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Topic 1.5: Understanding External Influences (PRINCIPLES OF EMPLOYMENT LAW…
Topic 1.5: Understanding External Influences
STAKEHOLDERS
Stakeholder: an individual or a group that has an interest in and is affected by the activities of a business
STAKEHOLDERS
Managers
bonuses and long-term success
Pressure groups
influence business decisions and actions
Employees
good pay and working conditions
Customers
value for money
Local community
local investment and limited pollution
Government
low unemployment and competitive markets
Suppliers
regular orders
Owners (shareholders)
profits and return on investment
IMPACT OF STAKEHOLDERS
Local community complains about traff
STAKEHOLDER CONFLICT
BUSINESS STAKEHOLDERS
Different stakeholders will have different interests and perspectives on the performance of a business
Shareholders
profits, dividends and growth
Employees
wages, job security and good conditions
Customers
fair price, choice and good quality
Managers/directors
Pay, growth and power
Government
Competition and tax revenues
Local community
Jobs and clean environement
Pressure groups
Socially responsible and ethical business behaviour
STAKEHOLDER CONFLICT
Conflicts are likely to occur between stakeholders if they have different interests
Shareholders want more profit paid in dividends
Managers want to invest profits for growth
Employees want higher pay
Customers want lower prices
POSSIBLE POSITIVE EFFECTS ON STAKEHOLDERS
Shareholders receive a return on investment
Employees and managers receive income, rewards, financial security and status
Customers receive high-quality products at reasonable prices with excellent service
Local community may benefit from development and investment in the local area
Government collects income tax and corporation tax
POSSIBLE NEGATIVE EFFECT ON STAKEHOLDERS
Government needs to monitor and regulate unfair, anti-competitive or illegal business activity.
Local community can suffer because of pollution in the local environment
Employees may lose their jobs and income or face job uncertainty
Employees work under poor conditions
Pressure groups protest against unethical business activity and damage the business's reputation
Shareholders lose their investment
TECHNOLOGY AND BUSINESS
TECHNOLOGY THAT INFLUENCES BUSINESS ACTIVITY
E-commerce
Social media
Electronic payment systems
Digital communication
TECHNOLOGY AND CHANGE
New technologies are constantly developing
Creates new opportunities, new markets and new industires
Investment in new technology can be a huge cost but failing to keep up with the latest technology can lead to loss of competitiveness and business failure
Development and adoption of new technology can lead to a competitive advantage for some businesses
HOW TECHNOLOGY INFLUENCE
Costs
Technology = huge investment
long-term, can help a business improve efficiency and reduce costs
Sales
innovating products with the latest technology can increase demand from customers and boost sales
methods used to sell products evolves through e-commerce and digital communication
Marketing mix
price: lower/higher costs of products
promotion: easier and cheaper advertising through social media
product: allow customers to purchase antime and anywhere through e-commerce
PRINCIPLES OF CONSUMER LAW
Governs all aspects of how a business interacts with its customers
The purpose of this legislation is to protect consumers
PRINCIPLES OF CONSUMER LAW
Consumers have the right to return or reject goods
Goods should be delivered and installed safely
Terms of contracts should be fair
Services should be provided with reasonable care
Businesses should disclose full information about products and services
Products sold to customers should be of a good standard and quality
IMPACT OF CONSUMER LAW
Advantages
Compliant businesses are less likely to be fined or sued by customers
Compliant businesses may be considered professional and caring, and may benefit from increased customer loyalty
Improved relationship with stakeholders
Good publicity, if followed
Disadvantages
Businesses must know the law and keep up to date
Laws can restrict businesses from operating as they would wish
Changing products and practices to comply with laws can be costly
Bad publicity can result if businesses do not comply with laws
Consumers can use the law to take legal action against the business
Consumer Rights Act 2015
PRINCIPLES OF EMPLOYMENT LAW
Governs all aspects of how a business interacts with its employees
The purpose of this legislation is to protect employees
PRINCIPLES OF EMPLOYMENT LAW
All employees' pay should be fair and meet minimum wage requirements
Groups of people, such as employees with disabilities, should not be discriminated against
Redundancy procedures should be fair
Disciplinary issues and grievances should be dealt with fairly
Health and safety requirements in the workplace should be met
Recruitment procedures should be fair and prevent discrimination
IMPACT OF EMPLOYMENT LAW
Advantages
A compliant business may be considered a good employer
Fewer employees will be tempted to leave the business, so reducing recruitment costs
Employees may be happier and more motivated, leading to high productivity and better customer service
Disadvantages
Meeting health and safety regulations can be costly for businesses
Paying the national living wage will increase businesses' costs
Failing to comply may lead to unhappy employees, low productivity and legal action
MEETING THE REQUIREMENTS OF THE LAW
Costs: businesses incur aditional costs
Equipment: health and safety equipment is required to keep employees safe
Licences: businesses must meet legal requirements in order to be granted relevant licences
Pay: must meet the national requirements for the living wage
Administration: businesses must use correct processes and record-keeping systems
Training: employees must be trained in health and safety rules and customer service guidelines
Health and Safety at Work Act 1974
Equality Act 2010
National Minimum Wage Regulations 2017
Employment Relations Act 1999
THE ECONOMY AND BUSINESS
The economic climate is the level of demand and spending within the economy.
Many variables contribute to consumer spending and demand
Economic activity is measured by gross domestic product (GDP)
THE LEVEL OF DEMAND IN THE ECONOMY
The level of demand refers to spending that takes place in an economy
Demand can come from consumers, government, business or overseas
Demand rises, risk may be reduced, business sales may benefit
Demand falls, risk may increase, business sales may suffer
UNEMPLOYMENT AND INFLATION
INTEREST RATES
EXCHANGE RATES
EXTERNAL INFLUENCES