An examinationof the key external influences impacting or likely to impact the organisation’s activities. (AC 1.1)

Economic Factors

The education institution I work is a university chartered in a foreign country. As such, much of the funding comes from the mother country. Nonetheless, different economic factors affect its activities. First, the exchange rate in the home country affects the firm’s financial state. Exchange rates, often known as the price of a foreign currency in the local currency, are essential in terms of their levels and volatility. Exchange rates can affect the overall volume of foreign direct investment and how these investments are distributed among various nations.

Secondly, the inflation rate in the country affects how the firm operates (Graham, 2018). Most of the learners in the university rely on their parents to pay for school fees. On this note, the number of students who enrol is based on the fees they charge, as the inflation rate dictates. (Drobyazko et al. 2019). A high inflation rate inhibits market growth since it discourages saving, limits investment. The employment rate also affects organisational growth as the number of students that enrol on the university is correlated to the incentives that employees get from the learned people (Graham, 2018).

Political

Policies in the local country where the institution operates influence the operation and activities of the firm. An organisation operating in the education sector is bound to adhere to the local policies and regulations regarding the education they offer. Changes in the policies could affect the operations and the courses that the organisation offers to the student (Graham, 2018). In addition, policies on student fees payment could also limit or promote the courses that the institution offers. Policies and laws regarding foreign investment could affect the organisation’s operation (Graham, 2018). In some instances, the FDI may require approval from the local country and affect operations. The taxation of the amount of FDI could affect the operations in the learning institution as it can limit or increase the amount invested (Drobyazko et al., 2019).