Topic 2: External Influences Flashcards
What is CAD?
Computer Aided Design
What is CAM?
Computer aided manufacturing
What is automation?
The use of technology and robotics to automate processes and functions within an organisation
What is an EPOS?
Electronic point of sale - a modern tile system to help a business run better and more efficiently
What is teleworking?
When employees work remotely whilst communicating with their colleagues through telephone, email or video conference
What is product innovation?
The creation and introduction of a product or service that is new to the market or a different iteration of an existing product
What is e-commerce?
Buying or selling goods or services electronically
What is legislation?
A set of rules that govern society
What are the 3 areas of business legislation?
- Consumer protection
- Employment
- Health and safety
What are the 6 pieces of employment legislation?
- Minimum wage
- Equality act
- Maternity and paternity leave
- Discrimination
- Disability
- Age
What does the minimum wage legislation state? How does it impact a business?
States all businesses must pay their staff a minimum hourly rate that can cover the needs of living - it changes depending on age
IMPACT: costs increase as age of staff increases
What does the equality act state? How does it impact a business?
All staff must be paid the same if they do the same job - not depending on gender etc.
IMPACT: businesses must be sure they pay staff the same
What does the maternity and paternity leave legislation state? How does it impact a business?
Pregnant women get 52 weeks off and get paid for first 20 weeks
Fathers get 2 weeks off - fully paid
Both must be able to return to the same position after the leave
IMPACT: business may have to find temporary replacements
What does the discrimination legislation state? How does it impact a business?
There are 9 protected characters and people cannot be treated differently based on them
IMPACT: businesses must be fair and transparent
What are the 9 protected characteristics?
- Age
- Gender
- Disability
- Marital status
- Pregnancy
- Race
- Religion
- Sex
- Sexual orientation
What does the disability legislation state? How does it impact a business?
Businesses cannot discriminate to disabled people
IMPACT: the business must be accessible to disabled people
What does the age legislation state? How does it impact a business?
No preference must be given to candidates based on age unless there’s a specific reason to do so e.g. having drivers license
IMPACT: they mustn’t discriminate
What are the 2 pieces of consumer legislation?
- Sales of goods act
- Trade descriptions
What does the sales of goods act state? How does it impact a business?
Products must be at a standard quality level, fit for purpose and as described
IMPACT: businesses must ensure quality is high - costly
What does the trade descriptions legislation state? How does it impact a business?
Business must accurately describe goods and services and they should match their descriptions including size and quantity
IMPACT: they have to be sure every product is as described or customers may return it
What is the piece of health and safety legislation?
Health and safety at work act
What does the health and safety at work act state? How does it impact a business?
Working conditions for employees and customers must be safe
IMPACT: they must have regular inspections to ensure these conditions are safe
How does unemployment rate impact consumers?
Prices and VAT may be higher
How does unemployment rate impact businesses?
Less people have disposable cash to spend on a businesses goods and services
What are the 4 stages of the economic cycle?
- Boom - businesses are making loads of money, demand is at its peak, people have a lot of money
- Recession - businesses are slowly making less money, demand is decreasing, people have less money
- Slump - business are making little money, demand is at its lowest, people have barley any disposable cash
- Recovery - businesses are beginning to make more money, demand is slowly increasing, people begin to have more money to spend on goods
How does inflation rate impact consumers?
They will have to pay more for goods and services
How does inflation rate impact businesses?
They will have to spend more on stock and inventory and will make less of a profit
What is consumer spending?
The value of goods and services bought by consumers
How is consumer spending measured?
Through GDP
What is an interest rate?
The cost of borrowing money and reward for saving
If things get too expensive what will the government do to the interest rate? Why?
Government will increase interest rates - people will thus stop borrowing money from bank so demand will fall and prices return to normal
If things get too cheap what will the government do to the interest rate? Why?
Government will decrease interest rates
Who is the MPC? What do they do?
Monetary Police Committee - work for the Bank of England, they meet every 3 months and set interest rates
What should interest rates be?
Around 2%
How to calculate annual interest payments?
Annual interest payments = loan x interest rate/100
What are ethics?
The moral standards by which business behaviour is judged - whether business activities are morally right or wrong
What are examples of ethical behaviour in businesses?
Equal pay
Fair trade and charity
Recycling and limiting pollution
Sustainability
What are examples of unethical behaviour in businesses?
Child labour and exploitation
Animal testing
Production of pollution and waste
Discrimination
What is a trade off? Example?
When a business has more of one thing which potentially results in having less of another
E.g. if a business has cheap prices, they may be exploiting staff and their reputation may worsen
What is the environment?
The natural world within which we live, it’s the landscape and natural features
What is environmental sustainability?
How a business uses its resources and assesses if it’s renewing these resources fast enough to ensure that stocks don’t deplete
What are sustainable methods of production?
Methods of production that can continue in the long term without damaging the environment for future generations
What are the 4 main environmental considerations for businesses?
- Traffic congestion
- Recycling
- Disposal of waste
- Noise and air pollution
What can customers do to reduce traffic congestion?
Use alternative methods of transport e.g. car share or public transport
What can businesses do to reduce traffic congestion?
Timings of deliveries to and from stores and the frequencies of them
Use efficient delivery services
Arrange car shares for employees
What can customers do to increase recycling?
Recycling product after use
Buying refillable products
Reusing carrier bags
What can businesses do to increase recycling?
Make recyclable packaging
Make products out of recycled goods
What can customers do to reduce disposal of waste?
They can reduce waste e.g. not buying more than what they need
Safe disposal of waste
What can businesses do to reduce disposal of waste?
Finding alternative uses of waste
Safe disposal of waste
Lean production - reducing waste in the first place
What can customers do to reduce noise and air pollution?
Reduce carbon footprint by buying from local businesses
Use low emission cars
What can businesses do to reduce noise and air pollution?
Reduce carbon emissions by sourcing supplies locally
Making products in factories that don’t use as much fossil fuels
Advantages and disadvantages to technological advancements in business?
Advantages: make processes faster, reduce costs in the long term
Disadvantages: can be very expensive, staff with high skill must be hired
What are the 4 main ways businesses can communicate digitally with stakeholders?
- Social media
- Websites
- Live chats
Advantages and disadvantages to advancements in e commerce?
Advantages: cheaper, reaches wider markets
Disadvantages: requires skilled staff
Advantages to acting ethically?
May increase their prices
It can motivate people to buy from the companies
Can have a positive effect on shareholders
Disadvantages to acting ethically?
Can be costly for a firm
May find it hard to find a supplier that’s ethical
May impact reputation if the supplier turns out to be unethical
What is competition?
The rivalry between businesses who operate in the same market, they sell a similar product to a similar market
What are the 3 types of competitive markets?
- Monopoly
- Oligopoly
- Perfect competition
What is the monopoly type of competitive market?
A market structure where a single seller or producer assumes a dominant position in a industry sector
Own 25% of the market
What is the oligopoly type of competitive market?
A market structure where there are a small number of large firms dominating the market
What is the perfect competition type of competitive market?
Market structure when all companies in an industry sell identical products - it is fair and has no dominator
What market structures have high barriers to enter?
- Monopoly
- Oligopoly
What market structure has low barriers to enter?
Perfect competition
What market structure can charge high prices?
Monopoly
How do businesses compete within competitive markets?
Pricing strategies
Quality and good customer service
USPs
Innovative ideas
What risks do businesses face in competitive markets?
Loss of customers
May be forced to charge lower prices
There may be ‘copycat’ products
Other bigger brands may dominate the market
What are the advantages when there is limited competition?
Charging higher prices
Can create exclusivity
Less advertising may be done
What is globalisation?
Companies operating internationally or on a global scale
A process in which economies have become increasingly integrated and interdependent - it’s a dynamic and not an end state
What are the positives of globalisation?
Product life cycles may last longer - it can be an extension strategy
Can expand the audience and customers for the business as they have a greater access to foreign markets
Can increase brand recognition and sales
What are the negatives of globalisation?
Can be costly and waste time - especially since there is a risk of failure
UK may struggle to compete with competitors - things may not be made as cheaply by the UK - due to minimum wage being higher
UK currently struggles to trade and access markets - due to Brexit
