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Influences on Business (Legalisation (Businesses have to pay staff a…
Influences on Business
Legalisation
Businesses have to pay staff a minimum amount
There are laws about the minimum amount employers have to pay their staff.
Workers aged 24 and under but of school leaving aged 24 and under but of school leaving age have to be paid the National Minimum Wage. Workers aged 25 and over have to be paid the national Living Wage, which is slightly more than the National minimum Wage.
The National Minimum Wage and National Living Wage mean that companies can't cut their costs by paying workers less than the legal minimum. If they do, they're breaking the law.
If a company doesn't pay its workers enough, it could be given large fines. It could also get bad publicity, and consumers might stop using the business.
Companies sometimes argue hat the National Minimum wage and National Living Wage increases costs. These increased costs can lead to increased prices, meaning a possible fall in sales and a reduced income for the firm.
The National Minimum Wage and National Living Wage can have benefits for companies though, they can lead to better motivated staff and increased productivity.
Businesses cannot discriminate
Recruitment procedures must not discriminate against anyone because of their race, religion, gender, age, sexuality or disabilities. This is covered by the Equality Act 2010/.
Apart from recruitment, the other main equal opportunities issue covered by the Equality Act 2010 is pay, all employees must be paid the same if they do the same job for the same employer.
If a company is found to have discriminated against someone, they'll have to pay compensation.
If any employee in a company is accused of discrimination, the company could also be held responsible. So companies need to take reasonable steps to prevent discrimination within the workplace, such as staff training and writing company policies about equal rights.
The workplace needs to be safe
Health and safety legislation helps to make sure that risks to people at work are properly controlled.
The Health and Safety at Work Act of 1974 requires all employers and their employees to take responsibility for health and safety.
Firms need to carry out risk assessments to identify possible dangers.
They need to take reasonable steps to reduce the risks. For example, accident books need to be kept, and first-aiders trained. All staff must receive health and safety training. Health and safety equipment must also be provided, eg. hard hats on building sites.
A safe working environment should mean fewer accidents, and so fewer injures. And hopefully it means a more productive workforce too, since people should need less time off work to recover.
It could also encourage people to apply to work for a company if they know they're safe to work for.
Following health and safety laws can be expensive, eg. paying for all staff to go on safety courses.
But businesses that don't follow health and safety laws can be prosecuted, fined and even closed down.
They may also have to pay compensation to anyone who's injured, and could get bad publicity.
Environmental Influences
Businesses can reduce their impact on the environment
All businesses can have an impact on the environment. They produce waste, lots of which ends up in landfills. The can also cause traffic congestion in the area where they're based if staff, customers and delivery lorries are driving there. Factories, cars and lorries can also cause air, noise and water pollution.
Companies can reduce the amount of packaging on their products. They can also recycle things such as delivery boxes, or unwanted goods. These things mean that less waste goes to landfill.
Companies can dispose of hazardous waste carefully so that it doesn't pollute land or water.
Companies can encourage car share schemes so that they reduce traffic caused by their staff driving to work. They can also support cycle to work schemes, where they help employees to buy bikes.
To help reduce air pollution, a business can buy more efficient machinery that is less polluting.
Noise pollution can be a big problem for some firms, such as those in the construction industry. To reduce noise pollution, they can buy quieter machinery, or put up sound barriers or insulation.
Businesses can aim to be more sustainable
Being sustainable means working in a way that doesn't damage the Earth for future generations.
People are worried that the combined impact of global businesses is damaging the Earth at the moment:
Resource Depletion - Many resources used by businesses are non-renewable. If these resources run out, there's no way we can replace them.
Global Warming - Many industrious release carbon dioxide into the atmosphere. Carbon dioxide is also released when power stations generate electricity. the rise of carbon dioxide in the atmosphere is contributing to the Earth's climate becoming warmer. The consequences of this could include icecaps melting, sea levels rising, more flooding, etc. which could have knock-on effects for plant and animal life.
Many firms are now working hard to make sure their operations are more sustainable. For example, they're using more renewable energy resources, vehicles and machinery that produce less carbon dioxide and electrical goods that are energy efficient.
There are Pros and Cons to being environmentally friendly
As people become more aware of environmental issues, consumers are changing their buying decisions, people are now buying more, "environmentally friendly" products.
Taking environmental issues seriously can give firms a competitive advantage, a "green image" can attract new customers and increase sales.
However, buying new equipment and developing new processes in order to be more sustainable can be expensive. Firms have to weigh up the benefits against the negative effect it could have on their profits.
Ethical Considerations
Ethical issues have become important for businesses
Ethics are the moral principles of right and wrong.
Many firms have their own ethical policies. This means they've developed ways of working that stakeholders think are fair and honest.
The ways that UK firms treat employees and suppliers in other countries raises many ethical issues.
In some countries, it's not illegal for people to work very long hours for very low pay. Some firms set up factories in these countries to reduce their labour costs, many people think this is unethical if it exploits workers from foreign countries.
Businesses can write codes of conduct for any factories they have overseas. This helps to ensure that the workers are treated ethically. For example, they can put limits on the number of hours somebody can work each week so they don't get too tired. They could carry out checks to make sure the code is being followed.
Firms that buy raw materials from developing countries can choose to buy from Fair Trade sources, this means people in developing countries who produce the goods are paid a fair price so they can earn decent wages.
Businesses need to treat their employees in the UK ethically too. Eg. businesses should reward staff fairly, keep personal details about staff private and provide a comfortable working environment.
Treating people well isn't the only ethical issue for a business. For example, when promoting products, firms have to follow codes of practice, they can't be dishonest or slate other brands in adverts. Some products can't be advertised at all, eg. cigarette adverts are banned on health grounds.
Firms are also under pressure to carry out product development in an ethical way, this means using non-toxic materials, paying close attention to safety, and not using animal testing.
Acting ethically can have benefits and drawbacks
Ethical policies can be costly for a firm. For example, by treating workers fairly and making sure they are all aid a fair wage, a business is likely to have a higher labour costs than if they didn't work ethically.
Also, if a firm is committed to using ethically sourced materials they may find it more difficult t find suppliers and have to pay a higher price for their materials.
These increased costs mean that a firm doesn't make as much profit on each item that it sells. It could put its prices up so that it makes more profit per item, but higher prices might lead to lower sales.
However, despite potentially making less profit, many firms are still keen to work ethically.
Firms might change their marketing to emphasise the fact that they have strong ethical policies. For example, the CO-OP advertises all its chocolate as Fair Trade produced. By advertising its ethical policies, a business might gain customers and increase its profits, there are plenty of people who think that ethical practices are more important than price.
Acting ethically can have a positive effect on other stakeholders as well. For example, some shareholders will be more likely to invest in a firm if it has shown that it behaves ethically. Treating staff ethically can mean workers are more motivated, which should make the firm more productive.
Technology
Technology has changed the way businesses operate
Developments in information and communications technology have improved how businesses work. They often make processes faster, eg. because computers can do jobs quickly than before or because people can communicate with each other more easily. They can also lead to reduced costs in the long term, eg. because fewer man-hours are needed to carry out tasks.
However, adapting to new technology can be very expensive. For example, a business may have to buy equipment or train staff to use new computer systems. They may also need to hire staff with the skills to use the new technology.
E-Commerce means buying and selling online
E-Commerce is using the internet to buy or sell products.
Many firms now have websites where customers can buy their products.
E-Commerce means that firms can reach wider markets compared to just having traditional shops, eg. a small business in Dorset could end up selling products to someone in New Zealand.
Firms have had to adapt to e-commerce as it's become more important. for example, they've had to build websites, employ IT specialists and develop systems to distribute products to online customers.
Firms can communicate digitally with stakeholders ss
Social Media: Companies are using social media more and more to communicate, eg. to advertise their products to customers, to provide customer service or to promote local events to community.
Websites: Websites are a great way to communicate with customers, eg. by posting blogs or providing customer service. Websites can also be used to publish reports to shareholders.
Email: Email is a very quick way of communicating with stakeholders, either on a personal level or on a bigger scale.
Mobile Apps: These are programs used on mobile devices, such as smartphones or tablets. They are usually used by firms to communicate with customers, for example by giving information about where stores are located, the products the company sells and any special offers.
Live Chats: Live chats are an instant messaging service. They have many uses, eg. employees can use them to talk to each other from different locations, or customers can use them to speak with a customer services advisor via the internet.
Video Calls: Employees who work for the same business in differnt locations may use video calling to hold meetings, rather than travelling to meet up. This can also be a good way for businesses to communicate with important shareholders, who may all live in different places.
Globalisation
Globalisation means the world is more interconnected
Globalisation is the process by which businesses and countries around the world become more connected. It has resulted in single businesses operating in lots of countries. They can be based anywhere, and can buy from and sell to any country.
Globalisation means there's a much larger market that UK businesses can trade with, they're trading with people all over the world, not just people in teir own town or country.
However, havng a gobal market means there can be lots more competiton. So UK businesses need to be able to stand out from the competiton.
Many UK companies invest lots of money in design. This means they can compete in a global market by designing new products or processes.
The UK has a reputation for producing higher quality goods and services than many other countries. By maintaining quality standards and taking measures to keep prices lower than overseas competitiors, UK companies can compete strongly in a global market.
Globalisation can be a good thing for UK businesses
Having a larger market to sell to can lead to increased sales and higher profits. Having a larger market to buy from means firms may be able to buy supplies more cheaply, wich reduces costs and can lead to higher profits.
Globalisation means that it's easieer for UK businesses to set up factories in other countries. This can reduce their transport costs if it means they're producing goods closer to certain parts of their market or closer to where raw materials are produced. It can also mean companies don't have to pay import taxes in the countries wher they have factories.
Some companies will purposely set up factories in countries where labour is cheaper, which helps to keep their costs down and can increase their profits.
Globalisation has drawbacks for UK businesses
Higher wages in the UK means some UK industries can't compete with firms from other countries. EG. steel from China is much cheaper than from the UK, partly because the average wage in China is lower than in the UK. So some UK industries such as steel manufacture have suffered from globvalisation.
Other countries have differnt currencies to the UK. So if a business is buying or selling products in other countries, its profits are likely to be affected by changes in the exchange rate.
UK businesses that set up factories abroad to benefit frm cheaper labour costs may get bad publicity, if they're seen to be exploiting or endangering workers in these countries.