Paper 3

• Effects of an ageing population


  • Spend relatively more on holidays and travel, health products and eating out
  • Need more goods and entertainment
  • Governments need to pay more pensions, so taxes may rise
• Effects of a society with a high percentage of young people


  • Have relatively high demand for toys, baby food and children's clothes
  • Face increasing demand over time for products appealing to young adults, then to families
• Effects of changing ethnic mix


  • Demand a wider range of clothing, food and possibly religion-related products
• Effects of age on employment


  • Older workers tend to have experience, be less likely to move jobs or location, and possibly be more reliable and less likely to be absent
  • Younger workers tend to cost less, and are likely to be flexible, willing to move and able to learn new skills, but may need more family/parenting leave
• Effects of ethnic diversity and migration on employment


  • Different ethnic groups may have different expectations regarding facilities at work or working hours
  • Inmigrants may have different skills or be willing to work for lower wages
• Demographic changes can vary considerably between regions
• An ageing population is an issue in many Western countries, while African countries have relatively young populations
• Increasing use of technology can affect all areas of business
• Examples of technological influences in Operations


  1. Product design based on market research information using IT and the internet

  2. Computer-aided design and manufacturing using robotics and 3D printers

  3. Fracking to extract previously unobtainable gas supplies

  4. Genetically modified plants and animals

  5. Enterprise resource planning

  6. Electronic point-of-sale systems to link sales, stock and ordering

  7. Access to online information and data
• Examples of technological influences in Communications


  Mobile computing, home working and video conferencing
• Examples of technological influences in Marketing


  1. Databases to sell to particular identified groups or individuals

  2. Email and social networks to communicate with customers directly

  3. E-commerce - global online sales outlets
• Benefits of using new technology


  • Improved efficiency, less waste, lower costs
  • Improved products and services directly tailored to consumer needs
  • Improved materials, designs, products
• Problems with using new technology


  • Cost of researching new technology
  • Cost of new technology that wears out quickly
  • Investment in the wrong technology is risky and expensive
  • Jobs disappear, retraining and new skills are needed, resistance from employees
  • More pressure on employees
• Greater competition in a market


  • Greater choice for customers
  • Lower prices
  • Greater incentive to be efficient and provide good customer service
  • Greater incentive to innovate
• Suppliers can affect a business


  • Costs because of input prices
  • The quality of materials
  • The ability to deliver on time (due to the arrival or non-arrival of materials)
• Local businesses


  Active in a specific town, area or region within a country, tend to be small- to medium-sized businesses that meet local customer needs
• National businesses


  Operate on a countrywide basis and might have branches in many regions of a country
• Multinational businesses


  Operate in more than one country, head office is located in one country but branches exist in several countries, frequently produce and sell products in several countries, sometimes adjusting their products to meet the specific preferences of different countries
• Multinational businesses


  Produce and trade across national boundaries
• International trade links can be formed


  Between businesses or as a result of governments reaching trading agreements, when both parties believe they can benefit
• Benefits to business of international trade


  • Larger potential market leading to the potential for growth of a business: this way lead to economies of scale
  • Fewer restrictions placed on the import/export of goods to and from other countries
  • Lower import duties agreed by the participating governments
  • The sharing of expertise
• Disadvantages to business of international trade


  • Environmental sustainability challenges
  • Increased competition from businesses in other countries
  • Potential loss of jobs due to cheaper imports
  • Restrictions on the type of goods that can be sold
• Sustainable business


  A business that has a positive impact on the environment in terms of what resources it uses, how efficiently it uses them, and how they perform in relation to environmental standards
• Businesses are likely to be exposed to competition from businesses in other countries. For example, if import duties are reduced, then foreign businesses may be able to sell goods at a cheaper price than previously. This could put pressure on the price that the domestic business can charge, which can potentially reduce the profit margin.
• Meeting the needs of a wider variety of customers can mean a greater variety of products and services, causing a lack of economies of scale.
• Some countries have lower wage rates than the home country, which is likely to influence the price charged for foreign goods, which might be significantly cheaper than local goods. This could lead to a loss of jobs in some sectors.
• Not all goods are acceptable for sale in all countries. For example, alcohol. Therefore, businesses must be fully aware of any restrictions on the type of goods that can be exported.
• Role of technology in international trade


  • Businesses can communicate more easily with other businesses around the world
  • Businesses can use the internet to source suppliers or target customers globally
  • Products can move more easily and quickly around the world
  • It is easier to track and manage what is happening, making businesses more likely to be willing to operate away from the home base
• Why a government might welcome a multinational to its country


  • Investment into the country in terms of technology and skills development
  • Increased employment if the multinational recruits locally
  • The infrastructure might be improved to accommodate the multinational business
  • An increase in the variety and possible quality of goods offered for sale in the country
  • The prices of goods produced or sold by the multinational may be lower
  • If the multinational is profitable, the host country can benefit from an increase in tax revenue paid to the government; tax paid can include income tax from employees as well as tax on profits
• Why a government might not welcome a multinational to its country


  • The multinational business might prevent infant industries in the host country from becoming established
  • Multinationals often bring their managerial staff who then, so the jobs offered in the local market might be lower-skilled ones. This can dilute the benefits to the host country in terms of skills development
  • A multinational might have a larger turnover than the GDP of the host country. This can produce an unequal balance of power in favour of the multinational that might cause a government to allow activities that would otherwise not be acceptable in order to prevent the multinational withdrawing from the country
• How might a country try to attract a multinational?
• Sustainability


  Businesses and business decisions that meet current needs without compromising the ability of future generations to meet their needs
• Sustainable businesses


  • Focus on long-term strategies for minimising the impact on the environment and on society
  • Consider the resources they are using
  • Consider how efficiently resources are used
  • Consider how they produce their products and the impact of their activities on the environment
• Sustainable business practices


  Affect business decisions, such as which suppliers are used, marketing decisions, financial decisions, and human resource decisions
• More businesses are changing their policies and practice to reflect concerns and tighter regulations regarding the physical environment
• How environmental influence affects business behaviour


  • More explicit focus on corporate social responsibility in relation to pollution, waste disposal and recycling
  • Inclusion of the business's environmental policy in its marketing material
  • Changing to obey new environmental laws, regulations and taxes
  • Responding to environmental campaigners and pressure groups
  • Developing more energy-efficient, sustainable solutions to raw material supplies, operations planning and product design
• Environmental audit


  When a business measures the impact of all of its activities on the environment, and then takes actions to reduce its impact and measure the effectiveness of these actions in the next audit
• Benefits of environmental audits


  • Help with strategic planning
  • Show external stakeholders what the business is doing and how it is improving
  • Attract and retain staff
  • Encourage investors
  • Lead to greater cooperation from the government and suppliers who want to work with an environmentally responsible business