Chapter 6 Notes – External Influences on Business Activity

Governments may shift ownership between public & private sectors to improve efficiency, raise funds or protect strategic assets.
Privatisation: ✓ profit motive boosts efficiency, access to private capital, govt gains sale revenue ✗ risk of private monopolies, loss of social objectives, reduced economies of scale if broken up.
Nationalisation: ✓ ensures strategic control, integrated policy, prevents consumer exploitation, gains economies of scale ✗ weaker profit incentive, political interference, high purchase cost, limits private finance.

Employment laws cover contracts, non-discrimination, working hours, health & safety, minimum wage; raise business costs but improve motivation & reputation.
Consumer protection laws prohibit unsafe goods, misleading claims & defective products; compliance increases quality-control costs but builds trust.
Competition policy blocks monopolistic mergers & anti-competitive practices, ensuring low prices, high quality & innovation.

Corporate Social Responsibility (CSR) = meeting legal & moral duties to all stakeholders; includes transparent accounting, rejecting bribes, publishing social audits.
Social audits report on safety, pollution, ethical sourcing, employee welfare; voluntary but enhance image and guide improvements.
Pressure groups (e.g. Greenpeace) use media, consumer boycotts & lobbying to push firms toward ethical & green practices.
Key demographic trends: ageing populations, higher female participation, more part-time & flexible work, rising literacy; create new product demand & alter labour supply.

Offers new products, processes, lower unit costs, richer data & faster communication; but involves high capital, training, redundancy, reliability & data-protection risks.
Effective introduction: analyse needs → involve staff → compare options & costs → plan training & rollout → monitor performance.

Market power falls when rivals are many or entry barriers low; pricing & differentiation crucial.
Buyer power rises when suppliers are numerous; firms can negotiate lower input prices & better terms.

Free-trade agreements & WTO reduce tariffs/quotas, expanding consumer choice, fostering specialisation & economies of scale, yet threaten uncompetitive domestic sectors.
Tech (blockchain, AI, digital platforms, mobile payments) accelerates global commerce.
Multinationals set up abroad to cut costs, bypass import barriers, access resources & markets; benefits: FDI, jobs, skills, tax, supplier growth; drawbacks: exploitation, pollution, crowding-out locals, profit repatriation.

Green decisions (energy saving, recycling, waste control) yield marketing edge, avoid fines & cut long-run costs; but may raise short-term expenses.
Greenwashing = false environmental claims; risks backlash.
Environmental audits assess pollution, energy use, recycling vs targets; gain stakeholder trust yet costly and voluntary unless mandated.
Sustainability: meeting present needs without harming future generations; driven by consumer pressure, regulation & long-term profitability.