1.5 - Understanding External Influences On Business Flashcards
What is a stakeholder?
Anyone affected by the business
Different stakeholders are affected by the business in different ways. This means they have different opinions about what makes a firm successful and what its objectives should be.
How are owners stakeholders?
Important - make a profit if business is successful and decide what happens to the business
Different stakeholders are affected by the business in different ways. This means they have different opinions about what makes a firm successful and what its objectives should be.
How are managers stakeholders?
Interested in job security
Promotion
Different stakeholders are affected by the business in different ways. This means they have different opinions about what makes a firm successful and what its objectives should be.
How are employees stakeholders?
Promotion
Decent wages
Good working conditions
Different stakeholders are affected by the business in different ways. This means they have different opinions about what makes a firm successful and what its objectives should be.
How are suppliers stakeholders?
Suppliers will benefit when firms set objectives based on profitability and growth
Different stakeholders are affected by the business in different ways. This means they have different opinions about what makes a firm successful and what its objectives should be.
How are local communities stakeholders?
Suffering - noise, pollution
Gain - good jobs, sponsoring
So the local community may benefit when objectives are based on minimising environmental impacts, ethical considerations, profitability and growth
Different stakeholders are affected by the business in different ways. This means they have different opinions about what makes a firm successful and what its objectives should be.
How are government stakeholders?
Receives taxes if the firm makes a profit
If the firm allows job creation
Different stakeholders are affected by the business in different ways. This means they have different opinions about what makes a firm successful and what its objectives should be.
How are customers stakeholders?
High quality products - low prices
Satisfaction
Different stakeholders are affected by the business in different ways. This means they have different opinions about what makes a firm successful and what its objectives should be.
How are pressure group stakeholders?
Influence decisions a firm makes
Creating bad publicity if they dont agree with the firms choices
What is a pressure group?
An organisation that tries to influence what people think about a certain subject
Who are the most influential stakeholders in a business?
Owners - but they need to consider interests of other stakeholders when setting objective
A firm might decide to ignore the opinions of some stakeholders, what are certain stakeholders that they must consider?
Customers - must sell products in order to survive
Suppliers - unhappy if not paid in time
Workers - unproductive
What is e-commerce
Using the internet to buy/sell products
What does e-commerce allow a business to do?
Reach a wider market compared to just traditional shops
How is e-commerce convenient for customers?
They can buy products from all over the world at any time of day and dont need to spend ages queuing up
How can firms use technology?
Websites - communicating with customers
Email - personal, or big, communication to stakeholders
Apps - firms to communicate with customers
Live chats - instant messaging service
Video calls - meetings rather than travelling
How can firms use social media to share information with customers?
Written messages
Articles
Pictures
Videos
Links
Can be updated regularly, seen by many people
Why do businesses use social media?
Customer service
Advertising
Promoting events
What different technological payment systems are now used to create products?
Online payments - paypal
Chip and pin - debit or credit cardand then enter your unique pin
Contactless - debit/credit card by downloading an app: apple pay, android pay
How can easier payments allow more sales?
Encourage customers to shop with the firm
Faster payments mean that businesses can serve more customers in a given time
Why would firms need to adapt to changes in technology?
To stay competitive - if other firms are communicating with customers through apps, the business should consider doing so
How can technology reduce costs?
Businesses can use new technology to carry out processes in the place of people
What are the disadvantages of using new technology in businesses?
Expensive - buy equipment, train staff
Hiring staff with the skills to use the new technology
How can technology allow more sales?
E-commerce - lets a business reach bigger markets
How can new technology affect the marketing mix?
E-commerce: more choice of firms to buy from, not just in the local area
Firms may need to change their pricing strategies or the way they promote their products to be more competitive
The growth of social media means firms are choosing to promote their products on social platforms instead of magazines/newspapers
What do employers pay to workers aged 24 and under (but of school leaving age)?
Have to be paid the NMW
National minimum wage
The exact amount depends on the age of the worker and type of work
What do employers pay to workers aged 25 and over?
Have to be payed the NLW
National living wage
Slightly more than the NMW
What happens if companies pay less than the NLW or the NMW?
They are breaking the law - large fines, bad publicity, consumers might stop using the business
How can NMW and NLW impact the revenue of a business?
Increases a firms cost
Reduced income
Some firms may not be able to pay the NMW/NLW for all their staff so they might have to lose staff in order to survive
What are some benefits of NMW/NLW?
Better motivated staff
Increased productivity
What can recruitment procedures NOT discriminate against?
Religion
Gender
Race
Age
Sex
Disabilities
This is covered by the equality act 2010
What MUST firms make sure about new recruits?
They have a legal right to work in the UK - extra work for the firms because they will have to check new recruits documents
Employing people illegaly can result in: big fines, closure of the firm
What will staff need to do so no employees are accused of discriminating others?
Company could be held responsible for just one employee
Staff training
Writing company policies about equal rights
Why do firms need to carry out risk assessments?
To identify possible dangers and take reasonable tests
E.G - first aid training, health and safety training, suitable equipment (hard hats on construction sites)
What would happen if businesses do not follow health and safety laws?
Prosecuted
Fines
Closed down business
Pay compensation to anyone who’s injured, bad publicity
What is the Consumer Rights Act 2015?
Covers how goods and services can be sold. States that goods should meet 3 criteria
What are the 3 criteria of the Consumer Rights Act?
- The product should be fit for its purpose
- The product should match its description
- The product should be of satisfactory quality
What is the ‘Product should be fit for its purpose’ criteria of the Consumer Rights Law?
Product has to do the job it was designed for
(If a bucket has a hole, its of no use)
What is the ‘The product should match its description’ criteria of the Consumer Rights Law?
It’s illegal for a retailer to give a false trade description
Includes size, quality, materials and properties
It’s also illegal to claim a product has been endorsed or approved by a person/organisation unless it really has been
What is a trade description?
The way a business describes a product
What is the ‘Product should be of satisfactory quality’ criteria of the Consumer Rights Law?
Product should be well-made: shouldn’t fall out after a couple of uses
It shouldn’t cause other problems for the buyer
(A fridge should keep food cool but shouldn’t make noise like a jet plane)
What happens if a product doesn’t meet its legal requirements?
Customers can ask for:
Their money back
A repair
A replacement
What could happen if a business breaks consumer law?
End up in court if the business is unhappy
Harm reputation - reduction in sales
Why do firms need to keep up to date with all legislation that they need to follow?
Any changes with legislation could mean they need to make changes in their business
A change in consumer law could mean that they have to rewrite any terms/conditions, retrain their staff
What is legislation?
Laws that have been set by the parliament
How can unemployment impact the whole economy?
The whole economy produces less output
Everyone will end up suffering from it
How can firms benefit from unemployment?
Lower wages
Fill jobs easily
Encourage a firm to grow
How can firms suffer from unemployment?
Lack of demand - sales can fall
Reducing prices, reducing output
If firms hire people who have been unemployed for a while, they may lose skills, so firms may need to spend more money on retraining them
How do businesses pay taxes?
Through their profits, environmental tax, and tax on premises they own
How do consumers pay taxes?
Pay tax on money they earn - income tax
How can decreased income tax affect the increase in sales?
If there is a decrease in income tax, consumer spending is likely to increase as they will have emore disposable income
How can an increased amount of tax lead to the need of cutting costs?
Businesses will have less money that they will be able to invest into businesses
What is inflation?
An increase in the price of goods and services
What is the rate of inflation?
The percentage increase in the price of products overtime
In which 3 ways, can inflation effect businesses?
Consumer spending - increases for short term because people would rush to buy before price goes up more
Cost of labour - increased wages so they can afford the pricy products
Global competition - exports expensive, less than other countries
What will happen if income rises at a slower rate than inflation?
People will have to spend majority money on necessities - food
Less money for luxuries
Businesses that provide luxuries will suffer, like the cinemas
Because of this, luxuries businesses may set their prices really low or discounted
What will happen if income rises at a faster rate than inflation?
Can spend money on luxuries
Businesses that provide luxuries will see sales increase and profit increase
What do low interest rates lead to?
Increased spending
Cheaper to borrow money
What do high interest rates lead to?
Decreased spending
More expensive to borrow
What is an exchange rate?
The price at which one currency can be traded for another
What factors can effect exchange rates?
Economy of the country that uses the currency
Global economy
