1.5 - Understanding external influences on business

1.5.1 What is a stakeholder

Any individual or group who can affect or is affected by the actions, decisions, policies, practices, or goals of the organization.

1.5.1 Give an example of a stakeholder

Pressure Groups

1.5.1 What is a pressure group

a group that tries to influence a business in the interest of a particular cause.

1.5.1 What is the difference between a shareholder and a stakeholder

Shareholders - own the business, may work in the business and are mainly interested in growing the value of their shareholding.

Stakeholders- have an interest in the business, do not own the business and may work for or otherwise transact with the business.

1.5.1 What is an internal stakeholder

Involved in the day to day running of the business

1.5.1 What is a external stakeholder

Not apart of the business but may still affect the activities within a businesses

1.5.1 Examples of internal stakeholders

employees, managers, owners

1.5.1 Examples of external stakeholders

suppliers, society, government, creditors, shareholders, customers

1.5.1 What is the customer's interest in the business

Will want their needs to be meet e.g convenience and quality

1.5.1 What is the employee's interest in the business

Will want max pay and to be paid on time, good working conditions.

1.5.1 What is the supplier's interest in the business

Will want to be treated fairly, paid on time and regular demand.

1.5.1 What are the pressure group's interest in the business

They seek to further specific causes, try to influence decisions making e.g Green peace and trade unions

1.5.1 What is the shareholder's interest in the business

Will want high dividend payments , sole trades and partnerships will want a profitable business, good reputation and large surplus of revenue over costs.

1.5.1 How do stakeholders impact business activity?

A business will consider which stakeholders are the most influential and prioritise their wants.

1.5.1 How do stakeholders face conflict with businesses

This occurs when one stakeholders achieves its objectives but in doing this has a negative impact on another stakeholder.

1.5.2 What is technology?

The application of scientific knowledge for practical purposes

1.5.2 How does technology impact Business operations

Uses of machines to produce good, computer aided design and customer service
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1.5.2 How does technology impact Human resources

ability to work from home, Skype

1.5.2 How does technology impact marketing

Uses of digital communications e.g social media, uses of websites for promotional purposes

1.5.2 How does technology impact Finance

online payments to suppliers and from customers
online monitoring of Bank balances and payments

1.5.2 What is e-commerce?

Conducting business on the internet (buying/selling on the internet)

1.5.2 Pros of e-commerce

Convenience,

Cheaper so reduction of fixed costs,

trade around the world 24/7,

ability to sell abroad

1.5.2 cons of e-commerce

Yo may need to pay commission for website so not all profits is kept
Fraud
Crowded market so competitors are everywhere
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1.5.2 Give one benefit to Lavinine using a online market place

One benefit is that it is cheaper to sell online. This is because she doesn't need a physical sweet shp to sell from thus lowering her fixed costs. This will lead to her perhaps having lower total costs and maybe more retained profit allowing her to buy high quality sugar therefore she can create better luxury sweets.

1.5.2 Explain one benefit to a business of using e commerce

One benefit is that it is cheaper. This is because e commerce doesn't require a business to have a physical store to sell from. This leads to a reduction in fixed costs therfore allowing a business to decrease total costs and maybe have retained profits.
Or
One benefit is increased convenience for customers. This is because they can order from the business 24/7. This leads to the business generating more sales and therefore being able to break even quicker.
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1.5.2 What is social media

websites and applications that enable users to create and share content or to participate in social networking.

1.5.2 Pros of social media

Allows business to gain insight into customer needs and wants.
Not expensive to set up and operates at a basic level which makes it suitable for small businesses.
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1.5.2 Explain one disadvantage to a business using social media

One disadvantage is that the Internet is overcrowded. This is because many businesses use social media like Twitter to reach their customers and promote their products. This may lead to customers not paying attention to the business's promotions as there is a better promotion from another competitor. Therfore the business may not attract any customer and generate sales.

1.5.2 What is digital communication

using electronic networks to transmit digital data, including text, images, video, or voice

1.5.2 Digital communication with customers

Email e.g customer service help
Text e.g a delivery is ready
TV e.g promote and attract them

1.5.2 Digital communication with employees

Email e.g Asking for a report
Skype e.g meetings
Internet e.g to make sure they are doing their job

1.5.2 Pros of digital communication with customers

Can send marketing materials straight to customers
Provide real time updates
Complaints can be solved quickly

1.5.2 Pros of digital communication with employees

allows people who are far away to join meetings
less travel expenses

1.5.2 Pros to home working (dc)

Less fixed costs
Efficient
can motivate the employees to work harder in their own home

1.5.2 Cons to home working (dc)

Bad Internet communications
Distractions

1.5.2 Pros with Working in other countries (dc)

Communication is quicker
Cheaper because phone bills are less
Online transaction helps business to communicate with customers and suppliers

1.5.2 Pros of online payment systems

quick and easy to transfer funds
can transfer around the world
allows people to pay even without a card

1.5.2 Cons of online payment systems

money could be stolen if transferred to the wrong account
Identify fraud if cards are stolen

1.5.3 What is legislation

laws passed by government, designed to protect the rights of the consumers and the workforce

What are the 4 main legislations ?

* national minimum wage


* equality act 2010
* health and satey act 1978
* consumer law

1.5.3 What is the Equality Act 2010

It's the law which bans unfair treatment and helps achieve equal opportunities in the workplace and in wider society. There are nine protected characteristics which cannot be used to treat people unfairly. These are: age, disability, gender reassignment, marriage, pregnancy/ maternity, race, religion, sex or sexual orientation.

1.5.3 What is National minimum wage

States that businesses must pay at least a minimum wages per hour to all employees

1.5.3 What is consumer law

Legislation intended to protect consumers from being exploited by businesses

1.5.3 What is the Health and Safety law

looks after the rights of the workplace in terms of their wellbeing in the workplace

1.5.3 How do these law impact the costs of the business

Wage costs may be higher as they have to pay over minimum wage
Staff need health and safety equality and training to follow the h & s law
To cater for the disabled lifts and ramps may be built in

1.5.3 What might happen if businesses ignore these laws

The business may be fined as a warning
The business could face prosecution and imprisonment
Business could be forced to close down if the health, safety and wellbeing of people are at risk.

1.5.3 What could happen to the business reputation

If people found out about the poor health and safety, certain business may have a bad reputation e.g food shops
Business could lose customers and gain bad publicity

1.5.3 Explain how legislation can impact on the costs of a business

One way is that wage costs may be higher. This is because will have to make sure they are paying the minimum wage set by the government. This will lead to the variable costs being increased therefor increasing total costs.

1.5.3 Explain why the reputation of a business could suffer if they do not follow these laws

One reason is bad publicity. This is because customers may not be interested in a business that doesn't follow legal legislations. This may result in a loss of customers and therefore leads to a loss in revenue.

1.5.4 What is the economic climate

Refers to how well the country is doing in terms of levels of income and employment.

1.5.4 If the economy is growing then?

The economic climate is positive

1.5.4 If the economy is in a recession then?

The economic climate is negative

1.5.4 Aspects that affect the economic climate

Interest rates changes
Inflation
Consumer income
Levels of unemployment
Taxation
Exchange rates

1.5.4 What is unemployment?

workers that are actively looking for a job but aren't working

1.5.4 Unemployment does not include

Full time students
The elderly
Stay at home patients

1.5.4 What happens if levels of employment are high

This indicates a good economic climate, employed people receive a wage which increase demand in the economy. aprices may start to rise as more people are willing and able to buy goods and services. Businesses may use this as an opportunity to invest in order to expand as demand continues to increase.

1.5.4 What is inflation?

a general increase in price levels in an economy over a period of time.

1.5.4 As inflation rises?

The purchasing power of the dollar/pound falls or money buys a smaller percentage of a good

1.5.4 If the inflation rates are high?

Prices rise sharply

1.5.4 If inflation rates are low?

Prices rise gradually

1.5.4 What is inflation measured by

Consumer Price Index (CPI) and
Retail Price Index (RPI)

1.5.4 Why are the rates of inflation measured by CPI lower than the RPI ones

CPI excludes some components of spending e.g mortgage payments and tax changes so the rates are lower

1.5.4 How do high interests rates affect of a business

High interest rates will make it more expensive for a business to borrow money, therefore they are less likely to invest in new machinery, premises or product development.

1.5.4 Why do we pay taxes

Pay for public goods, police, roads, schools, etc.

What are the diffferent types of taxes

* income tax
* national insurance
* corperation tax
* vat
* council tax
* business rates

1.5.4 What is income tax

A tax on people's earnings, increases as you earn more

1.5.4 What is National insurance

A contribution paid by workers and their employers, towards the cost of state benefits e.g pension. maternity and sick pay.
Increases the more you earn

1.5.4 What is VAT?

value added tax on good ad services mostly 20%

1.5.4 What is corporation tax

A tax on company profits, currently 19% in 2022

1.5.4 What is council tax

Individuals pay this for rubbish collection, paths and social care

1.5.4 What are business rates

paid for local services like street lighting and waste collection

1.5.4 What are excise duties?

These are specific taxes on goods such as alcohol, cigarettes and petrol

1.5.4 £1.00 - €1.50
£1.00 -€ 1.10
Has the pound depreciated or appreciated?

Depreciated

Imports are related to

How much it cost the British company to buy supplies (VC)

Exports are related to

How much demand the British company will get

Explain the impact on a British Business of the increase in the value of the £

One impact is that imports are cheaper for the business company, this is because it costs less in pounds to buy the foreign company. This leads lower variable costs therefore total costs.

What does a stong pound mean ?

S strong

P pound

I imports

C cheap

E exports

D dear

What does a weak pound mean ?

W weak

P pound

I imports

C cheap

E exports

D dear