1.5 Understanding External Influences on Business Flashcards
All 29 cards in this deck
What is a stakeholder?
Any individual or group with an interest in, or affected by, the activities of a business.
Name the main stakeholder groups of a business.
Shareholders (owners), employees, customers, managers, suppliers, the local community, pressure groups and the government.
How can a pressure group impact a business's activities?
e.g. a group campaigning about a factory's pollution
It creates negative media coverage, pressuring the business to change — the factory may reduce its environmental impact to protect its brand.
Give one possible conflict between shareholders and employees.
Shareholders want higher profits so may want wages kept low, while employees want higher pay.
True or false? The local community is a stakeholder of a business even if it does not buy anything from it.
True. It is affected by things such as jobs created, traffic, noise and pollution.
What is e-commerce?
Buying and selling goods and services online.
e.g. a shop selling through its own website
How do businesses use social media?
To promote products and interact with customers — many create social media teams to manage negative comments.
What is digital communication in business?
Communicating with stakeholders electronically, e.g. email, instant messaging and video conferencing.
Give two examples of payment systems a business can use.
Contactless card payments and mobile/digital wallet apps (online card payment is another).
Give two ways technology can reduce a business's costs.
Using electronic documents instead of printed ones, and remote working/video conferencing cutting travel costs.
How can e-commerce increase a business's sales?
It allows selling 24 hours a day to customers anywhere, widening the market beyond the local area.
True or false? Using e-commerce always reduces a small business's costs.
False. Website design, maintenance and delivery costs can increase costs.
What three things does the Consumer Rights Act (2015) require goods and digital content to be?
Of satisfactory quality, fit for purpose and as described.
Name the four areas covered by employment law.
Recruitment, pay, discrimination, and health and safety.
True or false? Product quality is an area covered by employment law.
False. Product quality is a principle of consumer law.
Give one consequence for a small business of not meeting its legal obligations.
It could be sued and face financial consequences such as a fine, which also gives it a negative image.
Give one advantage to a small business of meeting its legal obligations towards employees.
Employees feel the business takes good care of them, so are more motivated, which can increase productivity.
Give two costs to a small business of complying with legislation.
Buying safety equipment and training staff, and higher wage costs to meet the minimum wage.
What is inflation?
A general rise in the average price level of goods and services over time.
True or false? A decrease in interest rates means customers will borrow more money.
True. Borrowing becomes cheaper, so customers borrow and spend more.
Give one effect on a small business of an increase in unemployment.
Customers may lose their jobs, so have less disposable income, leading to a fall in revenue.
What is the likely effect on a business of a rise in the level of consumer income?
Consumers have more disposable income, so spend more, especially on luxuries, raising the business's revenue.
How does a reduction in government taxation on profits affect a business?
It keeps more retained profit, which it can invest in the business or use to lower prices.
What happens to imports and exports when the value of the pound falls?
Imports become more expensive for UK businesses; exports become cheaper for foreign customers.
What is an external influence on a business?
A factor outside the business's control that affects it, e.g. technology, legislation and the economy.
What are the steps to use data in a table to draw a conclusion about a business?
e.g. a table shows UK unemployment rising from 4% to 7%
- Read the title and units, and identify the trend: unemployment has risen.
- State the size of the change: a rise of 3 percentage points.
- Link it to the business: fewer customers with income to spend, so revenue is likely to fall.
Give one way a small business could respond to competitors starting to sell online.
Set up its own e-commerce website and use social media to promote it.
Give one way a business could respond to falling consumer incomes.
Cut costs and lower prices, or offer a budget range and special offers to keep customers.
What are the steps to recommend and justify a business response to an economic change?
e.g. interest rates rise
- State the response: delay expansion and borrow less.
- Explain the benefit: loan repayments and costs stay manageable.
- Give a drawback or what it depends on: growth is slower; it depends on how big the rise is.