Section B - Pre Release Flashcards
What are external stakeholders?
External Stakeholders are individuals or groups outside a business who are affected by, and have an interest in, the company’s actions and decisions
What are some examples of meeting the objectives of external stakeholders?
- Customers that may seek quality products at fair prices and good customer service.
- Suppliers could aim for steady demand, timely payments, and transparent partnerships.
- Investors may look for profitable returns, risk management, and ethical practices.
- Local communities and regulatory bodies could prioritise ethical practices, environmental responsibility, and compliance with local laws. Businesses often balance these diverse objectives through corporate social responsibility (CSR) initiatives, transparent communication, and engagement strategies.
Meeting the Objectives of External Stakeholders - Application to Specific Business - Tesco (Retailer)
Tesco engages with its suppliers through the Tesco Supplier Network (TSN). It supports communication, feedback, and improves the supply chain. Tesco’s initiatives, such as ensuring fair prices for suppliers and maintaining reliable, ethical sourcing, align with suppliers’ interests and meet local community expectations.
What is the Consumer Rights Act?
The Consumer Rights Act of 2015 is a UK law that ensures consumers are protected when purchasing goods, services, and digital content. It requires products to meet standards and being as described or fit for purpose or of satisfactory quality. It also allows for consumers requesting a refund, repair, or replacement if products fail to meet these standards.
How Businesses Comply with the Consumer Rights Act - Application to Specific Business - Amazon (E-Commerce):
Amazon UK has guidelines for its sellers to ensure that products comply with CRA standards. Its return policies allow customers to request refunds or replacements easily. Also, Amazon’s marketplace ensures quality control through customer reviews and ratings, which helps maintain a high standard across products offered by third-party sellers.
What is SWOT analysis?
SWOT analysis is used to identify a business’s Strengths, Weaknesses, Opportunities, and Threats. This tool helps companies understand internal capabilities and external challenges, guiding decision-making and strategic planning. Strengths and weaknesses are internal factors, such as brand reputation or operational inefficiencies, while opportunities and threats are external, like market trends or competition.
Swot Analysis in Action - Application to Specific Business - Nirvana Spa (Service Provider)
Nirvana Spa uses SWOT analysis to assess opportunities for growth and improvement. Strengths include a high-quality service reputation and a loyal customer base. Opportunities for Nirvana might involve expanding wellness programs or diversifying services to attract new clients.
What is Disposable Income?
Disposable income refers to the amount of income remaining after taxes and essential expenses are paid.
How can business Respond to Rising Levels of Disposable Income?
An increase in disposable income typically leads to higher consumer spending on non-essential items, luxury goods, and services. To take advantage of this, businesses may respond by launching premium products, expanding their offerings, or increasing marketing to appeal to consumers with more spending power.
Operational Responses to Rising Levels of Disposable Income - Application to Specific Business - Starbucks (Coffee Retailer):
Starbucks has responded to rising disposable income by diversifying its menu to include higher-priced items like specialty beverages and premium coffee blends. Seasonal offerings, like Pumpkin Spice Lattes, capitalise on disposable income trends and create excitement among customers willing to spend more.
What is Short-Term Sources of Finance?
Short-term sources of finance are funds obtained for periods usually less than a year.
How are Short-term Sources of Finance used?
They are typically used to cover immediate expenses, manage cash flow, or address unexpected costs. Common short-term finance options include bank overdrafts, trade credit, and short-term loans. Businesses rely on these sources to maintain operational stability and meet immediate financial needs without long-term commitments.
The Use of Short-Term Sources of Finance - Application to Specific Business - Tesco (Retailer):
Tesco uses trade credit with suppliers, which allows it to delay payment for stock purchases until after products are sold. This improves cash flow by enabling Tesco to generate revenue before making payments, ensuring they can consistently stock inventory and meet customer demand.
