External influences on business activity 6 Flashcards
privatisation
the act of selling state-owned and controlled business organisations to investors in the private sector
nationalisation
the transfer private owned- controlled businesses to state ownership and control
arguments for privatisation
-greater efficiency
- state owned can be slow and bureaucratic
-managers and employees act more responsible which is motivating
-market forces operate, failing businesses will close while successful ones can expand
- prioritising financial reasons rather than political reasons
-have access to private capital which will increase investments
arguments against privatisation
-focused on needs of society not just interest of shareholders, business activities that are essential but the private business consider unprofitable
-coherent and coordinated policies eg. railways, bus services.
-accountability for parliament and country
-privatised monopolies can exploit consumers
-nationalised industries is cost saving through economies of scale.
arguments against nationalisation
- less profit motiveless efficiency
-decisions affected by political reasons - high cost for buying private businesses
-removes the ability to raise finance from private sources
legal constraints on business activity
employment practices, condition of work and wage levels
marketing behaviour, consumer rights and controls over some products
competition
location of business
minimum wage
employers are not allowed to pay less than minimum wage than the set minimum wage per hour
labour laws
defers for every country- eg. no minimum wage in denmark, health and safety laws stringent in Bangladesh , 52 hours in central africa, 37 on denmark
written contract of employment
minimum age
maximum working hours
pension/holidays entitlement
no discrimination
protection against unfair dismissal
consumer protection laws
sale of goods acts- goods fit to sell, no defects, suitable for intended purpose, perform in the way described
trade descriptions act- no misleading descriptions claims made
consumer protection act- firms are liable for an damage they cause by their defective products, illegal to quote misleading prices
competition
monopoly- a market in their is only one supplier with no close competition
collusion- businesses agree to work together and restrict competition by fixing prices and sharing contacts between themselves
corporate social responsibility
when a business accepts it legal and moral obligation to all its stakeholders.impact on society and the environment are indicators of wether CSR is a key priority to the business
social audit
a report on the impact a business has on society
-health and safety records
-pollution levels
-contributions to local community
-suppliers from ethical sources
-employee benefit schemes
-independantly checked , required time and money, customers may just care about cheap goods
demographic changes
local level- housing estates in an area
national level- birth rate ,ageing population
global level-projected growth world population
changing roles of women
divorce rates, job insecurity, early retirement
globalisation
the increasing freedom of movement of goods, capitals and people around the world
technology influence
the products consumers demand
the way products are made
the way businesses communicate
the ways businesses collect, store and use information
job enrichment
aims to use full capabilities of workers by giving them the opportunity to do more fulfilling challenging work
introducing technology effectively
analyse
involve
evaluate
plan
monitor
international influences
international trade and its impact- loss of output/jobs from domestic firms, decline in domestic essential industries, the switch from making goods cannot compete with imports, prevents infant industries from growing domestically, importers may dump goods below cost price, loss of foreign exchange
international trade agreements- recent moves towards free international trade with less protectionism. WTO and free-trade blocs bc consumers have a wider choice of goods and services, imports of raw materials help develop economies indsutrialisation , encourage domestic producers to produce high quality and better prices, comparative advantage, specialisation, better living standards around the globe
key terms- trade agreements
protectionism- use of barriers to free trade to protect a country domestic industries
tariff- a tax on imported products
quota- physical limit placed on the quantity of imports of certain products
voluntary export limits- agreed limits to a quantity of goods sold by one country to another
free international trade-trade with no restrictions or barriers that might limit trade
role of technology in international trade
blockchain- speeding up the finance arrangements needed for international trade and reducing the cost of trade finance
AI and machine learning- most cost effective trade shipping routes, manage ships and truck traffic at ports efficiently and translate e-commerce queries from one language to another
new digital platforms- brings together service providers with potential global customers.
mobile payments- mobile pay allows even low-income groups to be global consumers- apple pay m-pesa
multinational
brings them closer to main markets, lower transport costs ,lower wages, rental costs, weak government restrictions, access to natural resources not available in base country
communication links with headquarters maybe poor, legal and culture differences, coordination with other plants, low skill levels local employees more investments in training
impact on host- investment brings foreign currency, employment opppturnities ,training, supplying services benefit generating additional income. local firms forced to increase efficiency, tax revenues boosted ,total output increase
local workforce could be exploited, might increase pollution ,local firms may be squeezed out, reduction of culture identity ,profits sent back to host country ,depletion of natural resources
environmental influence key terms
greenwashing- giving false impression about how a company products are environmentally sound and sustainable
environmental audit- assesses the impact of the activities and decisions of a business on the environment
sustainability- activities that meet the needs of th present without compromising the ability of the future generations to meet their needs
green consumerism- trend for consumers to only buy products that are produced sustainably without environmental damage
