Business: Influences on Business

What are 4 ethical considerations in business?

1. Treatment of workers (child labour, fair wage, amount of hours, safe working conditions, no discrimination)

2. Treatment of suppliers (Avoid late payment, fair prices)

3. Treatment of customers & Marketing decisions (Don’t overcharge, avoid false claims, safe products)

4. Sourcing of materials (Avoid child labour, sustainable sourcing)

Advantages and disadvantages of acting ethical

Adv	DisAdv
(High productivity & safe workers) → lower costs, higher retention, low absenteeism, less training & recruitment costs, easier & cheaper to recruit	Lower profit (charge less than competitors, higher costs for supplies, customers choose cheaper less ethical businesses)
Good reputation → higher sales → loyal, trusting customers	(Honest advertisement) → Lower sales, people don’t but what they don’t need
Higher profits (Higher sales & lower costs)	(Fair wages, higher min wage) → higher costs, health & safety provision
Higher investment (Invest in ethical business)	Lower investment (Lower profit)

WHat are the 4 environmental considerations?

1. Sustainability - Using renewable resources

2. Waste disposal - Reduce, reuse, recycle

3. Pollution - Avoid introduction of harmful things into environment

4. Climate Change - Change in weather patterns

Advantages and Disadvantages of being environmentally friendly

Adv	DisAdv
Lower costs (Less energy use, less waste)	Higher costs (more expensive materials)
Higher sales (Customers trust & loyslty)	Lower sales (Charge higher prices to cover costs)
Lower taxes, avoid fines (Less pollution)	Higher capital (New machines for eco-friendly production)
Government subsidies
HIgher profits (Higher sales, less costs)

What is the economic climate?

How well the country is doing in terms of income and employment levels

Consumer income - How much money customers have to spend

Un/Employment - Impacts their income

What are some impacts on a business of raising employment and income?

1. Increased sales (more money to spend) → increase production → sales rise

2. Sales of luxury goods increase (More people can afford them)

3. Businesses that sell cheaper goods have sales fall (People switch to better, more expensive goods)

What changes occur in business strategy when income and employment falls?

1. Production - reduce costs by reducing waste & improving productivity

2. HR - Reduce costs by improving productivity & lay off workers

3. Finance - Reduce costs by taking out cheaper loans & Reducing overdraft

4. Marketing - Increase sales by increasing ads & lowering prices

What is globalisation?

The process where businesses around the world become increasingly interconnected.

How are businesses inteconnected?

1. Global buying & selling

2. Global production - produce all or parts of product in different countries

3. Global movement of capital - Raise investment money by borrowing money & selling shares

4. Global movement of people - Recruiting & sending employees abroad.

How has globalisation been made easier?

• Improvements to transport

• Better telecommunications & internet (websites, SM, email)

• Reduced trading barriers - reduction in tariffs & quotas (amount that can be im/expoted)

What factors influence businesses?

1. Exchange rate - How much it costs to ex/import products (change in currency) can increase or decrease costs

2. Ethical & Environment - Consider wages, age of workers (no children), health & safety so that consumers have confidence in them

3. Economic climate - Sell more when incomes rise, reduce prices when income falls.