Understanding external influences Flashcards
Stakeholder:
an individual or group that has interest in and is effected by the activities of a business
Some stakeholders are:
- owners
- managers
- pressure groups
- employees
- customers
- local community
- government
- suppliers
What are the possible positive effects on stakeholders?
- shareholders revive a return on investment
- staff revive financial security and status
- customers receive satisfaction
- local community development and investment
- government collects more tax
What are the possible negative effects on stakeholders?
- pollution increase
- government needs to monitor more
- employees may face uncertainty
- employees work under poor conditions
- shareholders lose their investments
- pressure groups protest
What are some types of technology that influence business activity?
- e-commerce
- social media
- digital communications
- electronic payment
How can technology influence business activity?
- Costs, a huge investment that improves efficiency and reduces costs
- Sales, increase demand
- Marketing mix, influences all aspects of
What is consumer law?
givens all aspects of how a business interacts with its customers to protect them
What are some principles of consumer law?
- right to return or reject goods
- goods should be delivered and installed safely
- terms of contracts should be fair
- services provided with reasonable care
- good standard and quality products
- disclose full information
What are the drawbacks of consumer law?
- businesses need to lee up to date on laws
- laws can be restrictive
- changing products and practices may be costly
- bad publicity if laws aren’t met
- consumers can use law to take legal action
What are the benefits of consumer law?
- compliant businesses are unlikely to be fined or sued
- good reputation = increased customer loyalty
- improved relationship with stakeholders
What are employment laws?
governs all aspects of how a business interacts with employees and keep them safe
What are some principles of employment law?
- pay should be fair and meet minimum wage requirements
- no discrimination
- fair redundancy procedures
- dealing fairly with disciplinary and grievances
- health and safety
- fair recruitment
What are the drawbacks of employment law?
- meeting regulations can be costly
- increased businesses costs
- failing to comply = low productivity and legal action
What are the benefits of employment law?
- good rep
- reducing recruitment costs, employees stay
- high productivity and better customer service
How can businesses meet requirements of consumer and employment law?
- incur additional costs
- all pay meets requirements
- use of correct administration
- health and safety equipment is required
- grant of relevant licenses
- employees must be trained
What are some examples of employment law?
- Health and safety at work act 1974
- Equality act 2010
- National minimum wage regulations 2017
- Employment relations act 1999
What is the economic climate?
the level of demand and spending within the economy
What is economic activity measured in?
gross domestic product (GDP)
The level of demand can come from:
- consumers
- government
- business
- overseas
What might change demand?
- the level of economic activity
- interest rates
- changing exchange rates
- consumer incomes
- changes in taxation
What is the impacts of high demand and economic activity?
- consumer incomes may rise
- inflation may rise
- unemployment may fall
- interest rates may rise
- the pound may become stronger
What are the impacts of low demand and economic activity?
- consumer incomes fall
- inflation may rise
- unemployment may rise
- interest rates may fall
- the pune may become weaker
What is unemployment?
it exists when people who want to find work cannot do so
What are the impacts of unemployment on businesses?
- easier for businesses to recruit
- employees lack skills
- lower consumer demand
- economic activity falls = sales and revenue falls
What is inflation?
change in average level of prices in the economy measured using the consumer price index
What are the impacts of inflation on businesses?
- businesses costs rise
- profits can fall
- consumer costs rise =reduces disposable
income - absorb costs or pass them to customers
What is an interest rate?
the percentage reward or payment over a period of time given to savers in savings or paid by borrowers on loans
What is an interest rate?
the percentage reward or payment over a period of time that is given to savers on savings paid by borrowers on loans
What do businesses pay interest on?
- on top of repayments for a loan
- on any amount overdrawn
What are the effects of rising interest rates?
- businesses on a variable rate may struggle to repay loans
- small businesses are unlikely to borrow money
- consumer spending falls
What are the effects of faking interest rates?
- businesses will have more money
- businesses may borrow money
- consumer spending rises
What is an exchange rate?
the price of buying foreign currency
What are the effects of a fall in value if the pound?
- price of exports falls = sales increase
- prices cheaper to foreigners = tourism increases
- imports more expensive = people buy more uk goods
- imports more expensive = costs rise
The effects of a rise in the value of the pound:
- price of exports rise = sales fall
- prices more expensive for foreigners = decrease in tourism
- imports cheaper = people buy fewer uk goods
- imports cheaper = costs fall
What are some external influences?
- economic climate
- legislation
- competition
- technology
- society
What opportunities and threats are created in the case of rising economic activity?
- increased demand
- new competitors entering the market
What opportunities and threats are created in the case of new legislation?
- increases demand for a business’s safety products
- makes a business’s product illegal
What opportunities and threats are created in the case of new technology?
- lowers cost of production
- makes business’s product obsolete
A fall in economic activity leads to?
lower demand
What are some responses to external influences?
- stop the production of a line that has become obsolete
- changing company policy
- lower prices
- increase productivity and recuit when economic forecasts look good
- invest heavily in new technology
- cut investment and spending
