Topic 1.5 Understanding External Influences on Business Flashcards
(34 cards)
Who are the main stakeholders?
- Shareholders
- Managers (staff)
- Customers
- Supplier
- Local community
- Local government
- Pressure groups
What is a possible conflict between stakeholders?
Shareholders, managers and employees are happy to launch a new product that gets them more profit but pressure groups reveal it has a lot more calories than indicated which may upset the customers
What is pressure groups?
An organisation formed to put forward a particular viewpoint, such as promoting organic farming
What is a stakeholder?
A group that has an interest in the success or failure of a business
How can technology be used in business?
- Social media
- E-commerce
- Digital communication
- Payment system
What are the advantages of e-commerce?
- Enables a small business to start up from anywhere, testing the market before spending money on offices and staff
- Enables a small business to sell to the world without needing expensive overseas sales and distribution set-up
- Provides scalability so you can finance faster growth than is true of old-style retail or service businesses
- Use of social media makes it possible to build a relationship with customers even though you don’t meet them physically
What are the disadvantages of e-commerce?
- In many sectors, winner take all, monopoly businesses rarely serve customers well in the long term
- Dubious environmentally as there are large numbers of of van deliveries and return: carbon loaded way of trading
- For first movers, websites and apps work well, but it’s very difficult for late-arrival competitors to make themselves seen and heard by the market (monopoly)
- Some customers effectively blackmail businesses
How does technology influence business activity?
- Sales
- Costs
- Marketing mix
What interest does the government have as a stakeholder for a business?
- Honest and fair dealing from the company
- Pax taxes
- Clear employment and location plan
What interest do pressure groups have as a stakeholder for a business?
- Honest and fair dealing from the company (mainly with customers and the environment)
- Sometimes they are against growth
What interest does the local community have as a stakeholder for a business?
- Honest and fair dealing from the company (mainly with plans effecting local employment and the environment)
- Some people may want the business to grow and others not
What interest do suppliers have as a stakeholder for a business?
- Honest and fair dealing from the company (mainly on prices and credit terms)
- Good communication for future plans
- Strong organic growth meaning raising demand for supplies
What interest do managers have as a stakeholder for a business?
- Security of employment
- Opportunities for career development
- Fair pay and good ‘fringe benefits’
What interest do customers have as a stakeholder for a business?
- Consistently high-quality products
- Honest and fair dealing from the company
- Bright, innovative new products
What interest do employees have as a stakeholder for a business?
- Security of employment
- Opportunities for career development
- Fair pay and good ‘fringe benefits’
What interest do shareholders have as a stakeholder for a business?
- Long term organic growth
- Higher share prices
- More profit
What is the purpose of consumer legislation?
- Exposure from unsafe or unhealthy goods
- Harm caused when the consumer is lied to or misled
- Harm caused when the supplier knows more than the customer
What are the consumer protection legislation?
- Consumer Right Act 2015
- Trade Description Act 1968
- Consumer Credit Act 2006
- Weights and Measures Act 2006
- Food Safety Act 1990
What are the employee legislation?
- Recruitment (Equality Act 2010)
- Pay (Equal Pay Act 1970) (National Minimum Wage Act 1998)
- Discrimination
- Health and Safety (Health and Safety at Work Act 1974)
What are the negatives of legislation?
- Too many rules mean too much paperwork, which costs time and money
- Makes it difficult to compete with foreign companies who have less legislation to meet
- Rules can restrict creativity and initiative
What are the positives of legislation?
- Firms know what is acceptable and what is not, so managers are able to concentrate on doing things better
- Following rules do take time and money, but not enough to damage a business’ drive for success
- Consumer protection law is too valuable to dismiss just because a business finds its time consuming, unsafe products can ultimately result in death
What is legislation?
Laws passed by Act of Parliament, breaking these laws may result in a fine or prison sentence
What is consumer law?
Act of parliament that are intended to protect customers from misleading companies
What factors affect the economy?
- Unemployment
- Consumer income
- Interest rate
- Inflation
- Taxation
- Exchange rates
