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ACCA: F1: A: The Business Organisation, Stakeholders and the External Environment > The Business Environment > Flashcards

Flashcards in The Business Environment Deck (62)
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Johnson & Scholes suggest the following procedure: (5)

1. Assess the nature of the environment
2. Identify influences which have affected the organisation or which are likely to do so
3. Prepare a structural anaylsis identifying the 'key forces at work in the immediate / competitive environment'
(Important developments identified)
4. What is the organisation's position in relation to other organisations?
5. What threats and / or opportunities are posed by the environment?


Environment may be examined in a number of ways: (2)

1. Global / local:
2. General / task (ACCA's method)
a. General / Macro environment (Indirect factors; PEST)
b. Task / Micro environment (Direct impact)


General / Macro environment factors include: (3)

PEST (initial survey!)
1. General economic trends
2. Population growth
3. New technology


Task / Micro environment factors include: (3)

Porter's 5 forces
1. Ability to acquire raw materials
2. Competition
3. Customers


The overall degree of uncertainty in an environment may be assessed along 2 axes: (2)

1. Simplicity / complexity
2. Stability / Dynamism


Simplicity / Complexity: (3)

1. Variety of influences faced by organisation (More open; more markets)
2. Amount of knowledge necessary (Tax systems vs. Drug testing procedures)
3. Interconnectedness (Importing / exporting -> FOREX -> Interest rates)


Stability / Dynamism: (2)

1. Predict demand = stable
2. Fashion goods = unstable


Rule of thumb: A checklist for uncertainty: (4)

1. Simple & stable = Low uncertainty
2. Complex & stable = Low to moderate
3. Simple & unstable = Moderate to high
4. Complex & unstable = High


Changes that have happened: (8)

1. Globalisation
2. Science and Technology
3. Mergers, acquisitions and strategic alliances
4. Changing customer values & behaviour
5. Increased scrutiny
6. Liberalisation & deregulation
7. Business practices (Downsizing, outsourcing and re-engineering)
8. Social & business relationships


A 'flexible firm' is defined as:

a core of full-time permanent staff with the key scarce skills and peripheral part-timers and temporary / contract workers which can be flexed in a number of ways


Legal factors affecting all companies include: (9)

1. General legal framework (ways of doing business)
2. Criminal law (Theft, insider dealing, bribery, deception)
3. Company law (Directors' duties, reporting requirements, takeover proceedings, shareholders' rights, insolvency)
4. Employment law (Trade Union recognition, Social Chapter provisions, minimum wage, unfair dismissal, redundancy, maternity, Equal opportunity)
5. Health & Safety (Fire precautions, safety procedures)
6. Data Protection
7. Marketing & Sales (Consumer protection laws, Advertising laws)
8. Environment (Pollution, waste control)
9. Tax law (Corporation tax, income tax, NI, sales tax)


The impact of government: Porter notes several ways whereby government can directly affect the economic structure of an industry:

1. Capacity expansion (capital allowances)
2. Demand
3. Divestment and rationalisation (Defence)
4. Emerging industries
5. Entry barriers (Quotas and tariffs)
6. Competition


National & EU institutions also affect the operating activities of some organisations: (5)

1. Anti-discrimination legislation
2. Health & safety legislation
3. Product safety & standardisation
4. Workers' rights
5. Training & education policies


Businesses can influence government policies in a number of ways:

1. Lobbyists
2. Non-executive directorships
3. Influence public opinion by advertising


Political risk is:

The risk that political factors will invalidate the strategy and perhaps severely damage the firm


Comparative advantage suggests that:

Free trade is the best way to promote global economic growth and domestic propsperity


Forms of termination of employment: (7)

1. Retirement
2. Resignation
3. Dismissal


Organisations encourage retirement for a variety of reasons: (4)

1. Promotion opportunities for younger workers
2. An alternative to redundancy
3. Avoid the age structure becoming unbalanced
4. Cost of pensions rises with age


3 forms of termination that constitute dismissal:

1. By the employer
2. Non-renewal of fixed-term contracts
3. Constructive dismissal (employer breaches contract)


Wrongful dismissal is dismissal that

Breaches the contract of employment


Unfair dismissal would be

arbitrary dismissal; dismissal without good reason


Redundancy is dismissal under 2 circumstances: (2)

1. Employer has ceased to carry on business
2. Requirements of the business to carry out work have ceased or diminished or are expected to


Employees are not entitled to compensation in 3 circumstances: (3)

1. Offer of suitable alternative employment refused
2. Of or over pensionable age or less than 2 years' continuous service
3. Employee's conduct merits dismissal


Privacy is

1. The right of the individual not to suffer unauthorised disclosure of information
2. The right of the individual to control the use of information about him or her, including information on financial status, health and lifestyle


Personal data is

Information about a living individual, including expressions of opinion about them


Data users are

Organisations or individuals who control personal data and the use of personal data


A data subject is

an individual who is the subject of personal data


Data Protection Principles: UK Data Protection Act includes 8 Data Protection Principles: (8)

1. Processed fairly & lawfully; not processed unless:
a. A Schedule 2 condition is met
b. Sensitive personal data: A Schedule 3 condition is met
2. Obtained for 1 or more specified and lawful purposes; not further processed in any manner incompatible with those purposes
3. Adequate, relevant and not excessive
4. Accurate and kept up to date
5. Not kept for longer than is necessary
6. Processed in accordance with the rights of subjects
7. Appropriate technical and organisational measure against unauthorised or unlawful processing; accidental loss or destruction or damage
8. Not transferred outside of the EEA unless adequate protection for rights and freedoms are ensured


Ideas to ensure compliance with data protection legislation: (4)

1. Obtain consent
2. Supply copies if requested
3. Consider obtaining consent
4. Don't pass data on to unauthorised parties


The importance of maintaining health and safety at work: (3)

1. Legal obligation
2. Costs money
3. Image