Level 3 Diploma for the Business Administrator
Unit 301 Activity 4
Unit 301: Principles of business administration
Activity 4: External factors that affect organisations
Explain how the following factors can affect organisations. Give at least two
examples for each factor.
a) Inflation
Inflation can affect organisations due to the increase of prices of goods and
products, therefore, they are more than likely of increase their prices due to
them needing to make a profit this will affect the whole organisation as they
will be losing money due to their customers going to another place that
provides the exact same service for a lower price.
b) Labour market
The labour market can affect a number of different organisations this is
because if a organisation needs someone with more experience for
example, if they are looking for someone who has gone to university and
has obtained their degree they will have to pay to recruit them as they will be
using job advertising sites also, due to their experience they would be
expected to have a higher salary as apposed to those who may not have a
degree or experience in that specific sector.
c)Financial market
The financial market can affect certain organisations because the market is
constantly changing it also affects the exchange rates, so if you work with
consumers overseas it can have a major effect on your organisation an
example is the change of exchange rates and interest also, new technology
can affect the market as most organisations will have to buy new technology
© 2024 City and Guilds of London Institute. All rights reserved. Page 1 of 3
Unit 301 Activity 4
Unit 301: Principles of business administration
Activity 4: External factors that affect organisations
Explain how the following factors can affect organisations. Give at least two
examples for each factor.
a) Inflation
Inflation can affect organisations due to the increase of prices of goods and
products, therefore, they are more than likely of increase their prices due to
them needing to make a profit this will affect the whole organisation as they
will be losing money due to their customers going to another place that
provides the exact same service for a lower price.
b) Labour market
The labour market can affect a number of different organisations this is
because if a organisation needs someone with more experience for
example, if they are looking for someone who has gone to university and
has obtained their degree they will have to pay to recruit them as they will be
using job advertising sites also, due to their experience they would be
expected to have a higher salary as apposed to those who may not have a
degree or experience in that specific sector.
c)Financial market
The financial market can affect certain organisations because the market is
constantly changing it also affects the exchange rates, so if you work with
consumers overseas it can have a major effect on your organisation an
example is the change of exchange rates and interest also, new technology
can affect the market as most organisations will have to buy new technology
© 2024 City and Guilds of London Institute. All rights reserved. Page 1 of 3
