1.5 Understanding external influences on a business

Question 1

Owners

Answer 1

They achieve their objectives like max growth and own a share of profit and invest into the business

Question 2

1.5.1 Stakeholders

Answer 2

Owners
Suppliers
Customers
Employees
Local community
Pressure groups
Government
Managers

Question 3

Suppliers

Answer 3

To improve their profits by getting higher orders from business

Question 4

Employees

Answer 4

They want a good pay, working conditions and they want job security and promotions and all this depends on if the business does well or not

Question 5

Customers

Answer 5

The business mainly depends on customers and they want a affordable price and good quality products

Question 6

Local community

Answer 6

Businesses can provide local employment and can increase the expenditure of people which would benefit the local economy but the business may create noise and sound pollution

Question 7

Managers

Answer 7

They want job security, a good pay, good benefits and want opportunities for career development

Question 8

Pressure groups

Answer 8

Want honest and fair dealing from the business

Question 9

Government

Answer 9

Want honest and fair dealing from the business regarding legislations and taxes

Question 10

Conflicts between stakeholders

Answer 10

There may be conflict between maximising profits and being an environmentally friendly firm. Renewable energy sources can be better for a community but they may be more expensive than traditional energy sources such as oil, coal and gas

Managers might have to work longer hours
Employees may need to work different shifts, including working later
Some customers may want even longer opening hours, eg 24 hours a day
Suppliers could impact their customers by changing delivery routes and times
The local community could be disturbed by increased traffic and noise

Pressure groups may be unhappy if longer opening hours are against their cause, eg groups promoting families spending more time together or improved work-life balance
The government may require additional resources to monitor the impact on the local area, eg additional policing to deal with any shoplifting that takes place later in the evening

Question 11

1.5.2 Technology and business

Answer 11

Social media, digital communications, payment systems, e-commerce

Question 12

Social media

Answer 12

Lets businesses interact with their customers and can pay for ads that can reach a wide audience

Question 13

Digital comms

Answer 13

Video conferences like on zoom allow employees and stakeholders to talk to each other and hold meetings

Question 14

E-commerce + and -

Answer 14

+
Attract customers across the globe
Sell at any time of the day or night
Receive payments immediately
Reduced overhead costs compared to running a physical shop

_
More competitors from across the globe, making it harder for the business to get noticed
Employees may need new skills, eg website maintenance
Procedures required for how products and services will be delivered and processing returns
A need to maintain and update technologies, including security software, which may be expensive

Question 15

Payment systems

Answer 15

People can pay easily by using google pay, apple pay or pay pal

Question 16

Costs

Answer 16

One can determine the costs of each supplier much quicker online and there might costs may be able to get decreased due to offers or can be done quickly saving money but staff with good skills may need to be hired and lots of equipment will need to be bought

Question 17

Marketing mix

Answer 17

Customers can buy products from not only the local area but around the world due to e-commerce which would mean businesses need to change their marketing strategies to gain an advantage

Question 18

1.5.3 Legislation and business

Answer 18

Consumer law, employer law

Question 19

Consumer law

Answer 19

The product should match its description and purpose and should be of satisfactory quality

Question 20

Consumer law effect on business

Answer 20

If the business breaks the law they will pay fines and the case may end up in court maybe even causing the company to go bankrupt and their reputation will be tarnished

Question 21

Employer law

Answer 21

Businesses have to pay employees a good wage, companies can’t discriminate. Prevents exploitation of employees

Question 22

Employer law effect on business

Answer 22

-Businesses can avoid attracting unwanted media attention
-They are less likely to be subject to legal action
-New employees are likely to be attracted to work for a business that fulfill its legal obligations

-Fines may be issued if laws are broken

Question 23

Safety and health

Answer 23

All staff must be trained to avoid danger and safety checks need to be carried out but safety training can be expensive but if there isn’t safety, people could get hurt and the company can be fined and go to court

Question 24

Unemployment

Answer 24

Firms can pay lower wages if there is high unemployment, in some areas companies may even provide grants to firms to provide jobs

Less employment means less disposable income meaning that the business would get less sales, people may lose skills when unemployed, a firm may respond by cutting prices and firing employees

Question 25

1.5.4 The economy and business

Answer 25

Unemployment, inflation, change in consumer income, taxes, exchange rates, changes in interest rates

Question 26

Inflation

Answer 26

Consumers would buy more products before prices go up again, employees can put pressure on employers to increase wages which increases costs High inflation makes UK exports expensive making UK firms less competitive

Question 27

Taxes

Answer 27

Income tax - consumer spending decrease Business tax increase- Reduces amount of investment into business slower growth Business tax decrease - More money to reinvest and better growth

Question 28

Change in consumer income

Answer 28

Higher income - More disposable income Lower income - Less sales for high cost brands

Question 29

Change in interest rates

Answer 29

Low interest rates - Increased spending High interest rates - Decreased spending

Question 30

Change in exchange rates

Answer 30

Weak Pound makes Imports Dearer but Exports Cheaper Strong Pound makes Imports cheaper but Exports Dearer

Question 31

If a pound appreciates against a dollar

Answer 31

You can get more of a dollar with a pound

Question 32

1.5.5 External Influences

Answer 32

Technology, legislation, economic climate

Question 33

Changes in technology Opportunities and threats

Answer 33

Opportunities – Developing technology brings with it opportunities for new products or new uses for existing products. A business that can respond quickly can be first to market with a new product. Threats – New technology means that old products are likely to become obsolete Businesses that make these products could find themselves struggling unless they are able to respond to changes by developing new products.

Question 34

Changes in legislation

Answer 34

Businesses have little control over changes in government legislation . They should, however, be notified of any changes in legislation before those changes are implemented. During this period, they will need to respond by taking any necessary steps to ensure that they comply with the new rules. Failure to do so could have serious consequences, including: penalties, such as fines or imprisonment bad publicity, which may affect sales

Question 35

Economic changes

Answer 35

Changes in unemployment rate, interest rates, income rates, exchange rates