Business Context: Core Element 1

Business Context: Core Element 1

Business Context

• Factors affecting businesses:

  • Internal: Human resources, management quality, finance, marketing, logistics, R&D.

  • External: Political climate, environmental concerns.

• Digital technology implementation requires strategic and project planning.

  • Considers hardware, software, storage, end-user/stakeholder needs, and social/political/legal factors.

Learning Outcomes Covered

• Types of organizations and stakeholders.

• Organizational response to change.

• Key factors influencing business.

• Measurable value of digital service to customers/end-users.

• Value of meeting customer/end-user needs.

• Digitalization's influence and impact.

• Role of technical change management.

• Components of technical change management.

• Change drivers and organizational response methods.

• Risks and implications in a business environment.

• Purpose and applications of codes of conduct.

• Types of hackers and hacking implications.

Types of Organisations

• Public: Government-owned and operated (e.g., local council, HMRC, schools).

• Private: Individually-owned, profit-driven, financed by shareholders/loans.

  • Small or Medium Enterprises (SMEs): Classified by turnover, assets, and employee count; criteria vary by country/industry. They employ system administrators, network managers, or IT managers.

  • Large Enterprises: More comprehensive business model, full-time IT staff, exceeding SME benchmarks.

• Non-Governmental Organisations (NGOs): Non-profit, independent of government.

  • Operational: Design and implement development projects.

  • Advocacy: Promote/defend a specific cause, influence policy.

  • Funding from membership fees, sales, donations, grants.

• Voluntary/Charity: Benefit society, often without profit motive/government intervention.

  • Reinvest money raised back into the community.

  • Registered with Charity Commission, established for charitable purpose, and subject to High Court's charity law jurisdiction.

  • Tax exemptions on donation income or rental premises.

• Not for Profit: Activities not for financial benefit of individuals/directors.

  • Fewer registration restrictions than registered charities.

Stakeholder Types

• Stakeholder: Anyone with an interest in the business who can affect or be affected by its operations.

  • Internal or external to the business.

Internal Stakeholders

• End-users: Owners, board of directors, employees, departments.

• Owners: Control day-to-day operations, delegate functions.

• Board of Directors: Elected to represent shareholder interests and manage resources.

  • Internal members represent major shareholders and management.

  • External members bring an independent view.

  • Stakeholders: Include employees, customers, and community members whose interests must also be considered in decision-making.

  • Dividend Policy: Establishes guidelines for the distribution of profits to shareholders, balancing shareholder returns with the need for reinvestment in business growth.

• Employees: Have an employment contract with additional rights.

  • Rights include statutory sick pay, leave (maternity, paternity, adoption, shared parental), notice periods, unfair dismissal protection, flexible hours requests, emergency time off, and statutory redundancy pay.

• Departments: Organized around different roles (e.g., accounting, HR, R&D, sales, customer service).

External Stakeholders

• No direct relationship with the business, but affected by its operations.

• Governments influence business operations through policy changes.

• Customers/Consumers buy and recommend products/services.

• Clients pay for professional support/services.

• Direct Competitors sell similar products/services.

• Indirect Competitors sell similar products in the same sector but are sufficiently different.

• Outsourced Services and Suppliers provide goods/services to another business.

• Shareholders own company stock and are subject to capital gains/losses and dividend payments.

  Dividend payments: $Money paid regularly by a company to shareholders from company profits.$

• Investors provide funds for a return.

• Funders provide financial backing for projects/ventures.

• Government operates on local, national, and international levels.

  • Local: Support local businesses, address unemployment.

  • National: Encourage business investment and job creation.

  • International: Trade agreements, environmental regulations.

Business Environments

• Business to Customer (B2C): Direct sales to customers (online or in-person).

• Business to Business (B2B): Sales to other businesses for their operations.

• Business to Many (B2M): Sales to both businesses and customers.

Influencing Factors in the Business Environment

Political Factors

• Government Policy: Legislation, spending and taxes.

• Foreign Trade Policy: Import tariffs, subsidies, quotas.

  • Tariffs: $Taxes on imported goods to encourage consumers to buy domestic products.$

  • Subsidies: $Financial support to businesses struggling against international competition.$

  • Quotas: $Restrictions on the quantity/value of imported/exported goods.$

• Bilateral Trade Agreements reduce trade barriers and increase competition.

  • Bilateral: $Trade agreements between countries to promote trade and commerce.$

• Sanctions/Embargos: Political trade restrictions against specific countries.

  • Sanctions: $Political trade restrictions to maintain or restore international peace and security.$

  • Embargo: $Government order restricting business with a specific country.$

• Tax Policy:

  • Income Tax:

  • National Insurance Contributions:

  • Value Added Tax (VAT):

  • Corporation Tax: Tax on an organization's profits.

• Local Government: Business rates, planning permission.

• Cross Party Focus and Agendas. Senior members of parliaments and assemblies resolve issues or agree on particular issues. This may influence relationships, trading agreements, cyber security. These groups influence legislation, contribute to political pressure, and change behavior.

Economic Factors

• Economic factors impact spending and business decisions.

• Interest Rates: Higher rates increase interest payments and reduce disposable income.

• Exchange Rates: Impact import/export businesses.

• Consumer Trends: Influenced by employment, wages, prices/inflation, interest rates, and consumer confidence.

• Periods of Recession: Change purchasing attitudes.

Social Factors

• Social Mobility: Movement in a person's social status. Examples:

  • Horizontal, Vertical (ascending and descending), Upward, Downward, Inter-generational, Intra-generational.

• Market Trends identify changes to the market and stay ahead of the company's competitors.

• Cultural Expectations: Consideration of cultural differences in global business.

• Socioeconomic Aspects: Influence consumer behavior and lifestyles.

  • Include income, occupation, and economic growth.

Technological Factors

• Emerging technologies reduce operational costs, increase efficiency/profits, and improve stakeholder experience.

  • Saves time and money, increases efficiency/productivity, enables faster decisions, avoids errors, expands business, increases revenue.

Legal Factors

• Laws and regulations related to taxation, employment, contracts, securities, and immigration.

  • Organizational Law: Determines activities, taxation, customs, and employment requirements.

  • Employment Law: Varies by country (e.g., minimum wage, dismissal, discrimination).

  • Consumer Laws: Protect consumers from fraudulent behaviour.

  • Health and Safety Legislation: Varies greatly by country.

Environmental Factors

• Carbon Footprint: Impact on the environment from greenhouse gases.

  • Reduce by using renewable energy, reducing air travel/emissions from road travel, installing efficient lighting, reducing data center energy usage, implementing building temperature controls, reusing/reducing/recycling, reducing printing.

• Digital Waste (E-waste): Discarded digital/electronic equipment requires careful disposal.

  • Reclaim and repurpose components, dispose of hazardous materials.

  • Security issues: Hard drives with sensitive information should be recycled properly.

Measurable Value of Digitalization in Business

Sales and Marketing

• Enhanced Market Research: Data analysis of consumer lifestyles and preferences.

• Increased Brand Promotion: Social media and digital devices expand reach.

  • Global Access, Target Audience, Cost-Effective, Measurement Tools, Even Playing Field.

  • Disadvantages include social media misinterpretations, time/skills investment, criticisms, and competition.

Increased Communication & Coverage via Social Media

• Considerations: Which social media channels the customers are using, How to target audiences by using these channels, What are the business's objectives for using social media?. Can boost user engagement (different channels), business growth (increases interaction which increases sales and brand loyalty), and brand building (increases visibility).

Online Selling/E-Commerce Opportunities

• Customers expect fast dispatch and 24/7 customer service.

• Using platforms like AI, retail apps, and marketing automation for streamlined operations.

• Quick website setup, Free templates available for download or can hire the services of a web designer. Cost Savings by not having to consider the cost of rent, utilities (gas/electric, water) or rates. They provide a more personable experience.

• Analytics are used to make customer mailing lists that uses targeted online advertising with customers even those who visit the store abandoning the shopping cart. Traffic Increases therefore sales increase as well.

• Drawbacks competition and returns.

Tracking and Management of Customer/Service-User Retention

• Technology used to manage Customer retention rates. Businesses lose customers they can use for analysis. By improving on what can be done to bring customers back. This is due to no feeling valued or important with current business.

• Customers will be loyal when service providing is personalized. By implementing technology like AI and IoT, customer data can be processed faster.

• Way for businesses to make its customers and service users make them feel more valued and appreciated by offering them there best individual needs, personalized recommendations, suggestions and emails.

• Formula = (Customers at end of period - New customers acquired during period) / Customers at the beginning of the period X 100 = %. Example- if company starts with 1,000 customers but attracted 300 new customers, at the end of the period there was 1000 customers total. Formula would be: (1,000 customers -300 customers acquired)/10000 customers at beginning of period x100 = 90%CRR

• Results show that the company lost 100 customers leaving their retentions rates only at 90%. Meaning important tool can be used for companies.

Operations

Enhanced Communication Channels

• Accessibility: 24/7 Availability globally, email, social media, website, text.

• Reliability: Messages delivered instantly.

• Marketing Exposure: Use of social media, websites, data collections.

• Training Employees: Training can be done remotely.

Automation of Internal Processes

• Operational efficiency - Process automatically go from one stage to the next. Workflow is improved.

• Document/File Management- Requires less effort to take manage files and documents. Information gets transferred from different locations.

• Improved Customer Experiences- Readily available, services are good and customer services itself standardizes this way increases efficiency. Customer questions can be resolved by using bots.

• Improved Employee Morale- Employee can work more freely because there environment is less repetitive because processes being streamlined make this a factor.

Remote Working Functionality

• Less Space for workers. Work/Life balance for workers and employees through technology for great communications.

Finance

Increased Fiscal Performance

• Effective use of financial software solutions ensures current information is available to support business when making up-to-date strategic decisions. technology also allow the finance functional area to know the current situation of how the business is preforming against budget. Giving a financial overview

• Technology Increases the speed for financial business tasks such as the production of quarterly and weekly pays, profit and loss statements, and balance sheets.

• Finance software hosted in the Cloud allow team memebers acces from anywhere.

• Expansionary fiscal policies are where governments spend more and lower taxes through borrowing.

• Contractionary increase taxes, but cuts spending.

Increased Reporting Options and Functionality

• With functional area, financial managers plan for short term and long terms financial capital needs and analyse the impact. The function also produces statement for budgeting and forecasting.

Reduced Operating Costs

• Automations increased workforce more affectively, therefore reduce waste. Profit margins go up when automated. *The use of digital technologies increases products. Information is intensive is how they should be used therefore businesses can cut up to 90% costs. To reduce travel. To use their travel expenses for meetings to stop going to them.

  • Accounts receivable: $Money coming into an organisation$

  • Accounts payable: $Money paid out by the organisation$

• Implementing smart processes has cause to also reduce costs.

Key Performance Indicators

• high-level KPIs (overall performance) and, low-level KPIs (processes).

• Easier monitoring through customizable dashboards.

The Influence and Impact of Digitalization

Brand Differentiation

• Created by using physical characteristic.

• altering the price, story of what the brand is know for, customer experience.

• emotional response.

Brand Values

• Memorable, Timeless, Exclusive, Actionable. Business publish glossaries so others can understand value

• These brand values are incorperated into a marketing content and relationship built with customers and good customer service.

Virtualization/Cloud Services Enabling Scaling and Elastic Computing Solutions

• Virtualization a company with its own hardware to create and use virtual resources, reduces costs, reduces operating costs through security, host machines can share loads.

Types of virtualizations Enabling Scalability Also Benefits

• Server Virtualization; efficiency due to IT Equipment faster Workload distribution, better application operations.

• Network Virtualization: reproduce requirements of virtual network to application.

• Desktop Virtualization: enables organizations to provide software configured for the specific needs of the particular workplace or individual.

Cloud Solutions Enabling Elastic Computing solutions.

• Cloud Services: wide range of services delivered on demand, easy afford access, removes having to use internal infrastructure.

• Connectivity: Connection with employees world wide, prevent loss file from loss of devices or damage.

• Faster Implementation: easy installation.

• Improve Collaboration from workers wherever location.

• Reduction of Data Loss: Better backup facilities.

• Cost savings reducing physical servers and physical data storage that needs to be process.

• Cloud services can also reduce IT budget considerably as harware and software purchases.

  • Cloud services: a wide range of services delivered on demand to businesses and individuals over the internet. They are designed to provide easy and affordable access to applications and resources such as file storage, without the need for internal infrastructure or hardware.

• Elastic computing solutions: provision of variable service levels based on the changing needs of the business.

• Scalability: the ability of a digital system to respond to variable amounts of load (users, requests, connections, etc.) while maintaining good performance in a cost-efficient way.

Digital Innovations

Business Intelligence/Insight

• Using software for identifying problems.

Unique Selling Points

• Core reason of why customers prefer to use one company.

• A Process in a system to ensure the business operates effectively and needs data from process.

• Business process and technical steps that must be followed to product.
  Business model will identify processes and services that will generate profits, expenses in achieving them. Updated constantly.

Digital Manufacturing

• IT System Use for production.

Financial

• Scanning can help with payments can be done manually.

Wider Access

• The business work to be ensure their customers are always happy to stay with them.

Customer Base

• Description for businesses mostly loyal customers such people who purchase from that business.

Range of Products and Services

• The product of service that company provide.

Contextualizing Customer Behaviour

• The business considering the circumstance of each individual.

Digital Personalization

• Communications are written to a particular person.

Platform Interoperability

• Allows computer hardware to communicate with each other.

Open Standards

• Prevents barriers to interoperability and allows competition in the IT market.

Digital Identity

• Is a person information to a business based on e-commerce retailer or banking app. There are no barriers to access data.

Technical Change Management

• Change, reorganizations or operations.
  Change Can Be Caused By Financial, Legal, Economical, Social, Staffed Related and Technological Factors.

• Developmental: $Concern with the Development of Something even with both.$

• Transitional: $The transition from One position or concepts to another.$

• Transformational: $Producing A change of or improvement of a situation.$

Managing and Reinforcing Digital Change

Vision

• (The Future aspiration of the business and what they hope to achieve).

Designing the Digital Change roadmap

• This includes customers and workforce.

Developing the terms and source acquisition

• Teamed are picked base on experience and knowledge. All hardware , software, equipment must be provided.

Launching and monitoring

• Ensure all consideration are in place so organization goal can be achieved.

Planning

Unforeseen / Preventable Factors That can Cause Crisis to Businesses

• Natural Disaster: $(Floods)$

• Crisis: Bad things that happen require all kinds of change by organizations.

• Cyber Attacks.

• Zero Day Vulnerabuilities:$$ Vulnerabilities that have been identified, somebody makes use and benefits from zero day vulnerabilities which is a