1.5: Understanding external influences Flashcards
What are some examples of stakeholders and what they want
- Managers: bonuses & success
- Pressure groups: influence
- Employees: good pay & conditions
- Customers: value for money
- Local community: Local investment & little pollution
- Government: low unemployment & competitiveness
- Suppliers: regular orders
- Shareholders: profits and good returns
What are some technologies that influence business activity
- E/M-commerce
- Social media
- Digital communication (emails, QRs)
- Electronic payment systems
What can technology influence
- Costs (expensive in short-term, efficient & saves in long-term)
- Sales (tech innovation can up sales, new ways to sell)
- Marketing mix (tech influences all parts of it: lowers costs, easier promoting, e-commerce)
What is consumer law
It governs all of how a business interacts with customers, its purpose is to protect consumers
What are some principles of consumer laws
- Consumers can return/reject goods
- Goods should be delivered & installed safely
- Contracts are fair
- Services should have reasonable care
- Full disclosure on product information
- Products sold should be good standard
What are some drawbacks of consumer law
- Business need to be up-to-date
- Restrictive
- Changing products to comply can be costly
- Bad publicity if not followed
- Consumers can take legal action
What are some benefits of consumer law
- Complying -> less fining/suing
- Complying -> professionalism & more customer loyalty
- Improved stakeholder relations
- Following makes good publicity
What is the name of the consumer protection law in the UK
The Consumer Rights Act 2015
What is employment law
It governs all aspects on how businesses interact with their employees, used to protect employees
What are some principles of employment law
- Wages should be minimum wage or higher
- No discrimination
- Redundancy should be fair
- Discipline and grievances should be fair
- H&S requirements should be met
- Recruitment process should be fair
What are some drawbacks of employment law
- H&S can be costly
- Paying minimum-wage or higher is costly
- Not following->unhappy workers, low productivity & legal action
What are some benefits of employment law
- Compliance->respected
- Higher retention rates
- Lower recruitment costs
- More motivation->higher productivity & better customer service
What are some examples of employment law
- Health and Safety at Work Act 1974
- Equality Act 2010
- National Minimum Wage Regulations 2017
- Employment Relations Act 1999
What is the economic climate
The level of demand and spending in the economy
What might alter demand
- Economic activity
- Interest rates
- Exchange rates (SPICED, WPIDEC)
- Consumer income
- Taxation changes
What is impacted by demand/economic activity
- Consumer incomes
- Inflation
- Unemployment
- Interest rates
- Strength of the pound
What is unemployment
When people who want work can’t get it
What are some impacts of unemployment
- Easier to recruit, but over time less skills in business
- Lower demand (for most businesses, some like Aldi or Ryanair would likely get more)
- Less sales revenue
What does a rise in interest rates do
- Better to save, worse to borrow
- Businesses can struggle to repay
- Less loans used
- Fall in consumer spending
What does a fall in interest rates do
- Better to borrow, worse to save
- Better cashflow
- Loans can be used for expansion
- More consumer spending
What would a fall in the pound’s value do
- Good for UK exporters
- Good for tourism, as cheaper for tourists
- Good for UK businesses, as imports are dearer
- Bad for UK importers, as imports are more expensive
What are some external influences that are opportunities
- Rise in economic activity
- New legislation that the business already follows
- New tech that lowers production costs
- Lower interests rates for easier borrowing
What are some external influences that are threats
- New competitors
- New legislation that makes you illegal
- Fall in economic activity
- New tech that makes your products obsolete
What are some potential responses to external influences
- Cut investment
- Stop producing and obsolete product
- Change company policy
- Lower prices
- Recruit new employees
- Invest in new tech
