1.5 Understanding external influences on a business

Question 1

What are stakeholders

Answer 1

These are individuals or a group that effect or are effete by the actions of a business

Question 2

What are the 8 business stakeholders

Answer 2

1. Owners (shareholders)
2. Employee
3. Management
4. Suppliers
5. Customers
6. Pressure groups
7. The local community
8. The government

Question 3

What are the objectives of the owner/shareholder

Answer 3

Shareholders are individuals or entities who own a portion of the company stock
they invest in the company to make a profit
shareholders Primary objective is to maximise their returns on their investment
They want the company to be profitable and generate higher return on their investment.

Question 4

What are the objectives of the employees

Answer 4

Employees are individuals who work for the company
Their primary objective is to earn a living and have job security and be compensated fairly for their work and have a safe working environment

Question 5

What are the objectives of the management

Answer 5

Managers are individuals who are responsible for the day-to-day operations of the company.
Their primary objective is to meet the companies goals and objectives
They want to maximise profit and minimise costs while ensuring that the company operates efficiently.

Question 6

What are the objectives of the suppliers

Answer 6

Suppliers are individuals or businesses who provide goods or services to a business.
The primary objective is to sell their product or service and make a profit suppliers
Want to be paid on time and have a long-term relationship with the company

Question 7

What are the objectives of the customers

Answer 7

Customers are individuals or businesses who purchase goods or services from a business
their primary objective is to receive high-quality products or services at a fair price
Customers also want good customer service and positive experience with the company.

Question 8

What are the objectives of the pressure groups

Answer 8

Pressure Groups or organisations that seek to influence the policies and actions of a business or governments.
The primary objective is to promote a specific cause or agenda
pressure groups want the company to support their cause or take action on a issue.

Question 9

What are the objectives of the local community

Answer 9

The Local community includes individuals and organisations that live orb operate in the area where a business operates
the primary objective is for the business to have positive impact on the community
This may include business being environmentally responsible, providing jobs and contributing to local causes

Question 10

What are the objectives of the government

Answer 10

The Government is responsible for creating and enforcing laws and regulations that affect businesses.
The primary objective is to promote the public good and protect the interests of citizens
The government wants to companies to operate within the law and contribute to the economy.

Question 11

What benefits dosenhaving an acces to a range of technologies do to a business

Answer 11

Improve communication
Lower operating costs
Improve brand image

Question 12

What 4 type of technologies are used in businesses

Answer 12

1. E-commerce
2. Social media
3. Digital payment systems
4. Digital communication

Question 13

What influence does E-commerce have on sales

Answer 13

A powerful tool for expanding the customer base and increasing sales
able to do sales globally at any time during the day, increasing the number of cells in general

Question 14

What influence does E-commerce have on costs

Answer 14

Has also helped businesses reduce costs by eliminating the need for physical storefronts and reducing overhead costs

Question 15

What influence does E-commerce have on the marketing mix

Answer 15

Offers Business is new channels for advertising and promotion

Question 16

What influence does social media have on sales

Answer 16

A powerful tool for businesses to increase sales by building relationships with customers and generating leads

Question 17

What influence does social media have on costs

Answer 17

A cost-effective alternative for traditional advertising channels

Question 18

What influence does social media have on the marketing mix

Answer 18

Offers businesses, new channels for Brontë building awareness and engaging with customers. The marketing mix has been transformed for many businesses.

Question 19

What influence does digital communication have on sales

Answer 19

Offers Business is new channels for reaching customers and closing deals for example, using email marketing

Question 20

What influence does digital communication have on costs

Answer 20

Offers A cost-effective alternative for traditional communication channels

Question 21

What influence does digital communication have on the marketing mix

Answer 21

Has transform the marketing mix by providing businesses with new channels for communicating

Question 22

What are the negatives / drawbacks of new technology in a business

Answer 22

Training Costs for staff to learn new skills and improve or adapt existing skills.
Capital expansion for initial installation of technology and ongoing maintenance costs.
Distribution to products in during the installation of bedding in of new technology.
Security issues raised by operating digitally.
The potential loss of personal touch with customers.

Question 23

What are business legislation

Answer 23

Legislation refers to the laws and regulations passed by governments that require businesses and individuals to conduct their behaviour in a particular manner

Question 24

What are the three areas in a business that are effected by legislations

Answer 24

1. Consumer protection
2. Employee protection
3. Heath and safety legislation

Question 25

What is the customer protection laws

Answer 25

**Customer Protection laws, aim to ensure the customers are treated fairly by the companies with which they interact** the legislation covers areas including: - the safety of the product - the standard and quality of the product - the rights of customer if they are unhappy with their purchase - the product information that must be given to customers Meeting The requirements of each of the above laws resulting increase business expansion which may reduce probability. However, **all businesses are subjected to his extra expenditures** Customer protection legislation aims to provide a level playing field for a business, ensuring that no business can gain an unfair advantage over rivals by taking shortcuts, or by making false claims about its products.

Question 26

What are the employees protection laws

Answer 26

**Employee protection legislation aims to prevent the exploitation of workers** legislations cover areas including: - pay and working conditions - Equality of employment rights for marginalise groups to avoid discrimination - the right to be belong to a trade union and take industrial action - contracts and termination of employment. Meeting employee legislation is likely to have a range of benefits; business can avoid attracting unwanted media attention, They are less likely to be subject to a legal action, New employees are likely to be attracted to work for a business that fulfils its legal obligations.

Question 27

What is the health and safety legislation

Answer 27

Health and safety legislations require businesses to operate in a way that **protects the physical and mental well-being of employees and contractors as well as its customers** Legislation covers areas including: - the provision of aquatic breaks and rest periods - Temperature noise levels - the provision of safety equipment - hygienic, safe and sanitary conditions - preventing stress.

Question 28

What dose GDP growth mean

Answer 28

Gross domestic product - The total value of goods produced and services provided in a country during one year

Question 29

What happens when GDP grow is increasing

Answer 29

Income may increase spending on goods and services may increase inflation may rise unemployment may fall

Question 30

What happens when GDP growth is decreasing

Answer 30

Income may fall spending on goods and services falls inflation may fall unemployment may rise

Question 31

What are inferior goods

Answer 31

Demand For these goods arise when the customers income falls Demand fall when customers income rise, they are not necessarily poor quality

Question 32

What are normal goods

Answer 32

Product whose demand rises when customers income rises

Question 33

What is inflation

Answer 33

Inflation Is the general rise in prices in an economy overtime measured by using the consumer price index

Question 34

What is the consumer price index

Answer 34

Measuring Price changes to a household basket of 700 goods and services that an average family will purchase

Question 35

What are the 3 challenges caused by inflation to a business

Answer 35

Increased business costs Higher repayment on loans Consumer change spending habits

Question 36

What are exchange rates

Answer 36

The Exchange rate is the value of one currency expressed in terms of another

Question 37

Why are exchange rates important to a business

Answer 37

Exchange Rates are important economic influence for a business that imports, raw materials and components, and for a business that exports their products, the value of a currency can appreciate or depreciate over time

Question 38

What a dose appreciation mean in terms of exchange rates

Answer 38

Occurs when the value of currency rises, making exports, relatively more expensive and its imports, less expensive

Question 39

What a dose depreciation mean in terms of exchange rates

Answer 39

Occurs when the value of a currency falls, making the exports relatively more attractive and the imports, less attractive

Question 40

What is the impact on exporting businesses when the value of the £ increases against others (appreciation)

Answer 40

Sales are likely to fall as products become more expensive when compared to overseas competitors In order to remain competitive exporting businesses may need to lower their prices and accept lower profit margins

Question 41

What is the impact on importing businesses when the value of the £ increases against others (appreciation)

Answer 41

Costs are likely to fall as the raw materials from overseas become cheaper

Question 42

What is the impact on exporting businesses when the value of the £ decrease against others (depreciation )

Answer 42

Sales I likely to rise as the product becomes cheaper when compared to overseas competitors

Question 43

What is the impact on importing businesses when the value of the £ decreases against others (depreciation )

Answer 43

Costs are likely to rise as the role materials from overseas become more expensive Businesses may seek domestic suppliers to reduce costs and maintain profit levels.

Question 44

To help remember the effects of an appreciating currency rember the acronym SPICED

Answer 44

Strong Pound Import Cheaper Exports Dearer

Question 45

What are interest rates

Answer 45

The interest rate is a percentage reward offered for saving money and the percentage charge for the bearing of money

Question 46

What is capital investment

Answer 46

The purchase of physical assets, such as vehicles, plants, or machinery to allow business to meet its long-term objectives

Question 47

What are direct taxes

Answer 47

Direct taxes are levied (based) on income e.g. income tax and corporation tax

Question 48

What are indirect taxes

Answer 48

Indirect taxes are based on spending, e.g. Value added tax VAT

Question 49

What is the impact of taxation on revenue

Answer 49

Revenue may fall For many businesses increased income tax will reduce the disposable income of customers and demand for products may fall increase VAT will make products more expensive and customers may switch to alternative products

Question 50

What is the impact of taxation on costs

Answer 50

Businesses Costs will rise as a result of increased taxes, such as VAT and national insurance contributions. Higher costs may be offset by charging higher prices. Higher prices may lead to lower sales and profit. import costs are increased when the customer duties are raised.

Question 51

What is the impact of taxation on business decision

Answer 51

Operational decisions may be affected by increases in business rates and taxes related to employee workers. Businesses may choose to forgo business, improvements, or relocating, or employ fewer workers as a result of increased costs

Question 52

What are the 3 types of external influences on a business

Answer 52

1. Changes in technology 2. Changes in economic climate 3. Changes in legislation

Question 53

How can businesses respond to changes in technology

Answer 53

Investing in new technology, partnering with tech companies, training employees

Question 54

How can a business respond to changes in legislation

Answer 54

Complying with new regulations, lobbying, policymakers, seeking legal advice

Question 55

How can business respond to changes in economic climate

Answer 55

Diversifying their products cutting costs seeking finance from leaders

Question 56

What factors are included in the economic climate

Answer 56

- economic growth = how fast it is expanding - unemployment levels = number of people out of work and looking for jobs - inflation = high quickly prises are rising - interest rates = cost of borrowing money - exchange rates = value of the £ compared to other currencies