1.5 Understanding external influences on the business Flashcards
How are employees affected by a business?
If a business is doing well or doing badly it can have an impact on the wages of the employees and even whether or not they keep their jobs (job security).
If a business is growing rapidly then employees have more chance of being promoted to higher paid roles and if a business goes bust then the employees will lose their jobs.
For employees, the main objectives for the company would be survival and growth.
Why should a business keep customers happy?
Customers are very important stakeholders of the firm and can have a large influence on a business.
If customers’ needs and wants are changing over time then a business needs to be able to adapt in order to meet these.
Describe Internal stakeholders (3)
Individuals or groups within a business
- Owners/Shareholders
- Managers
- Employees
What is e-commerce?
Using the internet to buy or sell products. Allows firms to reach wider markets compared to traditional shops.
What are the main objectives of owners?
Their main objective is usually to maximise profit and the value of the firm.
How does technology reduce costs?
Businesses can often use new technology to carry out processes in place of people. This can lead to reduced costs in the long term. However, it is expensive in the short term.
How does technology increase sales?
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 is easier and faster for people to buy so they may buy products more often from the firm.
How is social media important to some businesses?
Makes it really easy for users to share information with other users. This makes it easier for businesses to communicate. It can be used to provide customer service; to advertise the product or to promote local events.
How does technology affect the marketing mix of a business?
New technology can also affect a firm’s marketing mix. For example, 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 compettive. The growth of social media means that many firms are choosing to promote their products through this channel rather than through more traditional routes, such as newspaper adverts. es
Describe external stakeholders (4)
Individuals or groups outside the business but still indirectly involved in how the business runs.
- Customers
- Community
- Suppliers
- External shareholders.
Who are the most important and less important stakeholders?
In a small business, the most important or primary stakeholders are the owners, staff and customers. In a large company, shareholders are the primary stakeholders as they can vote out directors if they believe they are running the business badly.
Less influential stakeholders are called secondary stakeholders.
How does a strong pound affect export?
An increase in the value of the pound makes exports more expensive and imports cheaper. British firms that export products to other countries are likely to see their sales and profits go down - their products will be more expensive so fewer people will buy them. They may decide to move part of their business abroad so they can trade in the currenoy of the country where they ell their products, meaning they will be less affected by the exchange rate.
How does a strong pound affect import?
British firms that import raw materials will be able to make products more cheaply. so their profits may go up.
How is a local community affected by a business?
Business operations affect those that live nearby. Businesses can provide employment and economic activity, but also create noise and environmental pollution.
A local community may be negatively affected by noise and pollution caused by factories.
How do low interest rates affect firms and consumers? (5)
Cheaper to borrow money. But you get less interest when you save money at the bank. Firms and consumers will borrow more and spend less. Consumers will have more money to spend therefore demand will go up so firms will make more profit and may need to increase output. Firms that borrow money will have smaller interest repayments, so they have more money to spend on other parts of the business.
Describe the laws of recruitment
Recruitment procedures must not discriminate against anyone because of religion, gender, race, sexual orientation or disabilities. Covered by Equality Act 2010. Firms must also check that the new recruits are eligible to work in the UK, big fines will incur and could close the firm if this isn’t conducted.
What are possible conflicts between employees and owners?
Owners may want to cut jobs to reduce labour costs; Employees may want a pay rise
Describe laws about the health and safety of workers.
The Health and Safety Legislation helps to make sure that risks to people at work are properly controlled. Firms need to carry out assessments to identify possible dangers and take reasonable steps to reduce the risks. All staff must receive health and safety training and suitable equipment must be provided. A safe working environment should mean fewer accidents and so fewer injuries which means a more productive workforce.
