1.5 - Understanding external influences on business Flashcards
What is a stakeholder?
A stakeholder is anyone who is affected by a business
e.g. Owners Managers Employees Suppliers Local community Government Customers Pressure groups
What is E-Commerce?
E-Commerce means buying and selling online
How can firms communicate digitally with their stakeholder?
- Websites
- Mobile Apps
- Live chats
- Video calls
- Social media
What payments systems can be used to pay for products?
- Online payments
- Chip and PIN
- Contactless payment
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.
Describe the features of employment laws.
- Business has to pay staff a minimum amount (either National minimum wage or national living wage)
- Businesses cant discriminate
- The workplace needs to be safe
- Recruitment procedures must not discriminate against anyone and firms must make sure that any new recruits have the legal right to work in the UK
What is consumer rights acts?
The consumer right acts sets conditions for products
Goods must be:
- As described
- Fit for purpose
- Satisfactory quality
What criteria must the product fulfil to follow 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
How does high level of unemployment affect a business?
- They may pay lower wages if there are lots of unemployed people desperate for jobs
- Less employment means less disposable income. This can lead to a lack of demand for products, so sales can fall.
- If firms hire people who have been unemployed for a while, people may lose skills
How do the levels of tax affect a business?
- If the amount of income tax that consumers needs to pay falls, they will have more disposable income. This means consumer spending is likely to increase, leading to an increase in revenue for firms. The opposite is true if tax increases.
- If the amount of tax a business has to pay increases, it reduces the amount of money they have available to reinvest. This can lead to slower growth of the business. The opposite is true if tax decreases.
What is inflation?
inflation is the increase in the price of goods or services
How does inflation affect a business?
Consumer spending - When inflation rises, consumer spending is likely to go up in the short term, as people rush to buy more products before prices go up even more. However if wages dont go up at the same rate as inflation, demand for the product will fall
Cost of labour - With high inflation, employees can put pressure on employers to increase wages so that they can afford higher prices being charged for the things they need.
Global competition - A high inflation rate makes UK exports expensive, so UK firms may become less competitive globally. This means that a firm that sells lots of exports may see its sales fall. However, when inflation is low, sales of export are likely to increases.
How does a change in income affect a business?
Income rises at a slower rate than inflation
- People will spend a greater proportion of their income on necessities, resulting in less money left to spend on luxuries
- This means businesses that provide luxuries will suffer. However businesses that provide cheaper goods could benefit.
Income rises at a faster rate than inflation
- People will spend a smaller proportion of their income on things they need. This means they will have more money to spend on luxuries, and the demands of these goods will go up.
- However cheaper goods could see a decrease in sales as more people are buying luxuries
How do low interest rates affect spending?
Low-interest rates lead to an increase in spending
How do high interest rates affect spending?
high interest rates leads to a decrease in spending
