topic 6: influences on business Flashcards
advantages of ethical business behaviour
+ lower recruitment costs - workers are paid fairly in safe conditions so well-motivated with high productivity, less likely to leave and easier to recruit new workers
+ higher sales because customers trust them for being ethical, some business buyers only want ethical to protect their own reputation
+ potential higher profits from higher sales and lower costs
+ higher investment bc some only want to invest in ethical businesses
disadvantages of ethical business behaviour
- higher costs from fair pay/no child labour, and costs in health+safety and purchasing ethically produced goods
- lower sales bc business is honest with customers and doesn’t sell customers goods they don’t need
- lower profits, charges a lower price than competitors/higher costs/customers prefer unethical if cheaper
- investment may be lower bc profits are lower, putting off some investors
list four environmental considerations in business
sustainability
waste disposal
pollution
climate change
advantages of being environmentally friendly
+ lower costs because of less energy/waste (lower energy bills and waste disposal costs)
+ higher sales bc customers like that they’re environment lovers
+ lower taxes/fines bc of less pollution
+ may gain subsidies from government to hep with paying for environmentally friendly production
+ high profits maybe from higher sales and lower costs
disadvantages of being environmentally friendly
- if materials are produced in an environmentally friendly way then production costs may be higher
- lower sales if prices are higher to cover extra costs from production
- capital costs may rise if they invest in new machines
what elements make up the economic climate
- consumer income levels: important because it affects how much money people spent don goods and services
- employment and unemployment levels
impacts on businesses of rising income and employment
- many experience increase in sales
- may have increased production and profits
- sales of luxury goods will increase more than necessities bc these are now more affordable for people
- businesses producing cheaper goods and services may experience a fall in sales bc people have switched to better and more expensive ones
changes in business strategy when income and employment falls
- reduce waste
- improve productivity
- take out cheaper loans
- reduce overdraft
- increase advertising
- produce cheaper products
- lower prices
what is globalisation
the process by which businesses worldwide have become increasingly interconnected
how has globalisation been made easier
transport improvements: larger ships and planes + better road and rail networks
better telecommunications + internet
reducing trade barriers: reduction in tariffs (taxes on imports) and quotas (limits on the amount that can be imported)
how have multinational companies grown
increased sales - each country has more potential customers
risk is spread - sales aren’t dependant on one country
lower costs - land/labour can be cheaper in certain countries
tax avoidance
international branding considerations
- income level - different products may be sold depending on incomes in different countries
- promotion - dependant on the culture in that country
- legal issues - eg. legal drinking age
- bribery - it is accepted and expected in some countries but not in others
- language - have to be good translations
