impacts of external factors

Question 1

Technological factor - impacts of cloud computing

Answer 1

positive impact - through tech such as OneDrive, organisations can save money on their own IT hardware. Additionally, they will not require as many IT staff to maintain equipment, saving on wage costs

negative impact - heavy reliance on ‘the cloud’ performing. if internet is unavailable, the organisation won’t be able to access files stored on the cloud, causing production to stop

Question 2

technological factor -impacts of wifi

Answer 2

positive impact - organisations that provide a free Wi-Fi service are likely to attract customers who wish to use Wi-Fi for work or personal reasons for example a customer choosing a Starbucks coffee house over an independent coffee shop because of Starbucks free Wi-Fi

negative impact - there is a financial cost of setting up and maintaining Wi-Fi

Question 3

technological factor- impacts of 4G

Answer 3

positive impact - 4G will enable organisations employees to communicate and download info while on the move such as more quickly

negative impact - not all areas are equipped with 4G capabilities which could leave organisations in these areas behind

Question 4

technological factor - impacts of Social media

Answer 4

positive impact - having social media allows a business to keep in touch with customers and raise their profile to a potentially worldwide market

negative impact - social media can be used by customers to spread bad reviews leading to a poor reputation that could cause customers to be put off the business and instead go to competitors

Question 5

environmental factors - impacts of weather

Answer 5

positive impact - a business could be impacted by spells of favourable weather for ex during prolonged periods of snow the ski industry in Scotland will see an increase in customers

negative impact - prolonged spells of adverse weather such as snow can affect the transport net work across the UK. this will make it difficult for deliveries of materials to arrive and for staff to get to work therefore causing production to slow down or crease entirely

Question 6

environmental factor - impacts of recycling

Answer 6

positive impact - organisations encourage recycling by their customers in order to impact less negatively on the environment. For example, businesses sell ‘bag for life’ instead of plastic bags to lower their costs and gain a reputation as being ‘environmentally friendly’

negative impact - organisations need to undertake recycling, for example, of waste paper and printer cartridges, but it takes time, effort and money to recycle rather than just disposing of waste

Question 7

environmental factors - impacts of carbon footprints

Answer 7

positive impact - organisations are encouraged to reduce their carbon footprint. this means to lower the amount of emissions from fossil fuels released into the atmosphere. businesses that do this for example by utilising renewable energy will eventually save money on fuel bill

negative impact - there is a financial cost associated with investing in renewable energy for ex solar panels or wind turbines to power factories

Question 8

political factor - impacts of changing corporation tax

Answer 8

positive impact - Many types of businesses, such as limited companies, have to pay a tax on their profits (corporation tax). The government could lower the rate of corporation tax which would mean less money is taken from the business and given to the government, which would increase profits.

negative impact - The government could raise the rate of corporation tax which means more money would be taken from the business and given to the government, which would reduce the profit of the organisation.

Question 9

political - impacts of changing income tax rates

Answer 9

positive impact - The government could reduce taxes (money collected by the government to fund public spending), such as income tax. This will give customers a higher disposable income. This means customers will be more likely to buy products.

negative impact - The government could increase income tax. This will give customers a lower disposable income. This means customers would be less likely to spend money on a business’s products, unless it is essential. This will reduce sales overall.

Question 10

political - impacts of changing laws and legislation

Answer 10

positive impact - The government could introduce environmental protection laws and policies such as ‘Zero Waste Scotland’ and, by complying, organisations will be seen in good light. This is good PR and can attract potential customers.

negative impact - The government could increase the minimum wage so that organisations have higher wage costs. This will result in a lower profit for the year.

Question 11

political - impacts of changing VAT rates

Answer 11

positive - The government could lower VAT (a tax on goods and services). Reducing the VAT rate will make products more affordable for customers, increasing sales for a business.

negative - The government could raise VAT. This will increase the selling price which could put customers off purchasing products and reduce sales.

Question 12

political - impacts of public spending on infrastructure

Answer 12

positive - The government could decide to fund the development of infrastructure (eg building new motorways, car parks). This will increase the likelihood of attracting customers for businesses in these areas.

negative - Public spending is a contentious issue as it only improves certain areas. For example, the Edinburgh tram network greatly improved Edinburgh’s infrastructure; however, businesses in Glasgow saw no benefit. This is known as ‘opportunity cost’, i.e. the cost of spending money on one area is that it can’t be spent in another.

Question 13

social - impacts of UK’s ageing population

Answer 13

positive - This is a vast, and growing, market segment. Businesses that can produce products tailored for this market should succeed. Many potential customers in this segment are retired and well off so there is a potential to offer quality products at high prices.

negative - Extensive market research must be carried out which costs time and money.

Question 14

social - impacts of more women with professional careers

Answer 14

positive - As more women are taking up high-profile professions and managerial roles they are waiting longer to have a family. As a result, couples are generally better off when they have their first child so businesses can offer high quality maternity and baby products that sell for a high price.

negative - More women will be taking maternity leave once they are established in their careers which will mean organisations have to consider flexible working arrangements, such as part time or job share. This will result in the organisation having to spend time recruiting and training replacement staff.

Question 15

social - impacts of evolving work life balance

Answer 15

positive - Fewer employees are working the traditional 9–5 working week. As a result, businesses must cater for the needs of a society that works around the clock for 7 days a week. This has led to a trend of convenience in the UK, e.g. 24-hour opening hours, e-commerce, etc. By meeting the convenience needs of customers businesses will ensure repeat custom.

negative - Organisations have to provide more staff to work 24 hours a day, 7 days a week to meet customer needs, which will increase wage costs.

Question 16

social - changing fashion trends

Answer 16

positive - Businesses can cater for the latest fashion trends and offer products that customers want, therefore increasing sales. For example the North Face or Supreme clothing trend.

negative - Businesses have to spend time and money researching and developing new products. Some products also have a very short shelf-life.

Question 17

social - flexible working arrangements

Answer 17

positive - Flexible working arrangements mean staff will be able to work at a time when they are most productive, which will improve quality in the organisation as well as raising morale. Additionally, businesses can save money on renting office space if more employees work from home.

negative - Flexible working arrangements can lead to a lack of supervision and direction of staff, which can reduce productivity. Organisations may also have to provide staff with equipment such as smartphones and laptops so they can work at home, which can be costly.

Question 18

social - impacts of ethical consideration

Answer 18

positive - Businesses that practice ethically (doing what is right) will be seen in a good light by customers, prospective employees, suppliers and the government. An example would be not exploiting child labour.

negative - Often unethical practice is carried out purely to keep costs low so operating ethically will increase costs and perhaps reduce overall profits. A bad image of being unethical will reduce sales

Question 19

explain what will happen if the pound weakens

Answer 19

if the pound weakens against other currencies then this will lead to it becoming more expensive for businesses to buy goods overseas.

Question 20

explain what will happen if the pound strengthens

Answer 20

if the pound strengthens against other currencies then imports will become cheaper. This will decrease costs for businesses that source materials from abroad which will increase their profits.

Question 21

explain what will happen if there is a rise in interest rates

Answer 21

customers will be more likely to save due to attractive rates as they will earn more money on their savings. this means customers will spend less on business products as they are saving their money instead

Question 22

explain what will happen if there is a reduction in interest rates

Answer 22

customers will be more likely to borrow money as it is less expensive to pay back loans and credit card debts. This means that they will be more likely to spend money on businesses products.