The Effect of Externalities on UK's Retailers

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The Effect of Externalities on UK's Retailers

1. Introduction

“In business the one thing you can be sure of is change” – (Peter Drucker)

In the recent years the development of the retail market has been greatly changed by external factors such as; political, economical, social, technology and legal (PESTL). This is also known as external macro environment, which concerns all businesses. This report will show what impact it has caused the retail business in the last forty years through these factors.

The retailing business has always existed, however it has been changing through external factors external factors. The retail industry is a huge business; an example of a highly profitable retail company would be Tesco. Last year they had total revenue of £38,259 million in Great Britain alone and there Net income was £1,576 million (Wikipedia, 2006). However, when it is bombarded with new laws, technology and other changes it needs to change as well, otherwise they may have huge consequences.

Only recently has the television had become popular, forty years in the past, only a few had a television. In this day and age people can go on the internet through their television sets and shop on their TV.

2. Methodology

In order to carry out this report, this includes, reading through academic materials such as: Omar (1999), McGoldrick (2002), Bromley & Thomas (1993) and also other academic materials from journals, internet and other materials. These writings develop the key issues with the macro environment and highlight: Political, Economic, Social and Technology. The table Fig 1.1 below from Omar (1999) summarises the key points:

External (macro) environment factors are those influencing factors that retailers are not directly able to control but which they will have to bear in mind during operation. It is usually the uncontrollable factors in the external macro environment that are the most important sources of both opportunities and threats to the retail organisation. The term macro environment, as used here, denotes all forces and agencies external to the retail organisation itself. (Omar, 1999; Berman and Evans, 1995)

The external forces are separate forces; nonetheless, these forces can combine together also. For example; when the government decreases the retirement age, this was affected politically, socially and economically.

In this section there will be an analysis of the key points from the external factors. However, due to the lack word limit, there will only be a selection of examples shown.

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