Economy Interest rates Interest rates have a large effect, on the amount people have available to spend and the amount people want to spend. It also has an effect on the amount of money people are likely to borrow. In periods of high interest rate, people are encouraged by this rate to save money in bank accounts, due to the higher returns that they can expect than in normal circumstances, and discouraged to borrow large amounts of money, due to the large amounts of interest they would have to pay back on loans. However, when interest rates are low, there is little incentive to save money, so this encourages spending. When marketing a new technological product, companies have to think carefully about the amounts of money people have available and are willing to spend. Luxury items are less likely to be bought in times when people have less money to spend, but essential items will be bought no matter what the economic conditions are. Tax See Ed’s report. Recession A recession is a time when production falls and trade dwindles, and people spend less money. Like the situation with high interest rates, people are less likely to buy luxury products in times of economic recession. But recession has a much greater effect than high interest rates. During recession, the uncertainty over jobs, and lack of consumer confidence causes people to cut down their spending as much as possible and can often only afford to buy essential items. It doesn’t necessarily mean that a new technology will fail in times of recession, if the technology is something that will save people money, the product will flourish. For example, genetically modified foods are much cheaper than non-GM foods, and inorganic foods are cheaper than organic foods. Organic foods have been very popular recently with all the major supermarkets selling organic items alongside other items. However, if there was a recession, people may not be able to afford the “luxury” organic foods, and that situation could cause the GM food technologies to flourish and prosper. Also if there were new advances in pesticides and fertilisers during a recession, these technologies would be a success. Unemployment has the same effect. If there is high unemployment, the population has less money to spend on luxuries and will want to try and save money. Although recession would cause some products to fail in the marketplace, recession can also cause problems in the development stage. A company would find it difficult to find investors for their new technology, because there were would be a general lack of confidence. Links to other factors Political · Taxes are set by governments. · Government policy can affect unemployment and interest rates · Bad economic management and budgets can lead to recession. Design · Lack of funds can lead to cutting corners in the design. · Product could be designed for a different market depending on economic conditions. Marketing · Launch product in different market, could be launched as a necessity rather than a luxury depending on the economy. · If there is not much money left after development, there may not be enough money to launch an effective marketing campaign. Competitors · Competitors are likely to experience the same problems as they are all affected by the economy. · Overseas competitors may not be affected if the economies are very localised. · Competitor could produce a substitute item, ie a cheaper item. Social · ????????????????? Communication · ????????????????? Resources · Price of resources is strongly affected by the economic conditions. Resources Cost International markets and cartels control many resources’ prices. For example, the cartel OPEC controls oil prices throughout the world, and there is an international price for diamonds. If there is a new technology that is dependant on a resource, either directly or indirectly, and the price of that resource changes during or after the product has been developed, that could have a huge effect on the success of that technology. Although, it could also make a technology more successful, if the price of a given resource drops significantly. Rarity At the moment, it could be argued that renewable energy sources are a failure due to their expense. However, as we use up the non-renewable sources, their prices will increase due to the rarity of the likes of coal and oil. This will have a knock on effect on the renewable energy technologies, causing them to eventually be a success. Loss of Human Resources It is vital to have the right people working on a project. The wrong people with not as much skill or expertise could cause a project to last months longer. There are also instances of a chief engineer dying midway through a project who in some case can be irreplaceable if that person is a leading expert or the only person with certain skills and/or knowledge. Links to other factors Political · Governments can impose taxes and sanctions on resources. Design · Laws concerning safety could have a significant affect on the design of an item - could even make it illegal to use. Marketing · ????????????? Competitors · Competitors will be affected in the same way by taxes etc on resources. Unless competitor produces in a different country. · Could make better use of human resources. Social · People may think it is wrong to use up natural resources. Communication · ????????????????? Economy · Has a large effect on the price and availability of resources.