrimination law, consumer law, antitrust law, consumption law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.