Unit 1: Exploring Business
Learning Aim C: Examine the environment in which businesses operate
P4: Discuss the internal, external and competitive environment of a given business
In this assignment, I’ll be discussing the internal, external and competitive environments in a
given business. The business I will be using is ITV plc.
Internal factors of a business are factors that can be controlled by the business itself.
External factors are factors that business cannot control but are affected by it and therefore
must respond to it. Lastly, a competitive environment refers to how a business competes
with companies it considers as competitors.
Internal factors
Corporate culture
This refers to the behaviour of employees and the management team that has an influence
on the business environment. ITV places a big emphasis on corporate culture. They have a
pleasant and productive culture in which employees are encouraged to work hard so that
they can achieve their work targets every day. As a result, employees have a positive
relationship with ITV and therefore are motivated to do their best at work.
Corporate Social Responsibility & Ethics
This is when a business takes into consideration social factors. ITV has a big corporate
social responsibility; they care about issues such as climate change and are therefore
committed to producing shows with the least amount of environmental impact. Furthermore,
they care for the mental wellbeing of their employees and are dedicated to diversity and
inclusion. In relation to CSR, businesses must ensure that they have ethical policies in place
to ensure that the business is operated without any workplace trouble such as having zero
tolerance for bullying.
External factors (PESTLE)
Political
These are the rules and regulations that are set out by the government which then has an
impact on the business. For example, in the UK the corporation tax is 19% and ITV is
required to pay this tax which means they must ensure that they pay the correct amount of
corporation tax or run the risk of getting into trouble with the government.
Economic
These are influences that come from the economy that affect the business. ITV generates
the majority of its revenue from advertisements, but it also generates a significant amount of
money through paid subscription services such as ITV Hub+ and Britbox. This is due to the
relatively high spending power of the British people, who can afford such services.
, Social
This is when the business can be affected by the culture and morals of the public. ITV offers
a diverse range of shows and programmes to appeal to people of all ages and lifestyles. For
example, ITV caters to a female audience by broadcasting talk show programmes like
'Loose Women,' which includes a female panel discussing topics from a woman's point of
view.
Technological
Technology is always improving and affects almost every business. ITV has used technology
for many things such as to allow people to join competitions through text messages and to
provide on-demand services so people can watch ITV programmes wherever they are by
using electronic devices such as laptops and phones.
Legal
There are different laws and rules that each business must follow. For ITV one rule they
must follow is the ‘watershed' rule, which means that ITV is not permitted to broadcast
anything that is deemed unsuitable for children until 9pm. If they violate this rule, they may
face action from the government's television regulator, Ofcom.
Environmental
This is when the business ensures that the environment is taken care of. Climate change
has become a significant problem over the past few decades, and as part of their CSR, ITV
chose to do their part by becoming a more environmentally friendly corporation. By 2030,
ITV intends to achieve net-zero carbon emissions and zero waste.
Competitive environment
When a business is in a specific market sector, they are likely to face competition from other
companies, whether it be locally, nationally, or abroad. That is why it is critical for businesses
to have a competitive advantage over their competitors since it helps the firm to stay ahead
of its rivals. There are several factors that give businesses a competitive advantage which
are differentiation, pricing policies, market leadership, reputation, market share and cost
control.
Factors that ITV benefit from:
Market share
This is the percentage of a given market that a business holds. ITV has 21.6% of the UK TV
broadcasters market share. This means ITV is one of the top broadcasters in the UK, giving
them an advantage over its competitors such as Channel 4 and Sky, allowing them to
charge advertisers a higher cost to advertise on ITV channels, resulting in greater income for
the company.
