Ch6 External Influneces On Business

Question 1

Arguments for privatisation/against nationalisation

Answer 1

• profit motive = efficiency
• fast decisions (less bureacracy)
• bad business can die out
• selling nationalised industry = gov finance
• responsibility to managers/employees (motivation)

Question 2

Argument against privatisation/ against nationalisation

Answer 2

• private firms competing can be bad cuz incoherent policy (eg trains)
• essential should be in hands of gov
• exploit consumer
• breaking up nationalised can = less EOS

Question 3

Legal constraints on busines activity

Answer 3

• Employment
• marketting behaviour
• competition
• labor
• location

Question 4

Labor laws

Answer 4

• redundancy (1yr)
• unfair dismissal
• workplace environment
• min wage

Question 5

Benefits of min wage

Answer 5

• less exploitation
• less income inequality
• more motivation
• more purchasing power

Question 6

Critisisms min wage

Answer 6

• higher labor cost
• cost push inflation
• undocumented employees (below min wage)

Question 7

Social auditing

Answer 7

Report on impact of business on society

(Shows if profit was made at expense of stakeholder interests)

Question 8

Consumer protection law costs to business

Answer 8

• redesigning products for health
• redesigning add expensive
• improving quality control expensive
• ## needs attitude/culture change in workers

Answer 10

• redesigning products for health
• redesigning add expensive
• improving quality control expensive
• needs attitude/culture change in workers

Question 11

Benefits of cons protection laws

Answer 11

• less risk of consumer injusry
• better reputation if abided

Question 12

Benefits of business competition

Answer 12

• more goods
• more quality
• more innovation

Question 13

CSR

Answer 13

Its the legal AND moral obligation of biz to contribite to society and ALL stakeholders (not just shareholders)

Question 14

CSR benefits

Answer 14

• reputation
• attract socially conscious investors
• employee motivation (+less turnover)
• govt grants
• low legal action risk
• approval from local community to operate and expand

Question 15

CSR costs

Answer 15

• greenwashing (lying, exxagerating)
• financial costs
• shareholders might get upset

Question 16

Social audit

Answer 16

A report a bysiness publishes about how it has contributed to society within a time period

Shows if profit made at shareholder expense or not

Question 17

Benefits of social audits

Answer 17

• marketting
• set goals to achieve CSR and reflect
• increase competition bw firms to contribute

Question 18

Costs of social audits

Answer 18

• time & resources
• greenwashing
• customers might not care

Question 19

Why should bysiness care abt community needs

Answer 19

• public image
• community will respond better to biz decisions
• govt grants/subsisdies
• less risk of legal or pressure group action
• motivation of employees

Question 20

Pressure groups

Answer 20

Organizations of ppl put pressure on businesses and govts to change policies.

They increase ethics of businesses

Question 21

How do pressure groups achieve goals

Answer 21

• social media publicity pressure
• influencing consumers (eg boycott)
• lobbying govts

Question 22

Impact of ageing population on business

Answer 22

• more grey consumers (diff demands)
• less young employees availible
• more loyal experienced old employees
• if birthrate dont mstch could reduce customer base longterm

Question 23

Trends that effect employment

Answer 23

• labor being replaceable by capital goods
• labor transitioning to newer industries from old
• more women etc working
• part time workers more
• more flexibile employment offers (meets seasonal demand)
• more women take maternity leave
• skilled ppl leaving

Question 24

Part time workers negative/benefit

Answer 24

• need to restructurr work patterns
• less loyal

BUT

• Cheaper
• flexible times
• can become experienced longterm later

Question 25

Benefits of tech change

Answer 25

- manager can get detail analytics to assess workers and projects - computers relay info fast so fast decisions (eg stock ticker) - lower cost of production - better quality - more consumer base (eg online delivery)

Question 26

Threats of new tech

Answer 26

- redundancy unemployment - expensice to set up - expensive maintanence - needs skilled operators - glitches etc can completely halt processes - at risk of data leaks/hackers - workers insecure so motivation down - too much info can confuse managers from whats imoortant to make decision - if competitor has patented tech that u dont yet it can lead to u being outcompeted

Question 28

Intl trade benefits

Answer 28

- wide good choice - wider cons base - import raw material lower COP - Competition globally - skills shared

Question 29

Threats of intl trade

Answer 29

- job loss if domestic furms outcompeted - if comeptition so high cuz of big foreign firms it prevents infant industries - dumping possible - too many imports can hurt balance of trade and devalue currency

Question 30

Multinational

Answer 30

Org that expands its manufacture, operating branches etc to countries abroad Butnonly has headquarter in 1

Question 31

Multinstional benefits

Answer 31

- lower COP - Avoid import restrictions via directly producing - brings them closer to their markets (more hands on control for managers etc) - access to resources that were unavailible

Question 32

Multinational problems

Answer 32

- communication links can be bad - employees migjt need training - language barrier - equality policy hurt cuz relative wages - publicity can be bad

Question 33

Eval of multinational benefits

Answer 33

- investment into foreign country - employment - local firms must be competitive - tax revenue - skills spread

Question 34

Eval of multinstional drawbacks

Answer 34

- exploitation of domestic labor - pollution - local firms might be competed out the market (monopoly etc) - overtime profit sent back to host country - resource depletion

Question 35

Environmental audit

Answer 35

Assesment of business impact on ENVIRONMENT, often published

Question 36

Green consumerism

Answer 36

Trend for consumers to buy products that are sustainable and dont harm environment

Question 37

How does govt assist small businesses

Answer 37

- less direct tax - better loan terms - more loans - training schemes - reduce paperwork needed to make easier - Loan gaurantee schemes

Question 39

Loan gaurantee scheme

Answer 39

Govt sheme where it agrees to pay a % of loan if business fail. Makes bank more likely to give loans

Question 40

Govt assistance for all businesses

Answer 40

- subsidy - interest rate changes - investment

Question 41

How does govt deal w market failiure

Answer 41

Fiscal Monetary Supply- side (training etc)

Question 42

Types of mkt failiure

Answer 42

- consumers buying goods w/ positive or negative externality - untrained labor (inefficientl - monopoly ( low choice, high prices etc)

Question 43

Macroeconomic govt objectives

Answer 43

- economic growth - low price inflation - low rate of unemployment - longterm even BOP - stable exchange rate

Question 44

Evonomic growth

Answer 44

Rising GDP

Question 45

GDP

Answer 45

Total VALUE of goods made in an econ in a year (priduced-depreciation)