Understanding external influences on business

Question 1

What is a stakeholder in a business?

Answer 1

A stakeholder is any person, group, or organization that has an interest in or is affected by a business’s activities.

Question 2

What is the difference between internal and external stakeholders?

Answer 2

Internal stakeholders work within the business and influence or carry out decisions. External stakeholders do not work within the business but are still affected by its activities.

Question 3

What role do shareholders and owners play in a business?

Answer 3

Shareholders and owners influence the business’s aims, objectives, and strategic activities. They make business decisions, and in a limited company, they need to agree with other shareholders.

Question 4

What is the role of managers in a business?

Answer 4

Managers are responsible for implementing decisions made by owners and overseeing the day-to-day work required to run the business.

Question 5

What is the role of employees in a business?

Answer 5

Customers buy products or services from the business, making them essential for generating revenue.

Question 6

What role do suppliers play in a business?

Answer 6

Suppliers provide products or services needed by the business, such as raw materials, utilities, or equipment.

Question 7

What is the role of the local community in a business?

Answer 7

The local community consists of people, organizations, and businesses located around the business, and can be affected by its operations.

Question 8

What role do customers play in a business?

Answer 8

Customers buy products or services from the business, making them essential for generating revenue.

Question 9

What role do pressure groups play in a business?

Answer 9

Pressure groups are formed by people with a common interest, and they may actively promote causes related to the business, such as environmental concerns.?

Question 10

What role does the government play in a business?

Answer 10

The government collects taxes from the business and sets regulations that businesses must follow.

Question 11

Who are the eight main types of stakeholders?

Answer 11

The eight main types of stakeholders are:
Shareholders and owners
Managers
Employees
Customers
Suppliers
Local community
Pressure groups
Government

Question 12

What do employees expect from a business?

Answer 12

Employees expect good pay, job satisfaction, job security, and potential for career progression.

Question 12

What do shareholders and owners expect from a business?

Answer 12

Shareholders and owners want the business to be successful and are interested in the profits the business can make.

Question 13

What do managers expect from a business?

Answer 13

Managers want a good salary, career progression opportunities, and job satisfaction.

Question 14

What do customers expect from a business?

Answer 14

Customers want good quality products, a range of options, and reasonable prices.

Question 15

What do suppliers expect from a business?

Answer 15

Suppliers want to receive payments on time and regular orders.

Question 16

What does the local community expect from a business?

Answer 16

The local community may be looking for job opportunities that the business can provide.

Question 17

What do pressure groups expect from a business?

Answer 17

Pressure groups want to raise awareness for their cause, such as concerns over environmental impact or local issues like traffic pollution.

Question 18

What does the government expect from a business?

Answer 18

The government wants businesses to create more jobs, which helps raise tax revenue and reduce the need for benefit payments.

Question 19

What are the three things required for e-commerce to take place?

Answer 19

A seller with products or services displayed electronically, a buyer with the equipment to view and pay for them, and a network to exchange information and payment.

Question 20

What is one advantage of selling products at any time of the day or night in e-commerce?

Answer 20

E-commerce businesses can make sales 24/7, providing customers the ability to buy at their convenience.

Question 21

How can e-commerce attract customers globally?

Answer 21

E-commerce allows businesses to reach customers across the globe, as products and services can be accessed from anywhere with an internet connection.

Question 22

What is a disadvantage of e-commerce regarding employee skills?

Answer 22

Employees may need new skills, such as website maintenance or technical knowledge, to support the business.

Question 23

How does e-commerce reduce overhead costs compared to physical stores?

Answer 23

E-commerce eliminates the need for a physical store, reducing rent, utilities, and other operational costs.

Question 24

What challenge does e-commerce face with increased global competition?

Answer 24

E-commerce businesses face more competitors from around the world, making it harder to stand out and attract customers.

Question 25

Why is it important for e-commerce businesses to maintain and update technology?

Answer 25

E-commerce businesses need to maintain and update technologies, including security software, to ensure smooth operations and protect against cyber threats.

Question 26

How does e-commerce allow businesses to receive payments immediately?

Answer 26

E-commerce transactions are processed online, allowing businesses to receive payments instantly through digital payment systems.

Question 27

What are some issues with delivering products and processing returns in e-commerce?

Answer 27

E-commerce businesses must have clear procedures for product delivery and returns, which can be complex and costly to manage.

Question 28

What is a key benefit of businesses using social media for marketing?

Answer 28

Social media helps businesses gain loyalty by encouraging people to follow their activities and promotions.

Question 29

How do businesses use social media for sales and marketing?

Answer 29

Businesses use social media as a relatively cheap way to advertise in visual or written forms, aiming to attract a target audience and encourage loyalty.

Question 30

How can businesses use social media to interact with customers?

Answer 30

Businesses can see what customers are saying about their products, answer questions, and address customer views or concerns.

Question 31

What is a risk businesses face when interacting with customers on social media?

Answer 31

Inaccurate or inappropriate responses can spread quickly, causing bad publicity for the business.

Question 32

How do businesses use social media to communicate with stakeholders?

Answer 32

Social media platforms like LinkedIn are used to network with other businesses, connect with relevant people, and even advertise vacancies.

Question 33

How is social media used in recruitment by businesses?

Answer 33

Businesses use social media to advertise job vacancies and also gain insights into applicants by reviewing their social media activity.

Question 34

What other options are available for contactless payments?

Answer 34

People can store their card details on smartphones and use services like Apple Pay or Google Pay to make instant payments.

Question 34

What is internal communication in the context of social media?

Answer 34

Some businesses use closed social media tools for informal or internal communication with staff.

Question 35

What are some common digital communication tools used in business?

Answer 35

Common tools include email, mobile phones, mobile applications, websites, social media, web conferencing

Question 35

What is chip and pin payment?

Answer 35

Chip and pin payments involve using a debit or credit card with a chip, requiring a personal identification number (PIN) to authorise the payment, improving security compared to previous methods.

Question 35

How has contactless payment changed the way people pay?

Answer 35

Contactless payments, introduced in the UK in 2007, allow payments of £30 or less using a debit, credit, or smart card, without the need to enter a PIN.

Question 36

How do digital communication systems impact sales activity?

Answer 36

Digital communication systems (phone, email, websites, mobile apps) make it easier for customers to contact businesses, increasing trust and making them more likely to make a purchase

Question 37

What are the positive impacts of e-commerce on sales?

Answer 37

E-commerce allows businesses to attract global customers, sell 24/7, present a professional image, easily adjust prices, and provide real-time stock updates.

Question 37

What are the negative impacts of e-commerce on sales?

Answer 37

E-commerce increases competition, creates logistical challenges, makes customer service more difficult, requires constant stock updates, and allows customers to compare prices easily.

Question 38

How does social media affect sales?

Answer 38

Social media helps businesses run sales campaigns, interact with customers, and build relationships. Positive responses can increase sales, but poor responses can damage a business’s reputation and decrease sales.

Question 39

How do payment methods impact sales activity?

Answer 39

Convenient payment methods make it easier for customers to make purchases. Businesses that only accept cash may struggle to attract customers, as more people prefer digital payment options.

Question 40

How do digital communication systems affect costs for businesses?

Answer 40

While the initial investment in digital communication systems can be costly, they lead to long-term savings by enabling remote work, reducing printing and postage costs, and cutting travel expenses with video conferencing.

Question 41

How does e-commerce impact costs for businesses?

Answer 41

E-commerce is cheaper than maintaining physical stores. It reduces the need for sales staff, lowers premises costs, and avoids expensive high-street locations. However, there are additional costs for website hosting, online payment handling, and warehousing.

Question 42

How does social media affect business costs?

Answer 42

Social media is a cost-effective way for businesses to reach a wide audience, enabling even small businesses to interact with customers and market their products at minimal cost.

Question 43

What impact do payment methods have on business costs?

Answer 43

New payment technologies make transactions more secure and efficient, eliminating the need for cash handling. However, businesses incur small fees for each card transaction.

Question 44

What is consumer law?

Answer 44

Consumer law refers to government legislation designed to protect consumers from poor-quality products and unfair business practices.

Question 45

What does the Consumer Rights Act (2015) cover?

Answer 45

The Consumer Rights Act (2015) protects consumers regarding goods and services, returns, repairs, replacements, and delivery. It ensures that goods are accurately described, fit for purpose, and of satisfactory quality.

Question 46

What rights do consumers have under the Consumer Rights Act (2015) regarding goods?

Answer 46

Goods must be described accurately, fit for purpose, and of satisfactory quality. Consumers have the right to reject faulty goods within 30 days for a full refund, and the right to a repair or replacement after that period.

Question 47

What does the Consumer Protection Act (1987) cover?

Answer 47

The Consumer Protection Act (1987) makes businesses that produce goods responsible for any harm caused by defective products. It allows consumers to claim damages from the producer if a product is faulty.

Question 48

What happens if a product is faulty within six months of purchase?

Answer 48

If a fault develops within six months, it is presumed to have existed at the time of purchase, and the business must prove otherwise.

Question 49

What does recruitment legislation cover?

Answer 49

Recruitment legislation outlines what employers can and cannot do when recruiting staff and their responsibilities once a job offer has been made, ensuring fairness in the hiring process.

Question 50

What happens if a business fails to deliver goods within the agreed timeframe?

Answer 50

If goods are not delivered within 30 days (or by the agreed date), the consumer has the right to cancel the purchase and receive a full refund.

Question 51

What is employment law?

Answer 51

Employment law refers to government legislation designed to protect employees from exploitation. It covers areas such as recruitment, pay, discrimination, and health and safety.

Question 52

What does the pay legislation ensure?

Answer 52

Pay legislation ensures that workers receive a pay that is above a set minimum level, protecting employees from being paid below the minimum wage.

Question 53

What is the purpose of discrimination legislation?

Answer 53

Discrimination legislation ensures that employers treat all employees fairly, regardless of factors such as race, gender, age, or disability, and prohibits unfair treatment based on these characteristics.

Question 54

What does health and safety legislation cover?

Answer 54

Health and safety legislation is designed to keep employees safe while at work, requiring employers to ensure a safe working environment and take steps to prevent accidents and health risks.

Question 55

What does the Equality Act (2010) require employers to do during recruitment?

Answer 55

The Equality Act (2010) requires employers to treat all candidates fairly and not discriminate based on age, gender, race, or other protected characteristics.

Question 56

What does the Data Protection Act (2018) require businesses to do during recruitment?

Answer 56

The Data Protection Act (2018) requires businesses to obtain permission from candidates to use their personal data during the recruitment process. Candidates also have the right to ask businesses to delete any personal information they hold after the process is complete, such as if they were not successful in their application.

Question 57

What must employers provide within two months of an employee starting a new job?

Answer 57

Under the Employment Rights Act (1996), employers must provide a written statement of employment within two months of an employee starting. This statement should include key details like the job title, place of work, start date, hours of work, and salary.

Question 58

What does the Pensions Act (2008) require businesses to do for new employees?

Answer 58

The Pensions Act (2008) may require businesses to automatically enroll new employees into a pension scheme, with both the employee and employer contributing to the scheme.

Question 59

What does the National Minimum Wage Act (1998) require businesses to do?

Answer 59

requires businesses to pay their staff a minimum hourly rate, with no exemptions based on employer size or location.

Question 60

What does the Equality Act (2010) prohibit regarding pay?

Answer 60

prohibits businesses from paying employees different rates for the same or similar jobs based on gender

Question 61

How does the economic climate impact businesses?

Answer 61

The economic climate affects businesses in several ways, including influencing consumer spending, prices, investment decisions, and employment levels.

Question 61

What does the economy include?

Answer 61

The economy includes all activities in a country related to the manufacturing, distribution, and use of goods and services.

Question 62

How does unemployment impact the economy?

Answer 62

Unemployment means the economy is not making full use of available workers, which slows down economic growth and can result in lower business activity.

Question 63

What are some reasons people become unemployed?

Answer 63

People may become unemployed due to:
Being made redundant (when there is no more work or need for their role)
Being dismissed (due to misconduct or breaking their contract)
Being a school, college, or university leaver (seeking work for the first time)

Question 64

How does unemployment affect businesses

Answer 64

Higher unemployment leads to lower household income, meaning consumers spend less, resulting in lower sales for many businesses. However, some businesses, especially those offering cheaper alternatives (like own-brand products), may see increased demand.

Question 65

How does an increase in consumer income affect businesses?

Answer 65

, people have more money to spend, leading to higher demand for goods and services. Businesses can expect increased sales, particularly for luxury items, and may need to produce more and hire more staff.

Question 65

How can unemployment benefit certain businesses?

Answer 65

Businesses offering cheaper goods and services may benefit from higher unemployment as consumers switch to lower-cost options. Additionally, these businesses may have more potential employees to choose from, and can offer lower pay while still attracting staff, though they must adhere to the national minimum wage.

Question 66

What happens to businesses when consumer incomes decrease?

Answer 66

When consumer income falls, people have less money to spend. This leads to lower demand for goods and services, and consumers may buy cheaper alternatives. Businesses may sell less, reduce production, and potentially make staff redundant.

Question 67

Are all businesses affected in the same way by changes in consumer income?

Answer 67

No, not all businesses are affected in the same way. For example, discount stores like pound shops may see an increase in sales when consumer income decreases because more people are seeking cheaper alternatives.

Question 68

How are businesses affected by changes in interest rates?

Answer 68

Businesses are affected by changes in interest rates because borrowing costs can increase or decrease. Higher interest rates make borrowing more expensive, which can reduce consumer spending and business investment. Conversely, lower interest rates make borrowing cheaper, encouraging more spending and investment.

Question 69

Which types of businesses are most affected by changes in interest rates?

Answer 69

Businesses that sell expensive luxury goods, When interest rates rise, consumers may find it more difficult to finance these purchases, leading to reduced demand for luxury items.

Question 70

What happens to consumer behaviour when interest rates rise?

Answer 70

consumers may reduce their spending, particularly on expensive items that require financing, such as new cars. They may either sacrifice these purchases or opt for cheaper alternatives, like second-hand goods.

Question 71

What is inflation?

Answer 71

Inflation refers to a general and sustained increase in prices over time

Question 72

How does inflation affect consumers?

Answer 72

Inflation reduces the purchasing power of money, meaning that consumers need more money to buy the same goods. If income does not increase at the same rate as inflation, people are worse off, leading to reduced consumer spending and lower sales for businesses.

Question 73

How does inflation impact businesses?

Answer 73

Businesses may face higher costs if staff request pay rises above the rate of inflation. To compensate, businesses may increase prices, which can contribute to further inflation. Inflation also makes exports from the UK more expensive if inflation is higher here than in other countries, leading to reduced demand for UK goods abroad.

Question 74

What is the impact of an increase in income tax on businesses?

Answer 74

An increase in income tax means workers have to pay more on their income, leaving them with less money to spend on goods and services. As a result, businesses expect to sell less and may reduce their level of investment.

Question 75

How does an increase in VAT affect businesses and consumers?

Answer 75

An increase in VAT raises the cost of goods and services for consumers, reducing their purchasing power. For businesses, it can lead to inflation, which increases their costs. Consumers paying higher prices can reduce overall demand.

Question 76

Why are exchange rates important for businesses?

Answer 76

Changes in exchange rates can affect the transportation and sale of goods or services imported into a country, as well as the price of goods exported abroad. Businesses that trade internationally need to consider exchange rates when agreeing on prices to avoid negative impacts from currency fluctuations.

Question 77

What happens when the value of the pound increases (appreciates)?

Answer 77

If the value of the pound increases, more foreign currency can be purchased for the same amount of pounds. For example, £100 could convert to more US dollars, benefiting UK businesses importing goods as they will pay less for foreign products.

Question 78

What happens when the value of the pound decreases (depreciates)?

Answer 78

If the pound depreciates, less foreign currency can be obtained for the same amount of pounds. UK businesses that import goods will face higher costs, as they will need more pounds to purchase the same amount of foreign currency. However, UK exports become cheaper for foreign buyers, benefiting exporters.

Question 79

What are the opportunities that new technology brings to businesses?

Answer 79

New technology creates opportunities for businesses to develop new products or find new uses for existing ones. This can help businesses stay ahead of competitors.

Question 80

. What are the threats that new technology poses to businesses?

Answer 80

New technology can make old products obsolete. Businesses that don’t adapt and develop new products may struggle to stay relevant.

Question 81

How has technology helped businesses save costs?

Answer 81

Technology has allowed businesses to replace printed documents with digital ones, making it cheaper and easier to share information.

Question 82

How has technology helped businesses reduce their environmental impact?

Answer 82

Technology like remote working and video conferencing reduces the need for travel, which helps businesses lower their carbon footprint.