Unit 6 Influences on a business Flashcards
Ethical Considerations
Treatment of:
-workers
-suppliers
-customers
-Marketing decisions
-Sourcing materials (child labour, extortion labour NOT environmental)
Environmental considerations
-Sustainability
-Pollution
-Waste disposal
-Climate change
Why would a business want to act ethically?
-Customers want to shop at ethical firms - as they want to be associated with businesses which act fairly
-Investors want to be associated with ethical firms - as they want to be associated with businesses which act fairly
What happens when unemplyment increases?
1) Disposable income deceases
2) Less demand
3) Less spending
4) Profit decreases for business
5) More people made redundant
6) Increases unemployment and cycle continues
Advantages to the business if unemployment increases
-Means people are willing to work for less money
-Larger pool of applicants to choose from when recruiting
What is a multinational company?
-A company that operates in more than one country
-A company where the production is made in different countries
What is globalisation?
-The process of all world’s systems (political, economical, social, cultural) becoming more integrated - coming together into one single homogenous community.
What 3 areas does globalisation involve?
-Movement of goods and services
-Movement of people/workers
-Movement of finance and capital
Key factors of why globalisation exists
-Improved communication (e.g phone/internet/skype)
-Improved technology
-Freedom of trade (WTO) / less tariffs and quotas
-Improved transport and reduced transport costs (containerisation)
Advantage of MNC’s for the Host country
-creates jobs and increses incomes, having a positive multiplier effect on the economy
-increased taxation paid by MNC ti governments helping them to increase public spending
Disadvantage of MNC’s for the Host country
-Local businesses may not be able to compete with local brands
-if the company leaves,
Advantage of MNC’s for the business
-Gives access to new markets allowing it to increase sakes and increase revenue / profits
-Spreads the risk so if one market suffers a recession the company can benefit from increased sales elsewhere
-Lower tax / tax avoidance
Disadvantage of MNC’s for the business
-Complex supply chain can be hard to manage and need good levels of organisation and communication
-Supply chains (Just in Time) can be disrupted by events in one country / delays in shipping and lead to production stopping / loss of sales
What is an international brand?
A logo/image/strapline that makes a consumer know about a product / service
NOT A COMPANY
What is the advantage of international brand?
- Operating in many different countries may increase sales / profits
- Allows development of a larger range of products
- A recognisable brand can build customer loyalty or increase sales / profits
