Stakeholders, Technology, and Laws in Business

Stakeholders in Business

Definition of Stakeholder

  • Any individual or organization that has a vested interest in the activities and decision-making of a business.

Types of Stakeholders

1. Owners

  • Definition: Owners have financial investment in the business; in the case of limited companies, these owners are shareholders.

  • Objectives:

    • Return on investment through profits and dividends.

    • Ensure the success and growth of the business.

    • Proper management and running of the business.

2. Managers/Employees

  • Objectives:

    • Job security and favourable working conditions.

    • Promote business profitability and growth.

    • Uphold ethical standards and job satisfaction.

3. Suppliers

  • Objectives:

    • Maintain continuous and profitable trade with the business.

    • Ensure financial stability and growth.

4. Local Community

  • Objectives:

    • Success of the business, especially in creating and retaining jobs.

    • Compliance with local laws and regulations.

    • Growth in profitability.

    • Minimize environmental impacts.

5. Government Agencies

  • Objectives:

    • Ensure the correct collection and payment of taxes.

    • Assist businesses in their growth and job creation.

    • Ensure compliance with business legislation.

6. Customers

  • Objectives:

    • Receive value for money.

    • Ensure product quality.

    • High levels of customer service and satisfaction.

7. Pressure Groups

  • Objectives:

    • Ensure the business acts fairly and honestly in the best interest of customers, society, and the environment.

8. Banks/Other Financial Providers

  • Objectives:

    • Assess whether the business can repay loans or invested amounts.

    • Focus on profitability and cash flow.

    • Ensure growth in profits and the overall value of the business.

Influence of Stakeholders on Business Decisions

  1. Owners are the primary decision-makers and have the most influence on business objectives.

  2. However, owners must consider the interests of other stakeholders when setting objectives, leading to potential conflicts of interest.

  3. Stakeholders may have conflicting opinions, necessitating that businesses balance these interests to survive.

  4. Stakeholder Conflict: This refers to disagreements between stakeholders.

    • Types of stakeholders:

      • Internal: Employees and owners; individuals within the organization.

      • Connected: Stakeholders connected through relationships based on contracts such as customers, suppliers, and creditors.

      • External: Stakeholders connected through their relationship with the business but not bound by legal contracts, such as society, competitors, and governmental agencies.

Technology and Business

Technology Definition

  • The application of knowledge, skills, and techniques to improve business performance.

E-commerce

  • Definition: The buying and selling of products and services using devices connected to the internet.

Advantages of E-commerce

  • Access to wider markets, allowing businesses to reach customers globally.

  • Convenience for consumers, as they can shop without queuing and at any time of day.

  • Increases business visibility through the electronic network.

Disadvantages of E-commerce

  • Increased competition from global businesses.

  • Higher costs due to the need for computerized systems and necessary staff training.

  • Loss of personal touch in customer interactions.

  • Increased distribution costs due to reliance on technology for payments, updates, and maintenance.

Digital Communication Technologies

  • Definition: The electronic transmission of information.

  • Methods of digital communication include:

    • Websites for customer interactions.

    • Emails for quick communication.

    • Applications (APPs) for customer communication and promotion.

    • Live chats for instant messaging.

    • Video calls for remote meetings.

Advantages of Digital Communication

  • Cost-effectiveness and widespread use.

  • Rapid communication, saving time and resources.

  • Information can be stored electronically, reducing physical storage costs.

Disadvantages of Digital Communication

  • Potential unreliability of technology.

  • Risk of communication overload.

  • Dependence on equipment with the possibility of malfunction.

  • Requires training to use effectively.

Social Media in Business

  • Definition: Online communication platforms that enable users to share ideas, content, and messages.

  • Importance:

    • Significant for sales and marketing.

    • Used as a method for businesses to share information with users.

Payment Methods

  • Online Payments: Transactions conducted through websites or applications.

    • Types include:

    • Standard online payments utilising debit/credit card details.

    • Chip and PIN payments requiring the input of a personal identification number.

    • Contactless payments using a debit/credit card or smart device near a terminal.

Impact of Technology on Business Operations

  • Reduction in operational costs: Using technology can replace human labor, reducing labor costs and improving efficiency.

  • Increased sales: E-commerce expands market reach, enhancing revenue opportunities.

  • Changes to the marketing mix: Increased choices lead to heightened competition among firms.

Economic Factors Affecting Business

Currency Exchange Rate

  • Definition: The amount of one currency that can be exchanged for another.

Impact of Exchange Rate Changes

Strengthening Currency

  • Good for Consumers:

    • Decreased prices for imports, making products more affordable.

  • Good for Businesses:

    • Lower costs for raw materials priced in foreign currencies.

  • Bad for Exporters:

    • Increased prices for goods sold abroad, potentially decreasing sales and profit.

Weakening Currency

  • Good for Exporters:

    • Y Cheaper goods for foreign buyers, enhancing sales opportunities.

  • Bad for Consumers and Importing Businesses:

    • Higher prices for imported goods, increasing costs.

Consumer Law

  • Purpose: Protect consumers from exploitation by businesses, ensuring fairness in transactions.

Consumer Rights Act 2015

  • Key provisions include:

    1. Products must be fit for purpose.

    2. Products must match their description.

    3. Products should be of satisfactory quality, meaning they are well made.

  • Consequences for Non-Compliance:

    • Customers can demand a refund, repair, or replacement if these rights are violated.

Implications for Businesses

  • Noncompliance can lead to costs, legal actions, and reputational damage, affecting sales. Businesses must keep staff trained and up-to-date on consumer rights legislation.

Economic Climate

Definition

  • Economic Climate: The overall health of a country's economy, encompassing production, distribution, and consumption of goods and services.

Effects of Economic Climate

  • Influences unemployment rates, taxation levels, pricing, and incomes.

Employment and Unemployment

  • Unemployment: The state of not having a job despite being available to work.

  • Consequences of Unemployment:

    • Loss of direct income, decline in skill levels, psychological impacts leading to depression.

    • Lower bargaining power for wages as job seekers may accept lower pay.

Employment Advantages

  • Benefits of high employment include:

    • Easier job finding for individuals.

    • Increased consumer spending due to higher income levels, fostering productivity.

Employment Disadvantages

  • Potential downsides include:

    • A shortage of available workers, leading to increased wages.

    • Higher employee turnover.

Taxation and Economic Impact

  • Businesses and consumers are both liable for taxes, which are set by the government. Changes in taxes influence spending behavior.

Effects of Income Tax Changes

  • Increase in Income Tax for Consumers: A decrease in consumer spending, leading to reduced business revenue.

  • Decrease in Income Tax for Consumers: Increased consumer spending, resulting in growing revenue for businesses.

Business Tax Implications

  • Increased business taxes may hinder growth and require cost-cutting measures, such as raising prices, which could cause inflation.

  • Conversely, reduced taxes allow for greater reinvestment opportunities, stimulating business growth.

Inflation

  • Definition: A general increase in prices and fall in the purchasing value of money.

  • **Effects on Business:

    • Labor Costs:** High inflation may prompt employees to demand wage increases, raising costs and reducing profits.

    • Global Competition: Inflation decreases the competitiveness of exports, potentially lowering sales.

    • Consumer Spending: If inflation rises, consumers may rush to make purchases, leading to short-term revenue increases.

Stakeholder Effects of Inflation

  • Increased consumer spending boosts sales for businesses, potentially raising revenue.

  • Suppliers may see increased demand, while employees could receive wage increases, impacting overall business costs.

  • Governments benefit from increased tax revenues, which can be used for social welfare.

Laws and Legislation in the Workplace

Employment Law

  • Legal framework ensuring employee rights are protected in the workplace.

  • Areas of protection include pay, recruitment, discrimination, and health and safety.

Key Legislation

  1. National Minimum Wage (NMW): Sets minimum pay levels for different age groups; non-compliance can result in fines and negative publicity.

  2. Equality Act 2010: Ensures non-discrimination in recruitment and employment practices; requires equal pay for equal work.

Health and Safety Regulations

  • Regulated by the Health and Safety Act of 1974, mandating risk assessments to ensure a safe workplace.

  • Violations can lead to legal consequences, fines, and damage to reputation.

Conclusion

  • Businesses must navigate complex stakeholder relationships, economic conditions, and legal obligations to operate efficiently and successfully. Adequate knowledge of these areas is critical for sustainable business practices and growth.