Influences On Business

Question 1

Employment law-businesses bave to pay staff minimum amount

Answer 1

-workers aged 20u but of school leaving age have to be paid the national minimum wage. Workers aged 21 and over have to be paid national living wage-slightly more than national minimum wage

Positive and negatives:
-companies can’t cut their costs by paying workers less than legal minimum. If do breaking law
-if companies doesn’t pay workers enough, it could lead to large fines. Could also lead to bad publicity, and consumers might stop using the business
-companies sometimes argue that they increase costs. These can lead to increased prices, meaning fall in sales and reduced income for firm
-can lead to better motivated staff and increased productivity

Question 2

Business can’t discriminate and equality act 2010-employment law

Answer 2

-employment law provide rights for employees to be protected in the workplace.
-includes areas such as religion,gender,race,age etc.

Equality act 210 also covers pay-all employees must be paid same if they do same job for same employer
Equality act 2010-legally protects people from discrimination in the workplace and in wider society

Question 3

What is discrimination and examples

Answer 3

Discrimination is the unacceptable treatment of any individual or group of individuals who are termed ti be different. In UK, it is illegal for Ann employer to discriminate against an employee.

Examples:
It is illegal to discriminate in any of the following
areas:
 Recruitment (advertisement, selection and / or
appointment)
 Employee contract (terms and conditions)
 Pay
 Promotions and transfers
 Providing training
 Deciding which fringe benefits employees receive
 Employee dismissal

Question 4

Health and safety act 1974

Answer 4

Requires all employers and their employees to take responsibility for health and safety
-forms need to carry out risk assessments to identify possible dangers
-This act requires:
• safe operation and maintenance
of the working environment
(building and machines)
• safe use, handling and storage of
dangerous substances
• adequate training of staff to
ensure health and safety
• adequate welfare provisions for
staff at work

Question 5

Impact on health and safety legislation

Answer 5

-Training will mean business costs will increase; for example, there will be
staff training costs on relevant health and safety matters, providing
appropriate equipment and clothing to staff and lost management time
spent checking that the business is obeying all aspects of the law.

-Meeting health and safety requirements can be expensive and make
businesses uncompetitive, particularly if they face competition from
firms in other countries where the legal requirements for health and
safety are lower.

-Failure to meet health and safety requirements can result in unlimited
fines and imprisonment, as well as a damaged reputation.

-Businesses will benefit from a safe working environment, as workers will
be loyal to the firm and not look for employment elsewhere. They will
also be happier and more motivated in what they are doing, which will
increase productivity levels. Long term, businesses will find it is easier to
recruit new employees.

Question 6

Consumer law 2015

Answer 6

The UK has laws that are designed to protect consumers from
businesses which try and exploit them. The laws protects
consumers when they buy goods or services, provides help if
they are treated unfairly or if things go wrong and goods are
faulty.

Good should meet three criteria:

1)The product should be fit for purpose

2) The product should match its description
-it is illegal for retailer to give a false trade description
-this includes size and quantity of the product, materials its made from and properties
-also illegal to claim that product has been endorsed or approved by a person unless it has been really seen

3) the product should meet satisfactory quality
-product should be well made-should;kt fall apart after couple of uses

Question 7

Benefits and costs of consumer loegislation

Answer 7

Benefits:
• Improved reputation in the
marketplace, leading to an
increase in sales
• Bad publicity is avoided
• No / fewer costs of repair and
replacement / less administration
costs
• Avoid very high fines, which may
run into millions of pounds for a
business

Costs:
-• Training may be required to ensure
employees are able to produce
quality products
• Increased quality control /
additional production processes
may be needed
• Higher quality raw materials could
be required
• Administration / management time
spent checking the law has been
met

Question 8

Changing use of ICT

Answer 8

Business use of Information and Communication
Technology (ICT) has expanded massively in the last 30
years. This use has expanded from word processing and
data storage to production, marketing and human
resource applications.

Benefit:
-Has allowed businesses
to reduce costs and
improve quality,
efficiency and
competitiveness.

Costs:
There are costs in
purchasing technology
and training staff to use
it.
Its use may result in
redundancies.

Question 9

Current uses of ICT

Answer 9

Storing of data e.g.
products, customers,
suppliers through the use of
databases to allow searches
and personal mailings to
customers
 Producing business
documents including
letters, advertising
literature
 Designing e.g. packaging,
buildings
 Internal and external
communications using
electronic links, such as e-mail
and online messaging
 Computerised stock control
and distribution systems from
customer ordering to receiving
products
 Linkages to production
technology to allow
computerised production
methods

Question 10

What is E-commerce

Answer 10

E-commerce is the buying and selling of goods and services
using the internet.

Question 11

What is m-commerce

Answer 11

M-commerce is the use of wireless handheld
(mobile) devices, such as smart phones to buy and sell online.

Question 12

Use of e-commerce-benefits and negatives

Answer 12

Positives:
Has allowed businesses to
access wider markets and
reduce costs through
automatic ordering using
online applications /
reduction in physical
stores.
The business can
experience sales increases
and become more well-
known.

Negatives:
Costs increase due to
investment in
computerised systems and
staff training.
Distribution costs increase,
processing of orders /
returns is time consuming.
Personal contact with
some customers may be
lost.

Question 13

What is Digital technology

Answer 13

Digital technology is where businesses use computer
based tools, systems, devices and resources to
generate, store or process data. It has many aspects
including social media, online multimedia, productivity
applications, cloud computing, e-commerce and
communication.

Question 14

What is digital communication

Answer 14

Digital communication is part of digital technology. It
is in widespread use throughout the world, through the
use of devices such as smart phones, tablets, desktops
and video conferencing. It can also occur through social
media platforms.

Question 15

Digital cimmunication to stakeholders

Answer 15

Customers – orders, invoices, bills, customer service,
advertising, social media (Facebook, X etc)
❑ Suppliers – ordering, payments, product information
❑ Employees – payslips, job information, booking holidays,
recording hours worked, emails, messaging, meetings /
conference calls
❑ Shareholders – annual reports, dividend information and
payments
❑ All stakeholders - e-mail can be used for communication to
all stakeholders, to share and receive information

Question 16

Examples od difitial communication with stakeholders

Answer 16

Websites-communication with customers-e.g by publishing blogs or providing customer service. Website can also be used to publish reports to shareholders

Email-very quick way of communicating with stakeholders,either on personal level to respond to customer or bigger scale

App-communication with customers and provide information about business. Can be sued to sell products and for promotion of special offers

Video calls-allow employees who work for the same business in different locations to hold meeting remotely,rather than travelling. Good way to communicate with important shareholders, who may live in different places

Social media-advertising products to customers, customer service or promote local events

Question 17

Benefits od digital communication

Answer 17

Decreases costs
Quality improves
Increased communication options
Helps marketing and increases markets
Allows remote working
Easier to recruit and retain employees

Question 18

Uses of digital technology

Answer 18

Organisation – computers can be used for communication, data
storage and retrieval. Remote working is possible using platforms
such as Skype & Teams, as well as email and other messaging
functions.

Finance – software packages can be used for electronic billing
and payments. Online payments can be received and made
through electronic transfers.

Human resources – job applications can be made online and
allows simple applicant screening tests to be used. Digital
training is increasingly being used.

Production – computers can be used to help production
design and manufacturing.

Marketing – e-commerce and websites are very
important to most businesses. Computers are also used
in product design, advertising, social media and its use
of customer databases

Question 19

What is ethics

Answer 19

Where businesses make
decisions based on what
is morally right rather
than what is more
profitable

Question 20

Ethical behaviour

Answer 20

Businesses are increasingly concerned
about the ethics of their business
behaviour. Making morally correct
decisions can be as important, to
some businesses, as choosing the
most profitable option.

-some countries, it not legal to work for very long hours for very low pay. So e firms set up factories in these countries to reduce labour costs-many people think its unethical if it exploits workers from foreign countries
-Businesses can write codes of conducts for any factories they have overseas. Helps make sure works treated ethically. E.g can put limits on working hours per day
-firms that buy raw materials from developing countries can choose to buy from fairtrade sources-these means people in developing counties who produce goods are paid fair price so they can earn a decent wage

Question 21

Benefite and drawbacks of behaving ethically

Answer 21

Benefits:
-Higher revenues – increasingly,
customers are making purchasing
decisions based on ethics, with selling
prices being less important in their
choices
• Improved brand / business awareness
and recognition
• Easier to attract and recruit staff
• Increased employee motivation and staff
retention
• New sources of finance are possible, for
example from ethical investors

Drawabcks:
Higher costs, for example sourcing
from Fairtrade suppliers rather than
from suppliers offering the lowest
prices
-these increased costs mean firm dosent make as much profit on each item it sells. It could put it prices up so that it makes more profit per item, but higher prices may lead to lower sales
• Higher overheads, such as training &
communication of ethical policy
• A danger of building up false
expectations amongst consumers
• Bad publicity if businesses are found to
be acting “unethically”

Question 22

Examples of poor ethical behaviour

Answer 22

Customers – charging very high prices when
customers have no choice
Suppliers – paying very low prices and delaying
payments
Employees – paying very low wages and use of
child labour / part of the supply chain uses
child labour
Local community – creating pollution and
inconvenience

Question 23

Engironemtnal considerwtions

Answer 23

 There are ever increasing concerns about the environment.
The number of UK laws relating to business and the
environment have increased dramatically.
 Areas such as pollution, disposal of waste linked to
recycling and energy use all increase business costs as they
must meet these new standards. In some cases, this
increase in costs can be passed onto the consumer in the
form of higher prices.
 Consumers will expect to pay a higher price for goods and
services that have been produced in a more
environmentally friendly way, for example higher prices can
be charged for organic products.

Question 24

Examples of different types ofmpollution

Answer 24

If a business causes pollution, it is damaging the natural
environment. This can damage the condition, health, safety or
welfare of animals, humans, plants or property and reduce
quality of life.

Air – factories and transport
contaminating air needed for
breathing
Noise – factories and construction
damaging peoples’ hearing
Light – factories altering animal
habitats
Water – factories discharging poison
and contaminating drinking water
Land – dumping of industrial waste
and contaminating agricultural land

Question 25

Businesses can reduce theit impact in the environment

Answer 25

-Companies can reduce the amount of packaging on their products. They can also recycle things such as delivery boxes or unwanted goods. These things means less waste goes to landfills. -companies can dispose of hazardous waste carefully so that it dosent pollute land or water -companies can encourage share car schemes/cycle to work so that they reduce traffic cause by staff driving to work -to reduce air pollution can use more efficient machinery that is less polluting -to reduce noise pollution can buy quieter machinery or put insulation or sound barriers

Question 26

Environmental policies-positive and negatives

Answer 26

Positives: Provides good publicity and meets the requirements of environmental laws. Customers may be willing to pay higher prices. Negatives: Costs increase as the business pays more for waste disposal and to meet the requirements of anti-pollution laws. Not all countries will have similar laws.

Question 27

Environmental policies and consumer

Answer 27

Environmental policies will affect businesses directly, but they will also impact consumers.  Prices – these may rise, as increased business costs are passed onto the customer  Availability – recycling will mean scarce resources last longer, goods may be available and cheaper in the long run  Quality of life – reduced pollution and waste will improve living conditions  Taxes – if pollution is reduced, the government can spend less on this area, which may result in a reduction in taxation

Question 28

Agriculture and global warming

Answer 28

• Agriculture employs 30% of the world’s population • A UN study says the effects of global warming will help some crops, but damage far more • According to this study, by 2050, food prices could rise by 84% • One small area of California lost production worth $2billion in one year due to drought.

Question 29

Sustainability-the trade off

Answer 29

usinesses can add value to their products by demonstrating their environmental and social benefits. It is often said that businesses must make a trade-off between sustainability and profit, as the extra costs of using renewable sources reduces profits.  Businesses can be successful and sustainable, but this may be difficult to achieve in a competitive environment, as some businesses will put profits first and therefore focus on cost minimisation resulting in lower prices being charged to customers.

Question 30

Effects kf global warming

Answer 30

Global warming is causing new pressures on our world and its climate – resources are being flooded and destroyed by rising sea levels  Industries, such as agriculture, are directly affected by changes in temperatures and droughts  Other industries are all also affected, for example insurance, but so are people, their consumption and their survival through natural disasters and famine  Solutions, including using renewable resources and reducing energy consumption, are essential

Question 31

What is the economic climate

Answer 31

The general situation in a country affecting the wellbeing of individuals, firms and the government in areas such as output, prices and employment.

Question 32

Unemployment

Answer 32

Unemployment means being available for work but not having a job or losing the job that you have. 1) Unemployment means the economy as whole produces less output than if everyone was employed. So everyone suffers from unemployment-in theory at leadt -some firms can benefit from unemployment. May be able to pay lower wages if lots of unemployed people desperate for jobs. Can also fill jobs easily. -less employment means lot of people have less money to spend. This can lead to a lack of demand for products from unemployed, so sales can fall

Question 33

High employment- Advanatges and disadvanatges

Answer 33

High employment is good for a country. It means people can find jobs more easily and income levels tend to be higher. Advantages: • Incomes will be higher, so spending on goods and services will increase, particularly on non- essential items • Workers will be more motivated, as they have more job security; productivity levels will increase Disadvanatges: • Fewer workers will be available, resulting in job vacancies being difficult to fill • Wage increases are likely, as less workers are available; new and existing workers can therefore demand higher pay • Increased staff turnover, as it easy for workers to gain employment elsewhere, increasing recruitment and training costs

Question 34

Fhanges in income can affect business

Answer 34

If prices rise at a faster rate than income... -people will have to spend a greater proportion of their income on needs-such as food,rent -so less money in wants such as new shoes,cinema-the demand for these will go down -this means that business provides want will suffer as sales likely to go down so less profits -some businesses will benefit if peoples income are relatively low. Store selling goods at discount prices are likely to see sales go up as more customers will be making an effort to buy things as cheaply as they can. If prices rise at a slower rate than income... -people will be spending a smaller proportion on income in their needs. As more money available to spend on wants, and demand for these services will go up -businesses providing wants will increase in sales and their profits likely to increase -stores selling discount prices may see their sales and profit go down.

Question 35

Interest rates

Answer 35

-when you borrow money, you usually have to pay it back with interest-this means that you pay back more than you borrowed -if you save money,you earn interest-the amount of money in your savings account will increase over time -the amount of interest you pay or earn depends on interest rates-usually given as a percentage. -the higher the interest rate, the more you pay or earn

Question 36

Low interest rates leads to increased spending

Answer 36

-when interest rate is cut, its cheaper to borrow money. But you get less interest when save money at bank -firms borrow more and save less -consumers have more money to spend so demand for goods and services goes ip. So firms likely to gain more profit and may need to increase output

Question 37

High interests rates

Answer 37

High or increasing interest rates will affect businesses directly: • Business loans will be more expensive. This reduces investment, so businesses are less competitive or do not expand.  Costs may increase, as the cost of existing business loans / overdrafts may be higher.  Businesses may choose to save money to earn the higher interest, so investment falls.  Businesses may close if they are unable to make loan repayments.

Question 38

Higher interest rates-indirect effects

Answer 38

Consumers spend less, as it is more expensive to borrow money.  Consumers save more, as rewards for saving increase.  Consumers may spend less, as their costs on existing credit cards, loans and mortgages increase.  Businesses selling non-essential goods and services see a drop in sales.

Question 39

What are three meaning of market

Answer 39

-a place where goods are traded between customers and suppliers -trade in a particular product -the potential customers for s product e.g the age 18-25 market

Question 40

What is a competitive environment

Answer 40

Where a business operates in a market where there are other businesses producing the same or similar goods and services.

Question 41

Competitve markets

Answer 41

Competition might be strong: Large number of businesses providing similar goods or services. Weak or no competition: Few larger firms. Little / weak competition gives a business operating in this market considerable market power. A monopoly exists where a single business dominates the market and does not have any competition

Question 44

Competitors sell the same products in same market

Answer 44

-firms need to try convince customers their product is better than rivals. This can be costly to firms. E.g might need to spend money on developing high quality products or funding promotions to customers -Firms will rush to fill any gap in market-results in firm spending lot of money developing new product

Question 45

Situations where business face little or no compeititon

Answer 45

When a business is the only seller of a particular good or service When a business develops a unique, innovative product When a business is one of a few large businesses which sells a particular good or service When a business offers much better value for money than its competitors

Question 46

Effects kf weake competition

Answer 46

A business can find itself in a very profitable situation, if it faces minimal competition. Customers have no alternatives to buy if they wish to purchase this product. • The business can charge higher prices and make good profits. • Profits may be reinvested into the business to make it more efficient or more can be distributed to the owners. • Quality, however, might suffer as the lack of competition can make the business “lazy.”

Question 47

Benefits kf competiton

Answer 47

• Encourages businesses to make its products different or better than its rivals. • Businesses will focus on one area of the market and their market strengths. • Research will take place to improve their products and to reduce costs. • Improved customer service levels to retain existing customers. • Can review the actions of competitors, see what they do well and then improve their own products.

Question 48

Ways to compete

Answer 48

-advertising -eye catching packaging - developing new products -price

Question 49

Types of risks

Answer 49

All businesses will face risk. These can be internal or external, for example… ▪ Employees unhappy, refusing to work leading to strike action or talented employees being “poached” by competitors. ▪ Bad publicity affecting sales. ▪ Losing a major customer threatening the survival of the business. ▪ Product becomes outdated due to changes in technology. ▪ Government introducing legislation, for example the introduction of the Sugar Tax in 2018 which affected fizzy drink manufacturers.

Question 50

Risks in running a business

Answer 50

Starting a business-an enulreuprneur needs money to buy equipment and pay workers. Will often use own money but will need to raise more money from banks other other investors as well. If business dosent make enough profit to pay back all money borrowed, it will fail. Health of economy-employment levels,interest rates and exchange rates. If these things change they can have huge impact on business The action of competitors

Question 51

How to redcue risk

Answer 51

Planning: -Doing a proper business plan at the start makes a new business less likely to fail - established businesses also need to make plans in order to change or grow in business Researching: -businesses should carry out regular market research to make sure they have right marketing mix for their products -business should research competition. Should be aware of new competitors and can keep up with any new products or pricing that competitors have brought in. -should be aware of planned changes to law or predicted changes to the economy that could affect them. Allows them to be prepared for changes and best plans to dealing with them

Question 52

Reasons fir bsuiness failure

Answer 52

-poor managment -poor market research -sales lower than expected -start-up costs to high -unexpected shocks -poor quality

Question 53

What is globalisation

Answer 53

Globalisation is the process by which businesses and countries are becoming more connected

Question 54

Benefits of globalisation

Answer 54

Increased markets-having a larger market to sell can lead to increased sales and higher profits. Having a larger market to buy from mean firms may be able to buy supplies more cheaply, reducing costs and higher profits  Access to cheaper labour and raw materials  International specialisation  Increased levels of efficiency, due to an increased level of competition  Transfer of knowledge, skills and technology

Question 55

Drawbacks lf globailsation

Answer 55

 International competitors with cheaper costs  Power of multinational brands  Whole industry closures  In the UK, there has been movement away from the manufacturing sector to the tertiary sector  Effects of events in other countries

Question 56

What are exchange rates

Answer 56

The exchange rate is the amount of one currency that can be bought with another currency.

Question 57

Strong pound

Answer 57

If the exchange rate changes so that the currency gets stronger or appreciates, it will be worth more. This means that it will cost more for businesses outside the UK to buy the UK currency. It will be cheaper for businesses in the UK to buy other currencies. Imports into the UK are cheaper and exports become more expensive.

Question 58

Psoitive and benefits kf strong pounds

Answer 58

Positive: -For consumers, as prices of imports will decrease; consumers can access and buy different / cheaper products. -If a business imports raw materials, it will be able to buy more of these raw materials for the same UK converted price. This will reduce business costs. Costs: -For a business that exports, its goods will become more expensive abroad, which could result in sales decreasing. -Local / smaller businesses that export may not be able to compete against cheaper imports from other countries where their currency is weaker.

Question 59

Weak pound

Answer 59

the exchange rate changes and the currency gets weaker or depreciates (devalues), it will be worth less and therefore it will be cheaper for other countries to buy goods and services from our country.

Question 60

Positive and negatives of weak pound

Answer 60

Good: -For a business that exports, as its goods will be cheaper in the country the business sells to. This may lead to an increase in sales. -For local UK businesses, as they will be able to compete better against more expensive imports. Bad: -For consumers, as prices of imports will increase. -For businesses that import raw materials, as costs will increase, which might cancel out the benefits of cheaper export prices.