The Dynamic Nature of Business (AQA GCSE Business): Revision Note

Businesses and change

• The external environment in which businesses operate is constantly changing

  • Changes in technology, consumer needs, wants and expectations, as well as the economic and legal climate, can all have an impact on demand for products and the way a business operates

• New business ideas emerge as entrepreneurs recognise opportunities created by changes in the market

• Change can also mean that demand for the products a business sells falls

• Successful businesses can identify opportunities, plan for changes that could have a negative effect, and develop innovative solutions that meet the changing needs of customers
  

Aspects of the dynamic business environment

Changes in technology

• Advances in technology can create new opportunities for businesses to develop innovative products and services

  • E.g. The emergence of smartphones and social media platforms created new opportunities for businesses to reach customers through mobile apps and digital marketing

Changes in the environmental expectations of consumers

• Consumer demand for environmentally responsible products has changed over time, with more and more people making green buying choices

• This has created opportunities for businesses to develop new products that are less damaging to the natural world

  • E.g. The growing demand for plant-based food products has led to the emergence of new businesses in the food industry, such as Impossible Foods

Products and services becoming obsolete

• Products and services can become outdated due to changes in technology or changes in consumer demand

• This can create opportunities for businesses to develop new products and services that meet the needs of consumers in new and innovative ways

  • E.g. The decline of physical media like CDs and DVDs created opportunities for businesses like Netflix and Spotify to develop digital streaming services

Changes in the economic situation

• Factors such as changing interest rates, inflation, the level of unemployment and economic growth (or contraction) can affect demand for a businesses products

  • E.g. a business selling products that consumers normally purchase using credit, such as electrical consumer durables, is likely to face a fall in demand when interest rates rise

Changes in law

• The introduction or amendment of laws and regulations can change consumer behaviour and require businesses to make changes to their operations

  • E.g. the introduction of legislation banning smoking in indoor spaces in 2007 meant that many hospitality businesses in the UK invested in outdoor spaces to accommodate smokers