1.5- Understanding external influences Flashcards
Stakeholder
Individual or group who have an interest in/ are affected by the activities of a business
Shareholder
Someone that owns a part of a company
Internal stakeholder
Work within a business
External stakeholder
Don’t work within a business but are affected
Stakeholder objectives
Shareholders/owners?
Managers?
Employees?
Customers?
-Business success and profit
-Good salary, career progression opportunity
-Good pay, job security, job satisfaction
-Value for money, reliability
Stakeholder objectives
Suppliers?
Local community?
Pressure groups?
Governments?
-Payment on time, regular orders
-Offers work, no negative impact on their quality of life
-Any demands they have to be met
-Job creation, contribution to the economy
Pressure group
Group that tries to influence public policy in the interest of a specific cause
Potential conflicts between stakeholders
-Employees wanting higher wages, owners wanting lower costs
-Customers wanting low prices, owners wanting high profits
Managers wanting to pay for supplies later, suppliers wanting payment quick
E-commerce affecting…
Sales?
Costs?
*Reach wider market, sell 24/7
*Fewer staff needed so smaller premises BUT ongoing cost for website
E-commerce affecting…
Marketing mix?
Product- download digital prints
Price- price comparison site, need competitive
Place- can purchase when/where ever
Promotion- easy to implement offers online
Social media affecting…
Sales?
Costs?
*Promotional campaigns, build rel with customers
*Cheap, quick to interact with customers
Social media affecting…
Marketing mix?
Product- information/ demonstrations can be shared about product
Price- lower costs, can lower prices
Place- interact all over world
Promotion- cost effective promotions
Digital communication..
Def?
Sales?
Costs?
Sending and receiving information to others
*Easier to contact a business, builds trust
*Lower costs, work from home, smaller premises
Digital communication affecting…
Marketing mix
Product- Can be adapted easily
Price- lower costs so lower prices
Place- Customers access anywhere
Promotion- Email newsletters & advertise
Payment methods
Def?
Sales?
Costs?
Ways to make payment easier and secure
*Easy and convenient, more likely to purchase
*Need to pay a fee for each transaction
Payment methods affecting…
Marketing mix?
Product- Digital products easier to buy
Price- Payment fees affect pricing
Place- Ability to sell online
Promotion- Promote variety of methods
Social media definition
Form of communication to share ideas/content
Legislation
Laws made by the government to protect stakeholders from business’ actions
Consumer Rights Act
What must goods be?
-Fit the description
-Be of satisfactory quality
-Be fit for purpose
3 times the consumer doesn’t have a legal right
-The item was damaged
-Consumer knew about the fault
-Changed their mind
Consumer laws
Ads?
Dis?
Ads- Improved reputation, increased sales; Avoids bad publicity; Avoids fines
Dis- Increased quality control, Additional production processes, Could require higher quality raw materials
All increase the costs
4 areas of employment law
Recruitment, pay, discrimination, health and safety
2 key rules when recruiting
-Must be fair, no discrimination
-Must provide clear statement of job description
Employment Rights Act
What does it include and do?
Protects employees in the workplace
Includes all areas from hiring to firing
Employment rights act
Ads?
Dis?
Ads- Protects employees from exploitation or unequal treatment–> increased fairness–> motivation–>productivity
Dis- Costs increase, implementing legislation is expensive and time consuming
Key fact of pay
Dif between minimum and living wage?
-All employees must receive standard minimum wage
-Employees over 16-> minimum wage
-Employees over 25-> living wage
Discrimination
Def?
Where is could occur?
Unacceptable treatment of any individual or group
Recruitment, pay, promotions, dismissal
3 key facts on health and safety
-Must provide training, toilets and water
-Employees must wear safe clothing, report risks
-Regulations on hours worked
Employee retention
What?
Good or bad?
Employees staying
Good for business
Employee turnover
What?
Good or bad?
Employees leaving
Bad for business
3 advantages of meeting employee legal obligations?
-Staff likely to work harder, more efficient
-Better employee retention
-Improved reputation, easier to recruit
3 disadvantages of not meeting legal obligations
-Could lead to tribunal, expensive fees
-May have to pay fines and compensation
-Bad reputation, less sales and staff
Economy
What is the wealth of an economy measured in?
State of a country based on the goods/services it is producing/consuming
GDP (gross domestic product)
Unemployment
Being available for work but not having a job
Economic slump
A period of poor performance/ inactivity in an economy
Economic boom
A period of rapid expansion, low unemployment, high prices
Recession
A period of temporary economic decline
Inflation
A rise in the general price level, a fall in the value of money
How is employment, demand, investment and confidence in…
Recovery?
Boom?
Slump?
Recession?
Recovery- increasing
Boom- high
Slump- low
Recession- decreasing
6 ways the economic climate affects businesses?
Unemployment
Changes in consumer income levels
Changing interest rates
Inflation
Government taxation
Change in exchange rate
Unemployment
Ads?
Dis?
Ads- More workers to fill vacancies, lower wages will attract employees
Dis- Less demand for luxury products, lower tax revenue to gov
Changes in consumer income
Increased income?
Decreased income?
Increased income- more money to spend, higher demand for luxury goods
Decreased income- less money to spend, higher demand for budget good
Interest rate
Price of borrowing and rewards for saving
Changing interest rates
Increased rates?
Decreased rates?
Increased- Spend less and save more; Less borrowing, more expensive
Decreased- Spend more; Borrow more money
2 impacts of high inflation
Reduces purchasing power
Lower consumer spending, fall in sales
Taxation?
VAT?
Money collected by government from individuals & businesses
Value added tax- tax on consumer expenditure
3 impacts of increased income tax?
3 impacts of increased VAT?
-Workers have lower income, less to spend
-Businesses sales lower
-Government can help economy
*Consumers pay higher prices, reduces purchasing power, inflation occurs
Exchange rate def?
Amount of one currency that can be bought with another currency
Spiced and wpidec acronyms
Strong pound, imports cheaper, exports dearer
Weak pound, imports dearer, exports cheaper
Appreciation & Depreciation
Pound is..?
Value of pound?
Strong pound
Increased value of pound
Weak pound
Decreased value of pound
External influences
Events and factors outside of the business’ control
3 business responses to changing technology
- Increased investment- initial costs of new equip, long term savings
- Innovation- new product or usp, reach new markets, need market research
- Marketing- e-commerce to target customers, social media to interact
3 threats of technology
Old products becoming obsolete
Redundancies
Loss of skills
3 business response to legislation
- Increase product quality–> increase costs
- Pay higher wages–> increases costs
- More safety equip–> increases costs
Reduce costs elsewhere to combat these
