1.5 - Understanding External Influences on Business Flashcards
What is a stakeholder?
+A stakeholder is anyone who’s affected by a business - Even small businesses may have lots of stakeholders.
What do different stakeholders have?
+Different stakeholders have different ideas of success.
How are different stakeholders affected by a business?
+Different stakeholders are affected by a business in different ways.
+This means they have different opinions about what makes a firm successful and what its objectives should be.
Give examples of different stakeholders.
- Owners
- Managers
- Employees
- Suppliers
- The local community
- The government
- Customers
- Pressure groups
What is an owners perspective of business success?
+The owners are the most important stakeholders - they make a profit if the business is successful and decide what happens to the business.
+In a limited company, the shareholders are the owners - Shareholders usually want high dividends, and a high share price.
What are dividends?
+Dividends are payments that the shareholders get if the company makes a profit.
+The more shares a shareholder owns, the higher the dividend will be.
What are managers/employees perspectives of business success?
+Managers and other employees are interested in their job security and promotion prospects.
+These are improved if the firm is profitable and growing.
+Employees also want a decent wage and good working conditions - so they may benefit most when objectives are based on profitability, growth and ethics.
What is a supplier’s perspective of business success?
+A firm buys raw materials from suppliers.
+If the firm is profitable and grows they’ll need more materials and the supplier will get more business.
+So suppliers benefit most when the firm sets objectives on profitability and growth.
What are the local communities’ persective of business success?
+The local community where the business is based will suffer if the firm causes noise and pollution - they may gain if the firm provides good jobs and sponsors local activities.
+If the business employs local people, these employees will then have money to spend in local shops, which is good for the local economy.
+So the community may benefit when objectives are based on minimising environmental impacts, ethical considerations, profitability and growth.
What is the governments’ perspective of business success?
+The government will recieve taxes if the firm makes a profit.
+They may benefit most when objectives are based on profitability, growth or job creation.
What is a customers perspective of business success?
+Customers want high quality products at low prices.
+They benefit when objectives are based on customer satisfaction.
What is a pressure groups’ view on business success?
+A pressure group is an organisation that tries to influence what people think about a certain subject.
+They can influence the decisions a firm makes by creating bad publicity for the firm if they don’t agree with the firm’s actions - [Eg. in 2015, farming pressure groups such as Farmers For Action, held nationwide protests about the low prices some supermarkets paid for milk].
+Many pressure groups are satisfied when businesses set objectives based on ethical considerations or minimising environmental impacts.
What do Stakeholders influence?
+Stakeholders influence business decisions to varying degrees.
What do owners make in a firm?
+The owners make the decisions in a firm, so they’re the most influential stakeholders.
+However, they need to consider the interests of other stakeholders when they’re setting their objectives.
What will stakeholders often have?
+Often, stakeholders will have conflicting opinion about the firm’s objectives and its activities.
+The firm may decide to ignore the opinions of some stakeholders, but they’ll need to take others into account if they want to survive as a firm.
What stakeholders will businesses need to take into account in order to survive?
- No business can ignore its customers - If it can’t sell its products it won’t survive.
- A business may want to hold onto its money for as long as possible, but suppliers will become unhappy if they’re not paid in time.
- If a business doesn’t have happy workers it may become unproductive.
- But a company may not mind being unpopular in the local community if it sells most of its products somewhere else.
What does E-Commerce mean?
+E-Commerce means buying and selling online
What is E-commerce?
+E-commerce is using the internet to buy or sell products
What do many firms now have?
+Many firms now have websites where customers can buy their products
What results in E-commerce?
+E-commerce means that firms can reach wider markets comapared to just having traditional shops.
+Eg. a small business in Dorset could end up selling products to someone in New Zealand.
Who can E-commerce be convinient for?
+E-commerce can be really convenient for consumers - it means they can buy products from all over the world, at any time of the day and they don’t have to spend ages queuing up to buy products.
Why do firms have to adapt to E-commerce?
+Firms have to adapt to e-commerce because it’s become more importat.
+For example, they’ve had to build websites, employ IT specialists and develop systems to distribute products to online customers.
How can firms communicate?
+Firms can communicate digitally
What to firms regularly need to do?
+Firms regularly need to communicate with their stakeholders.
+There are many ways firms can use technology to do this:
- Websites
- Mobile Apps
- Live Chats
- Video calls
How can firms communicate with their stakeholders using websites?
+Websites are a great way to communicate with customers - eg. by posting blogs or providing customer service [such as FAQs].
+Websites can also be used to publish reports to shareholders.
How can firms communicate with their stakeholders using email?
+Email is a very quick way of communicating with stakeholders, either on a personal level [eg. to respond to a customer query] or on a bigger scale [eg. to tell all employees they can go home early].
How can firms communicate with their stakeholders using mobile apps?
+These are programs used on mobile devices, such as smartphones or tablets.
+They are usually used by firms to communicate with customers, for example by giving information about where stores are located, the products the company sells and any special offers.
How can firms communicate with their stakeholders using live chats?
+Live chats are an instant messaging service - They have many uses [eg. employees can use them to talk to each other from different locations, or customers can use them to speak with a customer service advisor via the internet.]
How can firms communicate with their stakeholders using video calls?
+Employees who work for the same business in different locations may use video calling to hold meetings, rather than travelling to meet.
+This can also be a good way for businesses to communicate with important shareholders, who may all live in different places.
Who is social media becoming more important to?
+Social media is becoming more important to businesses.
What does social media make it really easy for businesses to do?
+Social media makes it really easy for users to share information with other users - information can be in many forms, such as written messages or articles, pictures, videos, or links to other sites.
+This means social media is a great way for businesses to communicate - it can be used to display lots of different types of information, it can be updated regularly and it can be seem by loads of people at once.
What do businesses use social media for?
+Businesses use social media for all sorts of purposes - eg. to provide customer service, to advertise their products, or to promote local events.
What do customers expect businesses to be up to date with?
+Customers expect businesses to be up to date with technology.
+Nowadays people are used to being able to find information instantly at any time.
+Businesses that don’t change will probably have a hard time surviving.
What has technology made it easier to do?
+Technology has made it easier for us to pay for products.
Whst are the new payment systems?
+There are now lots of different payment systems that can be used to pay for products - Eg:
- Online Payments
- Chip and PIN
- Contactless payments
What are online payments?
+Nearly all firms allow you to pay online by entering your debit or credit card details.
+But there are other online payment systems [eg. PayPal] that mean you don’t have to enter your card details on every website you buy from, and offer a higher level of cyber-security [so your bank details are less likely to get nicked].
What is Chip and PIN?
+This is where you put your debit or credit card into a terminal [a machine at a checkout] and enter your unique PIN to pay.
+If you lose your card, you know that someone else can’t go on a spending spree with it unless they know your PIN.
What are contactless payments?
+This is where you pay for something just by holding your debit or credit card or smart device near a terminal.
+[Using a smart device for contactless payments involves downloading an app first - eg. Apple Pay or Android Pay].
What does having safer and easier and faster payment systems mean?
+Having safer and easier payment systems can encourage customers to shop with the firm.
+Faster payment methods also mean that businesses can serve more customers in any given time, so their revenue could increase.
What has technology changed?
+Technology has changed the way businesses operate
What do firms need to adapt to stay competitive?
+Firms need to adapt to changes in technology so they stay competitive.
+For example, if a firm’s competitors are communicating with customers using apps then the firm should also consider doing this.
What can businesses often use new technology for?
+Businesses can often use new technology to carry out processes in the place of people.
+This can lead to reduced costs in the long-term [eg. because fewer man-hours are needed to carry out tasks]
What are the downsides to adapting to new technology?
+However, adapting to new technology can be expensive.
+For example, a business may have to buy equipment or train staff to use new computer systems.
+They may also need to hire staff with the skills to use the new technology which is more expensive.
What are the advantages of using new technology?
+New technology can lead to increased sales for a business.
+For example, e-commerce may boost a firm’s sales as they can reach a bigger market.
+Modern payment systems may lead to increased sales as it’s easier and faster for people to buy products so they may buy products more often from the firm.
How can new technology affect a firm’s marketing mix?
+New technology can also affect a firm’s marketing mix.
+Eg. E-commerce means that customers have more choice of firms to buy from as they can buy from firms in places all over the world, not just in their local area.
+This means that firms may need to change their pricing strategies or the way they promote their products to become more competitive.
What does the growth of social media result in?
+The growth of social means that many firms are choosing to promote their products through this channel rather than through more traditional routes, such as newspaper adverts.
Give an example of a business using modern technology for business success.
- In 2015, Katie Patel bought Glisten Up Cars, a car wash firm - When she bought the firm it was close to going bust, but Katie made it profitable again within two years.
- Katie bought handheld contactless payment terminals, which meant that people could pay for their car wash from their cards, rather than having to pay in cash or go into the office - This was more convenient for customers, so sales increased.
- Katie also set up a website to inform customers about the firm, and set up social media accounts to advertise the firm and promote its special offers - these measures also led to increased sales.
What is employment law?
+‘Employment law’ describes the many different laws associated with the relationship between employers and employees.
+The laws are generally about pay, recruitment, discrimination and health and safety.
What do businesses have to pay staff?
Businesses have to pay staff a minimum amount.
What laws are there on the minimum amount employers have to pay?
+There are laws about the minimum amount employers have to pay their staff.
What is the National Minimum Wage?
+Workers aged 24 and under but of school leaving age have to be paid the National Minimum Wage [NMW] - the exact amount depends on the age of the and the type of work.
What is the National Living Wage?
+Workers aged 25 and over have to be paid the National Living Wage [NLW] - this is slightly more than the National Minimum Wage.
What do the NMW and NLW result in?
+The NMW and NLW mean that companies can’t cut their costs by paying workers less than the legal minimum - if they do, they’re breaking the law.
Does the NMW and NLW increase?
+Yes, the NMW and the NLW are usually increased each year.
What happens if a company doesn’t pay its workers enough?
+If a company doesn’t pay its workers enough, it could be given large fines.
+It could also get bad publicity, and consumers might stop using the business.
