1.5: understanding external influences on a business

• stakeholders


  all the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address
• stakeholder examples


  - owners and shareholders

  - managers

  - employees

  - customers

  - suppliers

  - local community

  - pressure groups

  - the government
• owners and shareholders


  in a public limited company (PLC), these are people who influence the business' aims, objectives and strategic activities. In a limited company (Ltd), these are people who make business decisions but need to agree them with the other shareholders
• managers


  those individuals in organizations who make decisions about the use of resources and who are concerned with planning, organizing, staffing, directing, and controlling the organization's activities to reach its objectives
• employees


  the people who make the products and provide the services that allow a firm to exist
• customers


  people who buy goods and services
• suppliers


  individuals and organizations that provide an organization with the input resources it needs to produce goods and services
• local communities


  people, organisations and businesses that are located near the business
• pressure groups


  a type of special interest group which consist of individuals with a common concern who seek to place demands on organisations to act in a particular way or to influence change in their behaviour
• government


  the institution through which a society makes and enforces its public policies
• technology in business


  business models and strategies rapidly change because of technology - it can create new opportunities, but many companies can fall because of competition
• how can businesses use social media?

  - sales and marketing

  - interacting with customers

  - communicating with stakeholders
• how can businesses use social media for sales and marketing?

  social media is a relatively cheap way to advertise and can be used by big or small businesses
• how can businesses use social media for interacting with customers?

  businesses can see what customers interact with on social media, which can reveal their interests
• how can businesses use social media for communicating with stakeholders?


  social media can be used to connect with other businesses or anyone else related to the business for free
• e-commerce


  electronic business or exchange conducted over the internet
• e-commerce advantages


  - attracts global customers

  - sell at any time

  - receive payments immediately

  - reduced overhead costs

  - allows easier start up for smaller businesses
• e-commerce disadvantages


  - more global competitors

  - employees need digital skills

  - need to maintain/update technologies, such as security, which may increase costs

  - environmental damage from shipping

  - makes it easier for large firms to capture a large market share, making it harder for smaller businesses to own a portion
• online payments


  refers to money that is exchanged electronically
• online payments advantages


  - easy/secure way of payment

  - many of these payment systems offer credit

  - customers can stay logged in their bank accounts for a long time, quickening the checkout process
• online payments disadvantages


  - security risk if transactions are hacked

  - not all businesses allow online payments

  - dependant on internet connection/speed

  - some payment systems have purchase limits

  - payments are not anonymous: providers can see transactions
• digital communication


  data in a form that can be transmitted and received electronically
• digital communication advantages


  - cheap way of interacting with customers

  - easy way of allowing businesses to interact
• digital communication disadvantages


  - the lack of face-to-face contact

  - potential risk of fake/troll content being made about the business
• legislation


  a law or set of laws passed by acts of parliament; breaking these laws may result in a fine or even a prison sentence
• consumer law


  laws designed to ensure that businesses make products that are safe and of good quality, and that they deal with customers honestly and fairly
• when does the consumer not have legal rights?

  if the product was damaged by accident/misuse, existing faults were known to them to if they changed their mind
• employment law


  is the division of law that governs the relationship between employers and employees.
• what does the employment law affect?

  - recruitment

  - pay

  - discrimination

  - health and safety
• recruitment in the employment law

  employers must provide equal access to people applying for jobs and the business must not discriminate in any way when advertising a position
• pay in the employment law

  under the National Minimum Wage Act (1998), all businesses must pay their staff a minimum hourly rate and the Equality Act (2010) makes it illegal for a business to pay people doing the same work different wages
• discrimination in the employment law

  the Equality Act (2010) makes it illegal to hire or promote applicants based on criteria that are not job relevant
• health and safety in the employment law

  to ensure workers are safe at work, employers should provide staff training, safety equipment/clothes, drinking water, toilets/suitable wash facilities and first aid equipment; employees should only be allowed to work for a certain amount of hours per week and are entitled to a certain amount of holidays per year
• Equality Act (2010)


  a law introduced to prevent discrimination on a number of grounds known as protected characteristics - these are age, disability, gender, martial status, pregnancy/maternity, sexual orientation, race and religion
• regulating the employment law advantages

  - less of a chance of being sued/fine

  - customer loyalty

  - improved relationships with stakeholders

  - good brand image
• regulating the employment law disadvantages

  - time consuming to keep up with the law

  - may restrict business activities

  - increased costs to fit within the laws

  - bad brand image if failure to comply
• economy


  the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services
• GDP


  Gross Domestic Product - the total market value of all final goods and services produced annually in an economy
• economic climate


  the state of key factors within a country such as the level of goods and services produced and the number of jobs available
• what might a business do when the economic climate is good?

  a business may be more likely to hire more people, expand and take more risks