1.5 Understanding external influences on the business Flashcards Preview

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Flashcards in 1.5 Understanding external influences on the business Deck (47)
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How are employees affected by a business?

If a business is doing well or doing badly it can have an impact on the wages of the employees and even whether or not they keep their jobs (job security).
If a business is growing rapidly then employees have more chance of being promoted to higher paid roles and if a business goes bust then the employees will lose their jobs.
For employees, the main objectives for the company would be survival and growth.


Why should a business keep customers happy?

Customers are very important stakeholders of the firm and can have a large influence on a business.
If customers’ needs and wants are changing over time then a business needs to be able to adapt in order to meet these.


Describe Internal stakeholders (3)

Individuals or groups within a business
- Owners/Shareholders
- Managers
- Employees


What is e-commerce?

Using the internet to buy or sell products. Allows firms to reach wider markets compared to traditional shops.


What are the main objectives of owners?

Their main objective is usually to maximise profit and the value of the firm.


How does technology reduce costs?

Businesses can often use new technology to carry out processes in place of people. This can lead to reduced costs in the long term. However, it is expensive in the short term.


How does technology increase sales?

New technology can lead to increased sales for a business. For example, e-commerce may boost a firm's sales as they can reach a bigger market. Modern payment systems may lead to increased sales as it is easier and faster for people to buy so they may buy products more often from the firm.


How is social media important to some businesses?

Makes it really easy for users to share information with other users. This makes it easier for businesses to communicate. It can be used to provide customer service; to advertise the product or to promote local events.


How does technology affect the marketing mix of a business?

New technology can also affect a firm's marketing mix. For example, e-commerce means that customers have more choice of firms to buy from as they can buy from firms in places all over the world, not just in their local area. This means that firms may need to change their pricing strategies or the way they promote their products to become more compettive. The growth of social media means that many firms are choosing to promote their products through this channel rather than through more traditional routes, such as newspaper adverts. es


Describe external stakeholders (4)

Individuals or groups outside the business but still indirectly involved in how the business runs.
- Customers
- Community
- Suppliers
- External shareholders.


Who are the most important and less important stakeholders?

In a small business, the most important or primary stakeholders are the owners, staff and customers. In a large company, shareholders are the primary stakeholders as they can vote out directors if they believe they are running the business badly.

Less influential stakeholders are called secondary stakeholders.


How does a strong pound affect export?

An increase in the value of the pound makes exports more expensive and imports cheaper. British firms that export products to other countries are likely to see their sales and profits go down - their products will be more expensive so fewer people will buy them. They may decide to move part of their business abroad so they can trade in the currenoy of the country where they ell their products, meaning they will be less affected by the exchange rate.


How does a strong pound affect import?

British firms that import raw materials will be able to make products more cheaply. so their profits may go up.


How is a local community affected by a business?

Business operations affect those that live nearby. Businesses can provide employment and economic activity, but also create noise and environmental pollution.
A local community may be negatively affected by noise and pollution caused by factories.


How do low interest rates affect firms and consumers? (5)

Cheaper to borrow money. But you get less interest when you save money at the bank. Firms and consumers will borrow more and spend less. Consumers will have more money to spend therefore demand will go up so firms will make more profit and may need to increase output. Firms that borrow money will have smaller interest repayments, so they have more money to spend on other parts of the business.


Describe the laws of recruitment

Recruitment procedures must not discriminate against anyone because of religion, gender, race, sexual orientation or disabilities. Covered by Equality Act 2010. Firms must also check that the new recruits are eligible to work in the UK, big fines will incur and could close the firm if this isn’t conducted.


What are possible conflicts between employees and owners?

Owners may want to cut jobs to reduce labour costs; Employees may want a pay rise


Describe laws about the health and safety of workers.

The Health and Safety Legislation helps to make sure that risks to people at work are properly controlled. Firms need to carry out assessments to identify possible dangers and take reasonable steps to reduce the risks. All staff must receive health and safety training and suitable equipment must be provided. A safe working environment should mean fewer accidents and so fewer injuries which means a more productive workforce.


How does unemployment benefit firms?

> Able to pay lower wages if there are lots of unemployed people desperate for job.
> Can fill jobs easily
> Gov may give grants to firms who provide a lot of jobs in an area.
These factor may encourage a firm to grow.


What are possible conflicts between customers and shareholders?

Customers may want good quality products/services whereas shareholders may want to maximise dividends and profits instead.


How are suppliers affected by a business?

If the company fails, then the suppliers will lose a customer and this might be significant, especially if they have an exclusive contract.


Why should a business keep employees happy?

Keeping employees happy is also important as they determine a lot of the day-to-day running of the organisation. If they can keep employees happy then they will work more effectively.


What are possible conflicts between suppliers and owners?

Owners want to get supplies for a lower price but suppliers may want higher prices to maximise profits.


What does the second criteria of Consumer Rights mean? (Description)

The way a business describes a product it’s selling is called a Trade description. It is illegal to give a false trade description. This includes the size or quantity of the product, the materials its made of and its properties.


How does an increase in tax for business affect them? (5)

Reduces money available for reinvest; slow growth. If environmental tax increase for e.g., a firm may try to be more environmentally-friendly to avoid extra tax. Tax forces business to cut cost in order to survive or gain a profit. They may also relocate abroad where businesses pay less tax.


How does unemployment cause problems for firms?

> Less employment means that people have less disposable income. Leads to lack of demand so sales fall.
> People that have been unemployed for a long time may have lost skills so firms who hire them may need to retrain them.


To what extent do suppliers have a say in a business?

Businesses that supply a company with raw materials or certain goods/services have a significant stake because the business is a customer.


What is the effect of a weak pound on import? (6)

The weak pound also makes it more expensive for foreign firms to sell their products in the UK. That's good for British firms that compete with goods imported from abroad they won't have to reduce their prices so much to stay competitive. But it's bad for British firms that use imported raw materials - these are now more expensive so the production costs of these firms are higher. They'll need to increase the price they sell their products for to cover their costs, which could cause their sales and profits to go down.


How can firms communicate digitally? (5)

Websites, email, mobile apps, live chats or video calls.


What does the Consumer Rights 2015 state about how goods or services should be sold?

1. Product should fit for its purpose
2. Product should match its description
3. The product should be of satisfactory quality

If products don’t meet this criteria then customers can ask for their money back, get a repair or a replacement.