Topic 1.5 - Understanding External Influences Flashcards
List some benefits of a business plan
- increases chances of success
- makes entrepreneur realise that they lack skills needed for part of the plan - try harder to employ expert
- if plan is received well by investors, may compete to offer attractive terms for obtaining capital
- good to get it on paper
List some problems of a business plan
- making a forecast doesn’t make it happen - confuse plan with reality
- problems arise if plan is too rigid - good to be flexible
- plans based on high sales will include lots of staff to meet demand - higher risk
- business success is often about people, not paper
- over-focus on perfect plan = less time visiting suppliers/customers
What is a stakeholder?
A stakeholder is any individual or organization that is affected by the activities of a business
What are the different types of stakeholders?
- owners
- customers
- local community
- suppliers
- financiers
- government
- competitors
- pressure groups
- employees
What might customers be interested in when buying goods?
- range of goods offered
- price and quality
- opening hours and availability of staff
- helpfulness of staff
- overall efficiency
What do employees expect from the business they work for?
- fair pay and treatment
- good working conditions
- job security and prospects
- appropriate range of facilities
Managers share the same expectations as other employees, but have additional concerns. What are they?
- pressure to increase sales
- cut production costs
How do suppliers influence a business?
By the quality and price of what the supply as well as the speed at which they supply it
What happens if there are fewer suppliers offering the same product?
A supplier will have a lot of power over a business demanding this product and can raise its prices
What happens if there are many suppliers offering the same product?
The business has power over the supplier
Who are financiers?
Financiers are individuals who invest money in a business i.e. shareholders, or organizations such as banks which lend money to businesses.
Why are financiers interested in a business succeeding?
- make a profit on their investment
- receive repayments on time
How do financiers influence a business?
How much money they lend or invest in that business
- with more capital a business can grow
- able to close a business or sell its assets to repay debts
What does a local community expect?
- provide jobs and services
- avoid disrupting or polluting area
Why is the government a stakeholder in every business?
- govt wants business to do well
- people > employment > pay tax
- more profit = more money govt makes
- successful business = healthy economy
What is a pressure group?
An organised group of people which persuades businesses, and the government, to act in ways that are in line with their particular views
How can pressure group have a big influence over a business?
creating negative publicity about the business’s activities
What are the different areas of technology used by a business?
- e commerce
- social media
- digital communication
- payment systems
How is technology managed in a business?
- planning
- improve customer care
- increase production
- manage human resource
- improve on business communication
- catalyst for innovation - emerging tech
Benefits of e commerce?
- can trade around the world at any time
- process order immediately
- real-time order updates to customers
- avoid running retail shop
- easy ordering process
Disadvantages of e commerce
- expensive to keep up with tech
- customers have security concerns over fraud and account details
- harder to build relationships with customers, leads them to make purchase decisions because of price not brand loyalty
Benefits of payment systems
- easy
- fast
- open 24/7
- allows people to order immediately
- trends in sales can be identified
- can work in different currencies
- customers expect it, choose not to shop if digital payment isn’t available
Drawbacks of payment systems
- vulnerable to fraud
- additional fees to be paid by business
Advantages of paypal
- Easy access linked to product and when set up one click to pay
- Notification email to say that the transaction has worked.
- Can cancel payment and get money back before item is sent.
- Trust, guaranteed against fraud.
- Send money abroad easily
Disadvantages of paypal
- Not a bank does not adhere to the laws banks have to.
- Does not protect against insolvency
- Fees
- PayPal can freeze your account -the standard fee for PayPal accounts is 2.9 percent plus $0.30 for each transaction
Advantages of using technology to ensure sales
- Can be sold any time from any location in the world as long as there is internet connection
- Sales can be made when physical shops are closed such as bank holidays or religious festivals such as Christmas
How does technology have an influence on costs?
- Avoiding paperwork use online record keeping
- real time purchasing through online transactions
- Real time monitoring of business performance
- Reducing travel costs - hosting online meetings
- No need for office or shop as staff can work from home/sales can be made via an e-commerce site
- Sharing/reading documents online than print out
- email = communicate with customers than letters/newsletters by post.
What is the purpose of legislation?
- protects rights of consumers through law
- protects lights of employees through employment law
What are the different rights legislations/Acts?
- consumer rights act 2015
- trade descriptions act 1968
- weight and measures act 1985
- food and safety act 1990
What are the areas that employment laws relate to?
- recruitment
- pay
- discrimination
- health and safety
Employers can legally expect their employees to:
- meet terms of contract
- co-operate in meeting objectives of business
- comply with health & safety regulations
Employees can legally expect to be:
- paid according to contract
- provided with safe working environment
- appropriately trained
- permitted to join trade unions
- allowed access to any confidential records kept on them as employees
When an employee signs a contract of employment they are expected to abide by its terms. These include:
- express terms
- implied terms
What is express terms?
terms which are expressly stated in the contract of employment
What are implied terms
terms which are not written down but are taken to be agreed, usually because they are obvious
What is the Health and Safety at Work Act 1974?
all employers have towards their employees, and those that employees have towards themselves and others.
Under the law, all permanent employees also have a right to
- twenty days’ paid holiday a year min
- paid sick leave
- redundancy pay (for two or more years’ service).
What are trade unions and staff organisations?
organizations which act to protect and promote the interests of employees
What is the Working Time Regulations Act
1998?
restricts the number of hours most employees can work in the UK
What are employees entitled to under the Working Time Regulations
Act?
- 20 mins break min for 6hr working day
- 11hrs off between each working day
- 1 day off per week
- 20 days of paid holiday per year
What are the laws that protect against discrimination?
- The Equal Pay Act
- The Sex Discrimination Act
- The Race Relations Act
- The Disability Discrimination Act
- Employment Equality (Age) Regulations.
What is the Equal Pay Act of 1970?
men and women must receive the same pay for work of equal, or equivalent, value
What is the Sex Discrimination Act 1975?
illegal for one employee to be treated less favourably than another because of their gender or marital status.
What is the Race Relations Act 1976?
illegal for an employee to be discriminated against on the grounds of their race, colour, nationality or ethnic origin
What is the Disability Discrimination Act 1995?
aims to protect employees with disabilities from discrimination in recruitment, training, promotion and dismissal
What is the Employment Equality Regulations
an employer cannot discriminate against an employee because of their age, unless they can show that the discrimination is justified
How is business affected by unemployment?
- fewer potential employees they can hire
- put up their wages to attract potential employees to work for the business
- People’s income is higher, more money to spend on products as they are in work+receiving wages
- employee = happy - more secure
What is inflation?
Inflation is the increase of prices over time
How can low inflation benefit a business?
- amount that it pays its suppliers should remain low
- employees = less likely for pay rise
- employers give small pay rise -cost of living not increasing very much
What 3 areas is the British economy affected by?
- interest rates
- prices
- exchange rates
What is the base interest rate?
Fee that the Bank of England charges customers for borrowing money
How does high interest rate impact borrowers?
Borrowers pay more money to borrow
What happens when there is an increase in the value of the sterling?
£1 buys more dollars
- £ has gone up and stronger
What happens when there’s a fall in £?
Become weaker
Who benefits from fall in £?
U.K. exporters
Why are higher interest rates better?
Higher interest rates make it more attractive to save in a deposit account because of the interest gained
What happens if inflation in the UK is higher than elsewhere?
UK goods will become uncompetitive leading to a fall in demand for UK exports
