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GCSE Edexcel Business > 1.5 Understanding external influences on business > Flashcards

1.5 Understanding external influences on business Flashcards

1
Q

Define stakeholders

A

Individuals or groups that are affected by or affect the business’s actions

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2
Q

What are the two different groups of stakeholders?

A
  • internal
  • external
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2
Q

Who are the different stakeholders in the company?

A
  • shareholders
  • employees
  • customers
  • managers
  • suppliers
  • local community
  • pressure groups
  • the government
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3
Q

Give an example of a shareholder’s objective

A

Maximise the return on their investment: they want the company to be profitable

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4
Q

Give an example of a employee’s objective

A
  • earn a living
  • have job security
  • have a safe working environment
  • be compensated fairly for their work
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5
Q

Give an example of a managment’s objective

A

Meet the goals and requirements set by the company

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6
Q

Give an example of a supplier’s objective

A

Sell their goods and services to make a profit

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7
Q

Give an example of local community’s objective

A

For the business to have a positive impact on the community

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8
Q

Give an example of a customer’s objective

A

Recieve high quality products or services for a fair price

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9
Q

Give an example of a pressure group’s objective

A

Promote a specific cause or agenda by influencing business actions to align with it

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10
Q

Give an example of the government’s objective

A

Protect the interests of their citizens and promote public good

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11
Q

How do stakeholders impact business activity?

A
  • customers can influence product development and pricing through purchasing decisions and feedback
  • employees through productivity, job satisfaction and skills
  • stakeholders: investment decisions and demands for returns
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12
Q

What are the different types of technology used by the business?

A
  • e-commerce
  • social media
  • digital communication
  • payment systems
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13
Q

How does e-commerce influence sales?

A
  • increases sales
  • as a larger customer base can be reached
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14
Q

How does e-commerce affect costs?

A
  • reduces costs
  • by eliminating the requirement for physical storefronts
  • reduces overhead costs
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15
Q

How does e-commerce influence the marketing mix?

A
  • price: cheaper now that costs have reduced + to stay competitive
  • offers new channels for promotion and advertising
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16
Q

How does social media influence sales?

A
  • increases sales
  • by building relationships with customers and generating leads
  • can also decrease sales
  • as bad things about the product and the brand could be spread on social media
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17
Q

How does social media influence costs?

A
  • cost-effective alternative to traditional advertising channels
  • cheaper
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18
Q

How does social media influence the marketing mix?

A
  • offers businesses new channels for building brand awareness
  • and engaging with customers
  • again, new ways of advertising
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19
Q

How does digital communications influence sales?

A
  • offers businesses new channels for reaching customers
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20
Q

How does digital communications affect costs?

A
  • offers cost-effective alternative to traditional methods of communication
21
Q

How does digital communications influence the marketing mix?

A
  • new channels for communicating
22
Q

What are some of the potential costs of introducing new technology?

A
  • staff need to be re-trained to use new technology and improve or adapt existing skills
  • capital expenditure for initial set up of new technology and ongoing maintenance costs
  • disruption to production to set up new technology
  • security issues raised by operating digitally
  • potential loss of ‘personal touch’ with customers
23
Q

What does consumer protection legislation aim to do?

A
  • Ensures that customers are treated fairly by companies they interact with
  • provides a level playing field for businesses by ensuring that no businesses can gain an unfair advantage by taking shortcuts or by making false claims about its products
24
Q

What does the sale of goods act include?

A

All goods must be:
1. of satisfactory quality
2. ‘as described’ by both the advertisment and the sales assistant
3. do what it is supposed to do

25
Q

What is the Trade Descriptions Act?

A
  • prevents customers from being misled when they buy goods
  • states that description of the goods on sale must not be false or misleading
  • refers to all types of description: verbal, signage or physical
26
Q

What are the negative impacts of legislations upon a business?

A
  • increased costs
  • may have to pay fines for not following legislation
  • company may gain a bad reputation + damage brand image
27
Q

What are the positive impacts of following legislation?

A
  • good reputation
  • good brand image
  • increase sales
  • increase market share
28
Q

What does employee protection legislation aim to do?

A

Protect the employee and prevent the exploitation of workers

29
Q

What areas does the legislation cover?

A
  • health and safety act
  • pay national minimum wage rates
  • equality act
30
Q

Define economy

A

The wealth and resources of a country, especially in terms of the production and consumption of goods and services

31
Q

Define GDP

A
  • gross domestic product
  • the value of goods and services produced by an economy over a specific period (used to measure economic growth)
32
Q

What is the impact of increasing GDP?

A
  • incomes increase
  • spending on goods and services increases
  • inflation rises
  • unemployment falls
33
Q

What is the impact of decreasing GDP?

A
  • incomes fall
  • spending on goods and services fall
  • inflation may fall
  • unemployment rises
34
Q

Define inflation

A

The general rise in prices in an economy over time

35
Q

What causes inflation?

A
  • demand pull inflation: demand is more than supply, causing prices to rise
  • cost of production increases: eg: raw materials, increased wages - businesses push prices up to cover costs and maintain profit
36
Q

What are the effects of inflation on the customer?

A
  • goods become more expensive
  • cost of bills (gas and electricity) increase
  • consumers may cut back on spending
  • savings may be worth less
  • disposable income may fall
  • consumers may be able to negotiate higher prices
37
Q

What are the effects of inflation on businesses?

A
  • costs will rise (raw materials)
  • sales may fall
  • may have to increase prices to make up for falling sales
38
Q

How does inflation affect the value of money?

A

If prices rise, the value of money decreases (more money is required to buy the same amount of something)

39
Q

Define exchange rate

A

Value of one currency expressed in terms of another

40
Q

What is the impact of the appreciating pound on importing businesses?

A
  • costs likely to fall
  • as raw materials from overseas are cheaper
41
Q

What is the impact of the appreciating pound on exporting businesses?

A
  • sales likely to fall
  • as products become more expensive as compared to overseas competitors
  • to remain competitive, businesses may have to lower prices and accept lower profit margins
42
Q

What is the impact of the depreciating pound for importing businesses?

A
  • costs likely to rise as raw materials cost more
  • businesses may seek domestic suppliers to reduce costs and maintain profits
43
Q

What is the impact of the depreciating pound on exporting businesses?

A
  • sales likely to rise
  • products become cheaper as compared to competitors
44
Q

What does the acronym SPICED stand for?

A

Strong Pound Imports Cheaper Exports Dearer

45
Q

What is the impact of increased taxation on revenue?

A
  • may fall because:
  • increased income tax = less disposable income
  • increased VAT = more expensive products
46
Q

What is the impact of increased taxation on costs?

A
  • rise
  • higher costs = higher prices
  • which may lead to lower sales
47
Q

What is the impact of increased taxation on business decisions?

A
  • may choose to forgo any unneccessary costs
  • may hire less employees
48
Q

What is the impact of unemployment on a business?

A

Increased unemployment = business can find cheaper labour and vice versa

49
Q

How can businesses respond to changes in technology?

A
  • invest in new technology
  • partnering with tech companies to gain access to their expertise and knowledge
  • training employees to use technology more efficiently
50
Q

How can businesses respond to changes in economic climate?

A
  • diversifying their products and services so they are not entirely reliant on one product or service
  • cutting costs
  • seeking finance from lenders
51
Q

How can businesses respond to changes in legislation?

A
  • comply to the legislation
  • seek legal advice

GCSE Edexcel Business (12 decks)

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