chapter 2 - influence on a business

Information and communications technology (ICT)

Computing and communication systems used by a business to exchange information with stakeholders

Stakeholders

Individuals or organisations that affect and are affected by a business

Intranets

Internal communication networks only accessible by employees

Extranets

Networks like intranets but also accessible to external organisations (e.g. suppliers)

E-commerce

Buying or selling products using electronic systems (e.g. internet)

M-commerce

Buying and selling via wireless handheld devices (e.g. smartphones)

Digital communication

Electronic transmission of information between devices

Forms of digital communication

Email, texts, webchat, video/teleconferencing, apps, social media

Ethics

Judging whether business decisions are morally right or wrong

Profit

Difference between revenue (sales) and total costs

Stakeholder ethical concerns

Fair pay, treatment of employees, truthful advertising, safe products, fair supplier payments

Ethical business activities

Donating profits, creating jobs in high unemployment areas

Legal but unethical activities

Selling unhealthy products, high manager pay vs low worker wages

Illegal activities

Child labour, paying below legal minimum wage

Ethical marketing

Eco-friendly products, not targeting vulnerable groups, fair pricing

Ethical operations

Avoid unethical suppliers, produce recyclable products

Ethical human resources

Provide training, pay fair wages for good living standards

Ethics vs profit

Ethical actions may increase costs and reduce short-term profits

Air pollution

Harmful gases released into atmosphere damaging health and environment

Noise pollution

Excessive sound causing harm to people and wildlife

Scarce resources

Limited inputs that cannot meet all needs

Non-renewable resources

Finite resources (e.g. coal, oil)

Global warming

Gradual increase in Earth’s temperature

Ethical objectives

Targets to ensure morally correct behaviour and improve reputation

Pressure group

Group influencing public opinion and business/government decisions

Environmental responsibility

Making decisions to protect the environment

Sustainability

Production methods that continue long-term without environmental damage

Sustainable production

Renewable energy, low-pollution transport, recycled materials, eco-friendly production

Waste disposal

Removal or dumping of unwanted materials or by-products

Recycling

Reusing raw materials multiple times (e.g. glass, paper)

Consumer environmental actions

Recycle, buy eco-products, complain about environmental damage

Economy

System of consumers, businesses, and government making decisions

Consumers

Individuals who use goods and services

Economic climate

State of factors like production levels and employment

Interest rates

Cost of borrowing or reward for saving (percentage)

Rising interest rates

Lower spending, reduced sales, less production, delayed expansion

Falling interest rates

Higher spending, increased production, more employment

Level of employment

Percentage of working-age people with jobs

Consumer spending

Total value of goods/services bought over time

Income elastic products

Products with demand sensitive to income changes

Globalisation

Markets becoming worldwide

Multinational company (MNC)

Business operating in multiple countries

International trade

Buying and selling across countries

Exports

Goods/services sold to other countries

Imports

Goods/services bought from other countries

Benefits of globalisation

Growth, investment, cheaper resources

Drawbacks of globalisation

Increased competition, takeover risk

Ways businesses compete

Product design, quality, price, advertising

Exchange rate

Value of one currency compared to another

Strong pound (SPICED)

Imports cheaper, exports more expensive

Legislation

Laws governing society

Employment law

Rules covering rights/responsibilities of workers and employers

National Living Wage

Government-set minimum hourly pay

Discrimination

Unfair treatment without valid reason

Equality Act 2010

Law preventing discrimination (age, race, gender, etc.)

Part-time employee

Works fewer hours than full-time

Trade union

Organisation representing workers’ interests

Contract of employment

Legal agreement of pay, hours, and duties

Employment law impact

Raises costs, may reduce number of employees hired

Motivation

Factors influencing behaviour at work

Health and Safety at Work Act 1974

Law ensuring safe working conditions

HASAWA impact

Increases costs due to training, equipment, inspections

Consumer laws

Laws protecting consumers from unfair practices

Market

Place where buyers and sellers interact

Competition

Businesses trying to attract the same customers

Monopoly

Market with only one business (no competition)

Competition methods

Price, innovation, advertising

Uncertainty

Lack of information making outcomes unpredictable

Risk

Chance something may go wrong

Internal risks

Employee issues, theft, fire, bad publicity

External risks

Competition, natural disasters, new laws

Business plan

Document outlining business aims and plans

Reducing risk

Training, experts, diversification, new markets

Diversification

Selling new products in new markets

Recession

Fall in economic output for 6 months or more