The effect of externalities on UK retailers1. Introduction“In business the only thing you can be sure of is change” – (Peter Drucker)In recent years the development of the retail market has been significantly changed by external factors such as; political, economic, social, technological and legal (PESTL). This is also known as the external macroenvironment, which affects all businesses. This report will show what impact has caused the retail business over the last forty years through these factors. The retail business has always existed, however it has changed due to external factors. The retail industry is a huge business; an example of a highly profitable retail company would be Tesco. Last year they had a total turnover of £38,259 million in Britain alone and net profit was £1,576 million (Wikipedia, 2006). However, when he is bombarded with new laws, technology and other changes, he too must change, otherwise they could have enormous consequences. Only recently has television become popular, forty years ago, only a few had a television. Nowadays people can go on the Internet through their TVs and shop on the TV.2. MethodologyTo make this report, this includes reading academic materials such as: Omar (1999), McGoldrick (2002), Bromley & Thomas (1993) and also other academic materials from journals, the Internet and other materials. These writings develop the key issues of the macro environment and highlight: political, economic, social and technological. The following table Fig 1.1 from Omar (1999) summarizes the key points: External (macro) environmental factors are those influencing factors that retailers are not directly able to control but will need to keep in mind during operation. It is usually the uncontrollable factors of the external macroenvironment that are the most important sources of both opportunities and threats for the retail organization. The term macroenvironment, as used here, denotes all forces and agencies external to the retail organization itself. (Omar, 1999; Berman and Evans, 1995) External forces are separate forces; however, these forces can also combine together. For example; when the government lowers the retirement age, this is affected politically, socially and economically. In this section the key points of external factors will be analyzed. However, due to the lack of a word limit, only a selection of examples will be shown.