Understaning External Influences Flashcards
Eight types of stakeholders
Shareholders
Employees
Customers
Managers
Suppliers
Local community
Pressure groups
Government
Shareholders
Investors who are part-owners of a company
Private limited company
A incorporated business that is owned by shareholders who invest in the business in return for a share of the profits and voting rights at the annual general meeting
Public limited company
An incorporated business that can sell shares to the public
Stock exchange
A pave where shares in PLCs can be bought and sold
Shareholders objectives
To make money by being given a share of their profits of the business in return for their investments
To make money if they sell shares
Main objectives of employees
To get the best possible pay and rewards for doing their jobs
To keep their jobs and to ensure that their job is secure
Advantage to a business of having satisfied employees as stakeholders
They actually do the business’s work so if they are satisfied they can have a big impact on the reputation and overall performance of a business
Stakeholders - Customers
Stakeholder with an influence over business because they buy a business’s products and services. If they buy a lot from that business, its sales will increase and the business will do well. If customers stop buying the business’s products , the business’s sales will decrease and lower business’s profit
Customers’ objective
To get the best possible quality service or product
To get best value for money for that product or service
Stakeholders - Managers
Senior employees within a business
They can influence a business because they ensure that the business’s employees work well, either in teams or individually
This then has an influence on the way in which employees provide customers with the products or services they want
Managers are also influences by the business because it pays their wages
Objectives of managers
To make sure the business succeeds so that they get paid
To ensure that their jobs are secure
Stakeholders - suppliers
Can have a big influence on businesses because they provide the goods or services that the business needs in order to keep on operating
Suppliers need to trade with businesses to increase their sales and are dependent on the success of the businesses that buy from them
Makes it more likely that the business will be able to egotists better payment terms or savings that they can pass on their customers
Suppliers objectives
To increase sales and profits
To encourage businesses to buy from them again in the future
To grow their business
Payment terms
The period of time that a business has to pay its suppliers
Stakeholders - local community
Is a business stakeholder because the work of the business has an influence on them
They can support or object to the way in which it operates
Local community objectives
To look after the local area and the people within it
Stakeholders - pressure groups
A group of people who join together to try to influence businesses or the government for a particular cause.
Ways a pressure group can influence the way a business operates
Encouraging consumers to increase the amount of a product or service that is used
Persuading customers to boycott or stop buying from a business
Encouraging businesses to behave in more ethical ways that help other stakeholders
Pressure groups objectives
Trying to change something
Stakeholders - government
Large influence because they are responsible for running the country
Influence all aspects of how a business operates
How is the relationship between stakeholders and a business is defined ?
The business affects stakeholders
Stakeholders have an impact on a business
A business must try to satisfy all of its different stakeholders and manage any conflict between them
Conflict
A serious disagreement, usually between people, countries or ideas.
Shareholders impact on business activity
Sets the aims and strategy for the business, including how it behaves
Provide funding and investment to start up and expand a business
Employees impact on business activity
Provide good service, which usually results in higher sales and profits
Customers impact on business activity
Buy products and services
Make recommendations for how to improve products and services
Recommend the business to friends and on social media
Managers impact on business activity
Manage employees who do the day-to-day work of the business
Communicate employees’ needs to senior management
Communicate the business’s needs to employees
Suppliers impacts on business activity
Provide the business with the materials it needs for its products or services
Affect the amount of products and services that can be produced and sold, which can have an impact on the business’s sales and reputation
Local community impact on business activity
Support their local business by buying its products or services
Object to the business if it has a negative impact on the local community or local environment
Pressure groups impact on business activity
Change the business’s practices, such as its delivery times
Improve employees’ conditions
Influence customers’ opinions of the business and their buying habits
Government impact on business activity
Charges the amount of tax that the business has to pay
Passes new laws relating to the business and its industry
Promotes different types of business activity by providing special funding for particular activities
Disadvantages to a business when two of its stakeholders are in conflict with each other
If the owners are the managers as well there might be more responsibility and stress
Workers - There may be job losses if jobs duplicated in a merger or takeover as only one person is needed for that job. Shareholders will expect costs to be cut.
Customers - Prices could rise. With a merger or takeover, there might be fewer competitors, so the business could raise prices.
Different types of technology used by business
E-commerce
Social media
Digital communication
Payment systems
Advantages of using e-commerce
Can trade around the world, at any time of day or night
Can process order immediately
Can give real-time order updates to customers
May be able to avoid running a retail shop or other outlet and so reduce costs
Easier ordering process for customers
Disadvantages of using e-commerce
Can be expensive to keep up with technology
Customers may have security concerns over fraud and the security of their account details
Can make it harder to build relationships with customers, leading them to make purchase decisions because of price rather than brand loyalty
Real-time
Live or as it happens
Benefits of payment systems
Easy
Fast
Open 24 hours a day, 7 days a week
Allow people to order immediately which is good for customer service
Trends in sales can be identified quickly
Can work in many different currencies
Customers have come to expect it and may choose not to shop with a business if digital payment is not available
Drawbacks of payment systems
May be vulnerable to fraud
May be additional fees to be paid by the business
Three main influences that technology has on the activities of a business
Influence on sales
Influence on costs
Influence on the marketing mix
Technologies influence on a business’s sales
Tech means sales can be made at any time and any location. This helps increase its sales
Use technology in their warehouses to track the amount of stock available. Can show customers how many of a product or service is available before customers make a purchase decision. Increase customer satisfaction
Technologies Influence on costs
Keeps costs low
Avoiding paperwork by using online record keeping
Enabling real-time purchasing through online transactions
Reducing travel costs by hosting online meetings
Not needing an office or high-street shop because staff can work from home
Technologies influence on the marketing mix - price
Customers shopping online will have a lot of businesses to choose from, so technology helps businesses to lower their prices in order to compete
Customers can use online price comparison websites, which encourages business to lower prices
Businesses can operate more efficiently and reduce costs, allowing them to lower their prices and attract customers while still making a profit
Technologies influence on the marketing mix - product
Businesses can use technology to take advantage of the latest methods to produce goods and services
Businesses can use technology to offer new ways to access products or services
Customers can customise their product choices, which can be produced quickly using robotics
Technologies influence on the marketing mix - place
Bus can use social media to make customers aware of their brands products
Bus can create reliable, easy-to-use e-commerce websites that make purchasing easy for customers
Cust can be impressed by a good e-commerce website or put off by a bad e-commerce website
Technologies influence on the marketing mix - promotion
Businesses can use cheap digital promotional materials, such as email newsletters, which cost less than physical promotional materials such as billboards
Businesses can target their advertising at customers by using cookies to track what a particular customer has even looking at online
Cookies
Small files stored on a customer’s computer when the customer visits a website, which record details about that visit and can be accessed by the website when the customer visits again
Legislation
The laws that a country must comply with
The purpose of legislation
Protecting the rights of consumers through consumer law
Protecting the rights of employees and employers through employment law
Consumer law
Relates to the quality of products or services offered by businesses and the rights of consumers relating to those products or services
Consumer Rights Act
Products must be of satisfactory quality, fit for purpose for which they are supposed to be used
Cust have the legal right to reject goods within 30 days
After 30 days, cust have the right to a repair, replacement or refund for a faulty product
The retailer is responsible for safe delivery of goods
Bus. Must provide the service with reasonable care
Businesses are not allowed to enforce unfair terms when selling goods or services
Reasonable care
In consumer law, this means offering a service that it is suitable for customers, such as providing a meal that can be eaten
Employment law
Relates the way in which employees are hired and treated by businesses and sets out the responsibilities that businesses have towards their staff
Key areas of employment law
Recruitment
Pay
Discrimination
Health and safety
How employment law ensures that employers recruit in a fair way
Advertising vacancies
Selecting candidates
Interviewing candidates
Offering a candidate the job
Preparing the employee to start their job
Producing the employee’s contract of employment
Conducting the employee’s induction programme once they start their job
Induction
The period of time after an employee starts a job when they must be shown how to work safely and within the employer’s expectations
Comply
Obey a command or meet a set of standards
Minimum wage
The lowest legal rate of pay for employees, depending on their age and their type of employment
Apprenticeship - minimum wage requirement - implication for a business
Businesses must pay a specified minimum rate to any apprentice employed by them in their first year. The rate is set by the government and changes each October. It goes up to the National Minimum Wage
National Minimum Wage - implication for a business
Businesses must pay a specified minimum wage rate to any employee under the age of 25. These rates are set depending on the employees age
Under 18
18-20
21-24
National Living Wage - implication for a business
Businesses must pay a specified minimum wage to any employee over the age of 25
Discrimination
When someone is treated differently to someone else because of a particular characteristic, such as a disability, their ethnicity or their sex.
Law that prevents discrimination
Equality Act 2010
Protected characteristic
Characteristics that cannot be used in the recruitment process to reject a candidate, such as age, disability, sex or gender, marriage status, pregnancy, race, religion or belief or sexual orientation.
Impacts of legislation - cost
Training
Equipment - changed or updated
Pay
Administration
Licenses or professional services
Positive consequences of meeting and not meeting legal obligations
Positive reputation
Customers and other stakeholders feel they are being treated fairly
Higher sales due to customers being attracted to buy from the business because of its good reputation
Better candidates for jobs with the business, because people are attracted to work for the business
Negative consequence of meeting and not meeting legal obligations
Business may be taken to court
Negative media stories about the business, leading to a bad reputation
A customer or employee is injured, suffer ill-health or is even killed as a result of the business’s failure to meet legal obligations
Business is closed down temporarily or permanently
Levy
A tax on a particular product or service
Aspects of the economic climate that have an impact on businesses
Unemployment
Changes in exchange rates
Government taxation
Changes in interest rates
Inflation
Changing levels of consumer income
How does unemployment being low and falling affect businesses ?
there are fewer potential employees that can hire
They may need to put up their wages in order to attract potential employees to work for the business
People’s income is higher, so they have more money to spend on products and services because they are in work and receiving wages
Employees are happier because their jobs feel secure as the economy is doing well
Globalisation
When businesses operate on an international scale and gain international influence or power
