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