This relates to how government regulations and legal issues have an impact on how profitable and successful a company can be. Basically, all that has an impact will be considered here, like government policy, political stability, policy on transparency, foreign trade policy, tax policy, labor laws, environmental policy, trade regulations, education level, etc.

For example, the negotiations on trade agreements between countries can have a big impact on import tariffs.

Here are the external economic factors examined that influence the success of a company. This includes interest rates, exchange rates, inflation rates, unemployment rate, gross domestic product and credit availability.

These factors may have a direct or indirect long-term impact on the business operation. For example, the interest rate will have an impact on the ‘Cost of Capital’ and therefore on the business performance and possibility to expand.

The social factor analyzes the socioeconomic environment of a market and considers the demographic characteristics, norms, customs, age distribution and values of the population within the marketplace. These factors are especially important for marketers when targeting certain customers.

Socioeconomic changes could be a focus on healthier food products or environmentally friendlier energy consumption, but also the need to work longer as a result of a longer life expectancy.

This relates to innovations in technology that could have an impact on the market and therefore the company involved. Technology could be of major importance to the success and strategy of company. Understanding the potential and also the risks involved of a technology are therefore of key importance.