Advantages And Disadvantages - Understanding external influences on business

1.5.1 What are the advantages of prioritising shareholders and owners?

Profit and business value may rise, encouraging further investment; decisions can focus on financial survival.

1.5.1 What are the disadvantages of prioritising shareholders and owners?

Cost cutting may upset workers or customers; short-term returns may conflict with long-term reputation.

1.5.1 What are the advantages of prioritising employee needs?

Fair pay and conditions can improve motivation and retention; lower staff turnover can reduce recruitment costs.

1.5.1 What are the disadvantages of prioritising employee needs?

Higher pay and benefits raise costs; other stakeholders may receive lower short-term returns.

1.5.1 What are the advantages of prioritising customer needs?

Better value and service encourage loyalty and repeat sales; recommendations may strengthen reputation.

1.5.1 What are the disadvantages of prioritising customer needs?

Lower prices or higher service standards can reduce margins; customer demands may conflict with staff or owner interests.

1.5.1 What are the advantages of maintaining good supplier relationships?

Reliable deliveries reduce stock shortages; trust may lead to favourable credit terms.

1.5.1 What are the disadvantages of maintaining good supplier relationships?

Accepting supplier terms may raise purchase costs; depending on one supplier creates risk.

1.5.1 What are the advantages of responding positively to the local community?

Local support can improve reputation and customer loyalty; fewer disputes may reduce disruption.

1.5.1 What are the disadvantages of responding positively to the local community?

Reducing noise or funding community projects increases costs; some community demands may restrict operations.

1.5.1 What are the advantages of responding to pressure-group concerns?

Addressing concerns can protect the brand and win ethical customers; campaigns may reveal risks early.

1.5.1 What are the disadvantages of responding to pressure-group concerns?

Changing suppliers or processes can be expensive; meeting one group’s demands may upset another.

1.5.1 What are the advantages of balancing conflicting stakeholder objectives?

Compromise can maintain trust and reduce disputes; stable relationships support long-term trading.

1.5.1 What are the disadvantages of balancing conflicting stakeholder objectives?

Compromise may satisfy no group completely; negotiations delay decisions and create extra costs.

1.5.2 What are the advantages of using e-commerce technology?

Businesses can reach customers outside their area at any time; sales may grow without opening another shop.

1.5.2 What are the disadvantages of using e-commerce technology?

Website upkeep, delivery and returns cost money; cyber risks and outages may interrupt sales.

1.5.2 What are the advantages of using social media for business?

Low-cost posts can increase awareness; direct interaction helps gather feedback and encourage sales.

1.5.2 What are the disadvantages of using social media for business?

Negative comments can spread quickly; creating content and responding to customers takes time.

1.5.2 What are the advantages of using digital communication with customers and staff?

Information reaches people quickly, reducing delays; online meetings and messages can cut communication costs.

1.5.2 What are the disadvantages of using digital communication with customers and staff?

Messages can be misunderstood or missed; technical problems and data-security risks may disrupt work.

1.5.2 What are the advantages of offering digital payment systems?

Quick, convenient checkout can increase sales; less cash handling may improve efficiency.

1.5.2 What are the disadvantages of offering digital payment systems?

Transaction charges reduce profit; outages and fraud risks may prevent payments.

1.5.3 What are the advantages of complying with consumer protection legislation?

Customers may trust the firm and buy again; compliance helps avoid claims and penalties.

1.5.3 What are the disadvantages of complying with consumer protection legislation?

Product checks, refunds and staff training increase costs; dealing with returns can reduce profit.

1.5.3 What are the advantages of complying with employment legislation?

Fair treatment may improve morale and retention; compliance reduces legal and reputational risks.

1.5.3 What are the disadvantages of complying with employment legislation?

Minimum pay, recruitment checks and administration raise costs; procedures can take management time.

1.5.3 What are the advantages of investing in workplace health and safety?

Fewer accidents reduce absence and disruption; the business lowers the risk of claims and enforcement.

1.5.3 What are the disadvantages of investing in workplace health and safety?

Protective equipment and training cost money; safety procedures can slow some tasks.

1.5.4 What are the advantages of a fall in interest rates for a small business?

Borrowing becomes cheaper, supporting investment; customers with loans may have more disposable income.

1.5.4 What are the disadvantages of a fall in interest rates for a small business?

Income earned on savings may fall; increased demand can raise some input prices.

1.5.4 What are the advantages of a rise in interest rates for a small business?

A cash-rich firm may earn more interest on deposits; weaker demand can ease pressure on some prices.

1.5.4 What are the disadvantages of a rise in interest rates for a small business?

Loans and overdrafts become costlier; customers may cut spending, reducing sales.

1.5.4 What are the advantages of a rise in consumer incomes?

Customers can afford more goods and services, raising potential sales; premium products may become more attractive.

1.5.4 What are the disadvantages of a rise in consumer incomes?

A business may face higher wage expectations and competition; extra income does not benefit all products equally.

1.5.4 What are the advantages of higher unemployment for a small business?

There may be more job applicants, easing recruitment; wage pressure may fall in some roles.

1.5.4 What are the disadvantages of higher unemployment for a small business?

Household incomes and spending may fall, reducing demand; unpaid bills may increase.

1.5.4 What are the advantages of higher inflation for a small business?

If customers accept higher prices, nominal sales revenue may rise; firms holding stock bought earlier might benefit briefly.

1.5.4 What are the disadvantages of higher inflation for a small business?

Wages, energy and supplies often cost more; customers may buy less as purchasing power falls.

1.5.4 What are the advantages of higher government taxation?

Extra public spending could eventually improve local services or infrastructure; effects depend on the tax and its use.

1.5.4 What are the disadvantages of higher government taxation?

Higher business taxes reduce retained profit; higher consumer taxes may reduce spending and demand.

1.5.4 What are the advantages of an appreciation of the pound for a UK business?

Imported stock and raw materials may become cheaper, reducing costs; buying overseas equipment may cost less.

1.5.4 What are the disadvantages of an appreciation of the pound for a UK business?

UK exports become dearer to overseas buyers, potentially lowering export sales; cheaper imports intensify competition.

1.5.4 What are the advantages of a depreciation of the pound for a UK business?

UK exports become cheaper to foreign buyers, potentially raising demand; domestic firms may gain versus imported rivals.

1.5.4 What are the disadvantages of a depreciation of the pound for a UK business?

Imported supplies become more expensive, raising costs; prices may have to rise for UK customers.

1.5.5 What are the advantages of adapting quickly to a new competitor or economic change?

A business can protect sales by adjusting price or product; early action may reduce cash-flow problems.

1.5.5 What are the disadvantages of adapting quickly to a new competitor or economic change?

Changes cost money and may be based on incomplete information; frequent changes can confuse loyal customers.

1.5.5 What are the advantages of investing in technology to respond to market change?

Efficiency or online sales may improve competitiveness; better customer convenience may increase demand.

1.5.5 What are the disadvantages of investing in technology to respond to market change?

Training and systems create upfront costs; failures or rapid obsolescence can waste investment.

1.5.5 What are the advantages of raising prices to cover higher costs?

Profit per unit can be protected if customers still buy; higher revenue may help maintain cash flow.

1.5.5 What are the disadvantages of raising prices to cover higher costs?

Demand may fall as buyers switch to rivals; customer dissatisfaction may damage loyalty.

1.5.5 What are the advantages of cutting operating costs during an economic downturn?

Lower expenditure can protect cash flow and survival; the break-even output may fall.

1.5.5 What are the disadvantages of cutting operating costs during an economic downturn?

Reduced staff or quality may harm service; heavy cuts may stop the business responding to recovery.