2. Influences on Business

Question 1

What does ICT stand for?

Answer 1

Information and Communications Technology

Question 2

Give three advantages of a business using ICT

& examples

Answer 2

• Faster communication between people
• More efficient as computers do jobs more quickly
• Reduced costs in the long term as fewer man hours needed to carry out tasks

Question 3

Give two disadvantages of a business using ICT

& examples

Answer 3

• Can be very expensive to buy equipment
• May have to hire expert staff

Question 4

What is E-commerce?

Answer 4

E-commerce is using the internet to buy or sell products

Question 5

What is the main advantage of E-commerce?

Answer 5

The main advantage of E-commerce is that the business can reach wider markets (compared to traditional shops)

Question 6

Give one disadvantage of E-commerce

Answer 6

Businesses face new competition from online businesses, making it harder to get noticed

Question 7

What effect has digital communication had on businesses?

Answer 7

Digital communication has changed the way businesses communicate with stakeholders

Question 8

List all the examples of how businesses have changed the way they communicate with their stakeholders

Answer 8

• Social Media
• Websites
• Mobile Apps
• Email
• Video Calls

Question 9

How do businesses use social media to communicate with stakeholders?

Answer 9

Businesses use social media to to advertise and promote their products to customers as well as to provide customer service

Question 10

How do businesses use websites to communicate with stakeholders?

Answer 10

Websites allow customers to interact with a business (e.g. live chat) and learn about their products (e.g. FAQs, blog)

Question 11

How do businesses use mobile apps to communicate with stakeholders?

Answer 11

Mobile apps are used for businesses to communicate with their customers about where the business’ stores are located, information about the business’ products, and sometimes used to sell their products

Question 12

How do businesses use emails to communicate with stakeholders?

Answer 12

Emails aallow businesses to communicate with customers on a personal level, or on a bigger scale (such as sending an email to all employees)

Question 13

How do businesses use video calls to communicate with stakeholders?

Answer 13

Video calls can be used to communicate with employees and other stakeholders (like shareholders) to have important conversations whilst in different countries

Question 14

What does it mean for a business to be acting ethically?

Answer 14

A business acting ethically acts in ways that stakeholders consider to be both fair and honest

Question 15

Give 4 examples of ethical considerations for a business

Answer 15

• Not exploiting workers in developing countries for low labour costs
• Not testing their developing products on animals
• Looking after their employees’ welfare
• Buying fairtrade products

Question 16

What are the benefits of ethical behaviour?

Answer 16

• Firms can change their marketing to emphasise on their ethical policies. This develops a positive public image and increases sales
• Treating staff ethically is more likely to increase staff motivation
• Shareholders are more likely to invest in an ethical business as it gives them a moral purpose

Question 17

What are the drawbacks of ethical behaviour?

Answer 17

• It can be costly for the firm (e.g. to pay all workers fairly - higher labour costs)
• It can be difficult to find suppliers with ethically sourced materials
• These higher prices may lead to lower sales

Question 18

Give 3 examples of impacts a business can have on the environment?

Answer 18

• Businesses can cause traffic congestion because of their staff, delivery drivers and consumers
• Businesses can cause noise and air pollution from manufacturing machinery
• Businesses can cause an increase/decrease of wastage due to packaging

Question 19

Define Sustainability

Answer 19

Sustainability is the process of operating without damaging the environment or depleting natural resources for future generations

Question 20

What are the two major worries about sustainability?

Answer 20

• Resource depletion
• Global warming

Question 21

How can businesses imrpove their sustainability?

Answer 21

Businesses can improve their sustainability by :
- Using renewable energy resources
- Trying to reduce their CO₂ emmissions

Question 22

What is the advantage of a business being environmentally friendly

Answer 22

It can give a business a competitive advantage, as a green image can attract new customers and increase sales.

Question 23

What is the disadvantage of a business being environmentally friendly

Answer 23

It can be expensive to buy new equipment and develop new processes

Question 24

How and why may businesses be affected by changes in levels of employment

Answer 24

• If there are high levels of unemployment, people have less money to spend. This leads to a lack of demand and a fall in sales
• However, some businesses may experience an increase in sales as consumers switch to cheaper alternatives
• If there are high levels of unemployment, some businesses may be able to benefit as they can pay lower wages because many people are desperate for a job

Question 25

How does the demand for products and services change as incomes fluctuate?

Answer 25

* As customer income increases, people have more mioney to spend. This means that demand for many goods and services will increase as consumers look to spend their extra money * As customer income decreases, people will spend more money on needs and have less money to spend on wants. This means that the demand for these products will go down and businesses that provide wants will suffer * However, businesses that sell goods at cheap or discounted prices will benefit from consumer incomes fall as people try to buy things for as cheap as possible

Question 26

What types of businesses are most likely to suffer from incomes fall?

Answer 26

Businesses providing wants and 'luxury' goods

Question 27

How do high interest rates affect people?

Answer 27

High interest rates mean that: - Borrowers will have to pay more back for what was borrowed - Savers will recieve more interest on their money and vice versa

Question 28

How does fluctuating interest rates affect businesses & consumers?

Answer 28

When interest rates are low: - More companies will borrow more and save less as it is cheaper to do so - Consumers are less likely so save and more likely to spend, so the demand goes up - Businesses that rely on overdrafts and loans will have smaller interest repayments, and will have more money to spend on other parts of the business When interest rates are high: - Consumers are more likely to save less likely to spend - Businesses that rely on overdrafts and loans will have bigger interest repayments, and will have less money to spend on other parts of the business

Question 29

What is globalisation?

Answer 29

Globalisation is the process where businesses operate worldwide and countries become more interconnected to provide or produce goods and services together

Question 30

What are the benefits of globalisation for UK businesses?

Answer 30

* Larger markets, so increased sales and higher profits * There are reduced costs as businesses can import from other countries where labour costs may be lower * It can reduce transport costs if they're producing goods closer to where raw materials are produced

Question 31

What are the drawbacks of globalisation for UK businesses?

Answer 31

* Increased competition * Higher wages in the UK means that UK businesses can't compete with foreign businesses on pricing as they have lower wages, so more profit * UK companies that setup factories abroad to benefit from cheap labour may gain bad publicity * (Foreign currencies?)

Question 32

How do UK businesses compete internationally?

Answer 32

Uk businesses compete internationally by: - Investing heavily into **better designs** - Producing **higher quality products** than other countries at lower prices

Question 33

What is a strong pound?

Answer 33

A strong pound means that the pound can buy a lot of anther currency

Question 34

What is a weak pound?

Answer 34

A weak pound means that the pound cannot buy a lot of another currency compared to what it could purchase when it was stronger

Question 35

Explain the impacts of a weak pound

Answer 35

* A weak pound is good for exporters, as they can sell products at a cheaper price in the foreign currency in order to recieve the same amount of pounds (see img below) * A weak pound is bad for importers as they have to pay the same foreign currency for raw materials, however it can cost more pounds than before

Question 36

Explain the impacts of a strong pound