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gcse buisness edexcel my > 1.5 understanding external influences > Flashcards

1.5 understanding external influences Flashcards

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1
Q

stakeholder

A

A stakeholder is any individual or organisation who has a vested interest in the activities and decision making of a business.

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2
Q

Examples of business stakeholders

A

Shareholders or business owners - internal
Managers & employees - internal
Customers - connected
Suppliers - connected
Banks and other finance providers -connected
Trade unions - connected
Government - external
Local community - external
Other external groups (e.g. pressure groups)
Competitors - external
The media - external

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3
Q

objectives of stakeholders - Shareholders / Owners

A

Return on investment + profits and dividends
Success and growth of the business
Proper running of the business

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4
Q

objectives of stakeholders -Managers & Employees

A

Rewards, including basic pay and other financial incentives
Job security & working conditions
Promotion opportunities + job satisfaction & status – motivation, roles and responsibilities

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5
Q

objectives of stakeholders - customers

A

Value for money
Product quality & customer service

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6
Q

objectives of stakeholders - suppliers

A

Continued, profitable trade with the business
Financial stability – can the business pay its bills?

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7
Q

objectives of stakeholders - Banks & other finance providers

A

Can the business repay amounts loaned or invested?
Profitability and cash flows of the business
Growth in profits and value of the business

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8
Q

objectives of stakeholders - Government

A

The correct collection and payment of taxes (e.g. corporation tax)
Helping the business to grow – creating jobs
Compliance with business legislation

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9
Q

objectives of stakeholders - Local community

A

Success of the business – particularly creating and retaining jobs
Compliance with local laws and regulations (e.g. noise, pollution)

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10
Q

objectives of stakeholders - Pressure groups

A

The business acting honestly & fairly in the best interests of customers, society, the environment etc

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11
Q

examples of stakeholder influence - Negotiation

A

suppliers may try to negotiate better terms and conditions

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12
Q

examples of stakeholder influence - Voting

A

shareholders may be invited to vote on business decisions

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13
Q

examples of stakeholder influence - Refuse to co-operate

A

employees may refuse to co-operate and work to rule if they are not happy with suggested changes

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14
Q

technology’s influence on sales - E-commerce

A

E-commerce provides access to a wider market and therefore a larger number of customers, potentially leading to higher sales.

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15
Q

technology’s influence on sales - Payment systems

A

more convenient ways to pay for products; this can have a positive impact on the sales process and improve customer service which can lead to more repeat sales.

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16
Q

technology’s influence on sales - Digital communication

A

quicker and better interaction with customers through the use of systems such as live web chat, email and social media. This will help build customer relations increasing new and repeat sales.

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17
Q

How can technology increase costs

A

Initial investment in technology
Staff training
Recruitment of specialist IT staff if required
Maintenance and repair

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18
Q

How can technology decrease costs

A

-May replace employees leading to a reduction in staff costs
-Improved efficiency, leading to lower costs
-Many small businesses operate from home, reducing the need to pay for business premises

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19
Q

technology’s influence on the marketing mix - product

A

nature of the product e.g. fitness trackers, smartphones, apps all based on technology. Products can be designed using technology such as CAD systems. Some products have become obsolete as a result of technological change

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20
Q

technology’s influence on the marketing mix - price

A

Use of e-commerce has opened up the market and therefore level of competition. Businesses may need to be more price competitive. Price comparison sites allow customers to compare prices of products in specific markets.

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21
Q

technology’s influence on the marketing mix - place

A

websites and use of e-commerce allows businesses, including small firms, to target wider markets – local, national and international.
The growth of online shopping has meant the need to locate close to customers is now becoming less important.

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22
Q

technology’s influence on the marketing mix - promotion

A

availability of social media provides a cheap and effective way to promote a business. Facebook allows businesses to identify and target specific market segments with their promotions.

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23
Q

Changing use of technology - pros

A

Has allowed businesses to reduce costs and improve quality, efficiency and competiveness.

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24
Q

Changing use of technology - cons

A

There are costs in purchasing technology and training staff to use it. Also employees may lose their jobs.

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25
Q

e - commerce - pros

A

-Has allowed businesses to access wider markets and reduce costs through automatic ordering using online applications.
-The business can experience sales increases and become more well-known.

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26
Q

e - commerce - cons

A

-Costs increase due to investment in computerised systems and staff training.
-Distribution costs increase, processing of orders/returns is time consuming.
-Personal contact with some customers may be lost.

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27
Q

social media

A

Most businesses use social media as an active part of their business operation. Social media provides an unrivalled number of direct contacts for communication – said to be 2 to 3 billion potential customers worldwide. It is also not expensive to set up and operate at a basic level, making it very suitable for a small business.

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28
Q

E-payments use by businesses

A

-Collecting payments from customers by direct transfer, debit card, credit card or standing order.

-Making payment to employees and suppliers through electronic transfer.

Contactless payment and smartphone apps are making e-payment more popular.

E-payments can be linked to accounting software.

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29
Q

E-payments use by businesses - pros

A

E-payments reduce the costs of paying in cash

Provide quicker receipt of money

Leads to happy customers who find it more convenient

There is no need for cash to be kept or used

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30
Q

E-payments use by businesses - cons

A

Cost of buying and using payment systems

Some customers will not wish to use an e-payment system

Not all customers may have access to the required technology

There is a risk of fraud

31
Q

legislation

A

Legislation (in terms of business) is where the government makes laws in order to control business actions, in order to protect the needs of stakeholders.

32
Q

Employment law

A

Employment law provides rights for employees to be protected in the workplace. These include areas such as pay, discrimination, as well as many other contract areas.

33
Q

Employment law - pros

A

Protects employees from exploitation and receiving unequal treatment in the workplace.

34
Q

Employment law - cons

A

Business costs increase, as implementing employee legislation is expensive and time-consuming.

35
Q

TheEquality Act 2010

A

TheEquality Act 2010legally protects people from discrimination in the workplace and in wider society.

36
Q

Health and Safety at Work

A

This act requires:
-safe operation and maintenance of the working environment (building and machines)
-safe use, handling and storage of dangerous substances
-adequate training of staff to ensure health and safety
-adequate welfare provisions for staff at work

37
Q

Consequences of Health and Safety Legislation

A

Businesses will benefit from a safe working environment, as workers will be loyal to the firm and not look for employment elsewhere. They will also be happier and more motivated in what they are doing, which will increase productivity levels.

Failure to meet health and safety requirements can result in unlimited fines and imprisonment.

Meeting health and safety requirements can be expensive and make businesses uncompetitive, particularly if they face competition from firms in other countries where the legal requirements for health and safety are lower.

Training will mean business costs will increase; for example, there will be staff training costs on relevant health and safety matters, providing appropriate equipment and clothing to staff and lost management time spent checking that the business is obeying all aspects of the law.

38
Q

Consumer law

A

The UK has laws that are designed to protect consumers from businesses which try and exploit them. The laws protects consumers when they buy goods or services, provides help if they are treated unfairly or if things go wrong and goods are faulty.

39
Q

Consumer Rights Act 2015

A

Goods must fit their description
Goods and services must be of satisfactory quality
Goods must be fit for the purpose specified

40
Q

The Trade Descriptions Act 1968

A

It is an offence to make a false description about any goods or services supplied

41
Q

consumer legislation - pros

A

-Improved reputation in the marketplace, leading to an increase in sales
-Bad publicity is avoided
-No costs of repair and replacement/less administration costs
-Avoiding very high fines, which may run into millions of pounds for a business

42
Q

consumer legislation - costs

A

-Training may be required to ensure employees are able to produce quality products
-Increased quality control may be needed
-Higher quality raw materials could be required
-Additional production processes might be needed

43
Q

economic climate

A

The general situation in a country affecting the wellbeing of individuals, firms and the government in areas such as output, prices and employment.

44
Q

Different aspects of the economic climate

A
  • Interest rate changes
  • Inflation
  • Consumer income
  • Levels of unemployment
  • Taxation
  • Exchange rates
45
Q

How are individuals affected by being Unemployed

A

The unemployed worker has no direct income from employment/relies on benefits. His/her spending power will decrease.
The skills of the unemployed worker may decrease, which may result in the need for retraining in the future.
Unemployment can cause depression and a lack of motivation to find another job.

46
Q

Unemployment Impact on Business - costs

A

Incomes will be lower, so spending on goods and services will decrease, particularly on non-essential items
Workers may be less motivated, as they have less job security; productivity levels may decrease

47
Q

Unemployment Impact on Business - benefits

A

More workers will be available, resulting in job vacancies being easier to fill
Wage increases are less likely, asmore workers are available;
Lower staff turnover, as it is harder for workers to gain employment elsewhere, decreasing recruitment and training costs

48
Q

Economic Activity

A

This is the amount of buying and selling that takes place in a period of time.
Economic activity is measured by adding up all the value of the sales over a period of time.

49
Q

Economic growth

A

This is where there is a rise in the rate of economic activity in the economy. Meaning that the value of total sales has gone up.

50
Q

Economic decline

A

This is where there is a fall in the rate of economic activity in the economy. Meaning that the value of total sales has gone down. This is also called a slowdown or downturn

51
Q

Business Cycle

A

Fluctuations in the level of economic activity over a period of time

52
Q

Recession

A

A period when economic growth is negative for two successive quarters (6months)

53
Q

Recovery

A

A period when the economy begins to grow after a period of economic decline

54
Q

consumer spending

A

An increase or decrease in consumer incomes will affect how much money consumers spend on goods and services

Changes in income levels will affect where consumers spend their money and what they spend it on

Income level changes will affect the overall economy in terms of output, employment and prices (inflation)

55
Q

Consumer spending and its effects on stakeholders - businesses

A

most businesses will make more sales, as consumers are spending more. They may also be able to increase their prices, which can lead to revenue and profits increasing.

56
Q

Consumer spending and its effects on stakeholders - suppliers

A

as businesses sell more, they need more raw materials and goods to supply. Supplier sales increase and there could be an opportunity to increase selling prices.

57
Q

Consumer spending and its effects on stakeholders - employees

A

in order to supply more goods and services, to meet consumer demand, businesses will need more employees. Wages may increase, if there is a shortage of workers.

58
Q

Consumer spending and its effects on stakeholders - Government

A

the amount gained in taxation increases, giving the Government the opportunity to spend more on areas such as health and education.

59
Q

Inflation

A

Inflation is the general increase in prices and the fall of the purchasing power of money.

The UK economy has experienced very low inflation for many years until recently.

Currently inflation isincreasing, this means that the prices of goods and services are increasing.

This would normally lead to an increase in wage rates, so that consumers can afford the higher prices when they buy goods and services.

60
Q

Effects of inflation on costs

A
  • Wage and raw material costs rise, therefore businesses increase prices
  • Workers ask for more pay, so that they can afford to pay the higher prices charged for goods/services
  • Pay disputes with workers may result, as businesses try to keep costs to a minimum
  • Some workers may lose their jobs so that higher wages can be afforded
  • Quality of materials may reduce, as businesses try to reduce costs
61
Q

Effects of inflation on demand

A
  • Higher prices for customers may reduce demand
  • Consumers find cheaper alternative products from goods imported into the country, reducing demand for British goods
  • Some consumers will not be successful in gaining wage increases; demand for some products will therefore fall
62
Q

Interest rates

A

Interest rates affect both businesses and consumers. They can represent a reward for saving or a cost of borrowing. Consumers, businesses and the government are all affected by any change to interest rate levels. Interest rate changes will impact the overall performance of the economy.

63
Q

direct affects of High interest rates on businesses

A

Business loans will be more expensive. This reduces investment, so businesses are less competitive or do not expand.
Costs may increase, as the cost of existing business loans/overdrafts may be higher.
Businesses may choose to save money to earn the higher interest, so investment falls.
Businesses may close if they are unable to pay interest on loans.

64
Q

indirect affects of High interest rates on businesses

A

Higher interest rates also affect businesses indirectly:
Consumers spend less, as it is more expensive to borrow money.
Consumers save more, as rewards for saving increase.
Consumers may spend less, as their costs on existing credit cards, loans and mortgages increase.
Businesses selling non-essential goods and services see a drop in sales.

65
Q

Taxation

A

Taxation is when the government collects money from individuals or businesses, in order to pay for its expenditure plans and to influence the performance of the economy.

Although no business likes paying taxes, it does provide a source of funding through government grants and other programmes to some firms.

66
Q

Direct effects on business of taxation

A
  • Sole traders and partnerships pay income tax on any profits.
  • Limited companies pay corporation tax on their profits.
  • The rate at which businesses are taxed has been reduced in recent years to encourage businesses to stay in the UK, rather than move to other countries which may tax profits at lower rates.
  • Employees may expect businesses to increase wages, if taxes are increased, for example income tax, VAT, so that individuals can still enjoy the same standard of living and afford to pay the increased prices of goods and services.
67
Q

Indirect effect on businesses of taxation

A

Consumers will be also affected by changes in taxation:
Income Tax – if this is increased then consumers will have less money to spend. This can effect demand for goods and services, which may result in business sales falling.
VAT – an increase in expenditure taxes, such as VAT, means that the prices of some goods and services will increase. Again, some business sales are likely to decrease.

68
Q

Exchange rates - not on eoy

A

Most countries have their own currencies.
The exchange rate is the amount of one currency that can be bought with another currency.

69
Q

Strong pound - not on eoy

A

If the exchange rate changes so that the currency gets stronger or appreciates, it will be worth more. This means that it will cost more for businesses outside the UK to buy the UK currency. It will be cheaper for businesses in the UK to buy other currencies. Imports into the UK are cheaper and exports become more expensive.

70
Q

Strong pound - pros - not on eoy

A
  • For consumers, as prices of imports will decrease; consumers can access and buy different/cheaper products.
  • If a business imports raw materials, it will be able to buy more of these raw materials for the same UK converted price. This will reduce business costs.
71
Q

Strong pound - cons - not on eoy

A
  • For a business that exports, its goods will become more expensive abroad, which could result in sales decreasing.
  • Local/smaller businesses may not be able to compete against cheaper imports.
72
Q

Weak pound - not on eoy

A

If the exchange rate changes and the currency gets weaker or depreciates (devalues), it will be worth less and therefore it will be cheaper for other countries to buy goods and services from our country. It will be more expensive for UK customers and businesses to buy from other countries. This is often seen as a disadvantage, but in reality some businesses will gain and others will lose.

73
Q

Weak pound - pros - not on eoy

A

For a business that exports, as its goods will be cheaper in the country the business sells to. This may lead to an increase in sales.

For local businesses, as they will be able to compete better against more expensive imports.

74
Q

Weak pound - cons - not on eoy

A

For consumers, as prices of imports will increase.

For businesses that import raw materials, as costs will increase, which might cancel out the benefits of cheaper export prices.

gcse buisness edexcel my (11 decks)

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