1.5 - understanding the external influences on business Flashcards
who are potential business stakeholders
- owners/shareholders: want profits from their investment
- managers: want bonuses and long term success
- pressure groups: want to influence business decisions, actions
- local community: local investment, limited pollution
- suppliers: regular orders
- customers: want value for money
employees: good pay and working conditions
conflicts between stakeholders
- shareholders want profits, manages want to invest profits
- workers want higher pay, customers want lower prices
employers vs employees:
- disagree about working practices —> lower productivity —> lower profits
- pressure for higher pay —> increased wages —> lower profit margins
types of technology used by businesses
- e commerce
- social media
- payment systems
- digital communication
technology impacts on sales
- product with latest tech can increase demand from customers
- boost sales
- further increase by e-commerce
- profits
technology impact on costs
- maybe high costs initially
- but can improve efficiency and save money long term
technology impact on marketing mix
- product: lower costs
- promotion: easier to reach audience on social media
- price: lower price from lower costs
- place: e-commerce increases convenience
consumer law
- right to return/reject goods
- goods should be delivered/installed safely
- terms of contract fair
- service provided with reasonable care
- good quality products
- business disclose full info about their products/services
benefits of consumers law
- compliant businesses gain customer loyalty
- good relationship with stakeholders
- good publicity
drawbacks of consumer law
- business must be up to date on law
- restrictions on how they operate
- costly
- bad publicity if not followed
employment law
- paid fair (minimum wage)
- no discrimination
- redundancy procedures (business no longer employs someone) should be fair
- health and safety requirements
benefits of employment law
- good employer —> no prosecution for breaking law —> no financial penalties —> use money to invest in future projects
- more inclined to stay working for business
- happier and more motivated —> higher productivity —> better customer service
drawbacks of employment law
- costly to meet health and safety regulations
- minimum wage increase costs
- failing to comply leads to unhappy workers
impact of economic climate on business
- unemployment
- consumer income changes
- inflation
- interest rates
- gov tax
- exchange rates
impact of rising interest rates
- increase cost of borrowing
- struggle to repay loans
- small businesses less likely to borrow to start up or expand
- customers less likely to spend
impact of falling interest rates
- lower borrowing costs
- businesses can spend more, cash flow improve
- borrow money for startup/expansion
- customers more likely to spend
impact of fall in the value of the pound
- price of exports fall
- price of imports rise
impact of rise in the value of the pound
- price of exports rise
- price of imports fall
positive impact to external influences
- rise in economic activity
- new tech lowers production costs
- lower interest rates means business want to borrow
negative impacts of external influences
- new competitors
- new legislation that makes a product illegal?
- fall in economic activity
- new tech leads to product becoming obsolete
responses to external influences
- cut investment and spending when economic activity low
- invest in new tech to gain competitive advantage
- stop producing obsolete products
- increase productivity in positive economic climate
- change company policy to adhere to new legislations
- lower prices to compete
effect of unemployment on a business p+n (3)
- fall in demand
- decreased consumer spending due to lower consumer income
- reduction in sales
OR
- easier to recruit new employees
- more people looking for a job
- better quality employee
