2. Influences on Business Flashcards
What does ICT stand for?
Information and Communications Technology
Give three advantages of a business using ICT
& examples
- 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
Give two disadvantages of a business using ICT
& examples
- Can be very expensive to buy equipment
- May have to hire expert staff
What is E-commerce?
E-commerce is using the internet to buy or sell products
What is the main advantage of E-commerce?
The main advantage of E-commerce is that the business can reach wider markets (compared to traditional shops)
Give one disadvantage of E-commerce
Businesses face new competition from online businesses, making it harder to get noticed
What effect has digital communication had on businesses?
Digital communication has changed the way businesses communicate with stakeholders
List all the examples of how businesses have changed the way they communicate with their stakeholders
- Social Media
- Websites
- Mobile Apps
- Video Calls
How do businesses use social media to communicate with stakeholders?
Businesses use social media to to advertise and promote their products to customers as well as to provide customer service
How do businesses use websites to communicate with stakeholders?
Websites allow customers to interact with a business (e.g. live chat) and learn about their products (e.g. FAQs, blog)
How do businesses use mobile apps to communicate with stakeholders?
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
How do businesses use emails to communicate with stakeholders?
Emails aallow businesses to communicate with customers on a personal level, or on a bigger scale (such as sending an email to all employees)
How do businesses use video calls to communicate with stakeholders?
Video calls can be used to communicate with employees and other stakeholders (like shareholders) to have important conversations whilst in different countries
What does it mean for a business to be acting ethically?
A business acting ethically acts in ways that stakeholders consider to be both fair and honest
Give 4 examples of ethical considerations for a business
- 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
What are the benefits of ethical behaviour?
- 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
What are the drawbacks of ethical behaviour?
- 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
Give 3 examples of impacts a business can have on the environment?
- 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
Define Sustainability
Sustainability is the process of operating without damaging the environment or depleting natural resources for future generations
What are the two major worries about sustainability?
- Resource depletion
- Global warming
How can businesses imrpove their sustainability?
Businesses can improve their sustainability by :
- Using renewable energy resources
- Trying to reduce their CO2 emmissions
What is the advantage of a business being environmentally friendly
It can give a business a competitive advantage, as a green image can attract new customers and increase sales.
What is the disadvantage of a business being environmentally friendly
It can be expensive to buy new equipment and develop new processes
How and why may businesses be affected by changes in levels of employment
- 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
How does the demand for products and services change as incomes fluctuate?
- 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
What types of businesses are most likely to suffer from incomes fall?
Businesses providing wants and ‘luxury’ goods
How do high interest rates affect people?
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
How does fluctuating interest rates affect businesses & consumers?
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
What is globalisation?
Globalisation is the process where businesses operate worldwide and countries become more interconnected to provide or produce goods and services together
What are the benefits of globalisation for UK businesses?
- 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
What are the drawbacks of globalisation for UK businesses?
- 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?)
How do UK businesses compete internationally?
Uk businesses compete internationally by:
- Investing heavily into better designs
- Producing higher quality products than other countries at lower prices
What is a strong pound?
A strong pound means that the pound can buy a lot of anther currency
What is a weak pound?
A weak pound means that the pound cannot buy a lot of another currency compared to what it could purchase when it was stronger
Explain the impacts of a weak pound
- 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
Explain the impacts of a strong pound
