Understanding business part 2 Flashcards
What are the external factors?
Political (Legal) Factors
Economic Factors
Social Factors
Technological Factors
Environmental Factors
Competitive Factors
Describe 2 political factors
Taxation affects business success as it funds public services (e.g., NHS). Higher corporation tax increases business costs, reducing funds for other areas like raw materials or suppliers.
Legislation impacts businesses through laws like the National Minimum Wage Act and Health and Safety Act. Compliance may lead to extra costs, such as staff training.
Describe 2 economic factors
Unemployment - high unemployment reduces consumer spending, lowering demand, sales revenue, and profit.
Exchange rates impact businesses trading internationally. A weak pound makes importing supplies more expensive, increasing costs.
Describe 2 social factors
Lifestyles - companies must adapt products and marketing to trends or risk losing customers.
Ethics - businesses face pressure to operate responsibly. While ethical practices may increase costs, they can enhance reputation and boost sales.
Describe 2 technological factors
New technology - it makes production faster, cheaper, and more efficient, boosting competitiveness and profits.
Technology developments enhance customer interaction through websites and online chat, improving service and reputation.
Describe 2 environmental factors
Severe weather can disrupt business by damaging materials, causing delays, complaints, and a bad reputation.
Environmental friendliness attracts eco-conscious customers, boosting loyalty and market share while reducing pollution.
What are stakeholders?
A stakeholder is a person or group of people who have an interest and influence on an organisation and the way in which it is managed or run
Describe 2 competitive factors
Competitors’ prices - lower prices attract customers, increasing competitor loyalty.
Competition level impacts sales since more businesses offering similar products give consumers more choices, reducing purchases from one business.
Describe stakeholder interest
The concerns, needs, and expectations that individuals or groups have in a business. Different stakeholders have different interests e.g
Owners/Shareholders – Profitability and business growth.
Employees – Job security, fair pay, and good working conditions.
Customers – Quality products, fair prices, and good service.
Give 3 influences of managers
Recruit and train staff
Make decisions, for example, what products/services to sell
Motivate staff
List the external stakeholders
Banks
Customers
Suppliers
Local Community
Pressure Groups
Local Government
National Government
Describe stakeholder influences
This is how they impact the business e.g. employees can go on strike.
List the internal stakeholders
Owners
Shareholders
Employees
Managers
Give 3 influences of shareholders
Voting at AGM (Annual General Meeting - all shareholders and board of directors attend this).
Appoint the Board of Directors
Can invest more or less capital.
Give 3 influences of employees
Industrial action
Leave the business
Standard of work
