3.2 Influences on business

The importance of external influences on business and how businesses change in response to these influences.

Students need to be aware of the impact influences on business have on the four functional areas of business:
  • business operations
  • human resources
  • marketing
  • finance.

3.2.1 Technology

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  • E-commerce
  • Digital communication

Students should understand the impact of the changing use of ICT and how it influences business activity.

E-commerce to access wider markets.

Digital communication changing the way businesses communicate with stakeholders. Students are expected to know relevant examples of digital technology/communication.

3.2.2 Ethical and environmental considerations

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Ethical considerations

Students should be able to identify and analyse where there may be a possible trade off between ethics and profit.

Ethical behaviour requires businesses to act in ways that stakeholders consider to be both fair and honest.

Students are expected to know relevant examples of ways in which a business can behave ethically and the benefits and drawbacks of ethical behaviour.

Environmental considerations:

  • impact on traffic congestion
  • recycling
  • disposing of waste
  • noise and air pollution.

Students should be able to demonstrate knowledge and understanding of how business and consumers accept greater environmental responsibility in their decision making and the costs and benefits of businesses behaving this way.

Sustainability:

  • global warming
  • using scarce resources.

Students should be able to identify and analyse where there may be a possible trade-off between sustainability and profit.

3.2.3 The economic climate on businesses

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  • Interest rates:
    • how fluctuating interest rates can affect businesses that rely on overdrafts and loans for finance
    • how fluctuating interest rates can affect consumer and business spending.
  • Level of employment
  • Consumer spending

Students should be able to demonstrate and understand how businesses might be affected by changes in the rate of interest.

Students should be able to identify how and why businesses might be affected by changes in levels of employment.

Students should be able to discuss how demand for products and services may change as incomes fluctuate.

Economic theory relating to how/why interest rates change is not required.

3.2.4 Globalisation

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How UK businesses compete internationally, offering:

  • better designs
  • higher quality products at lower prices.

Students should be able to demonstrate knowledge and understanding of globalisation and the benefits and drawbacks that it offers UK businesses.

Exchange rates

Students should understand the impact of exchange rates on the profit and sales of those businesses that import and/or export.

They will not be asked to calculate exchange rate conversions.

3.2.5 Legislation

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  • Employment law
  • Health and Safety law
  • Consumer law

Students should be able to assess the impact of legislation on businesses, for example cost, training needs, recruitment and the consequences of failure to follow legislation for the business.

Students should be aware of the benefits for providing a safe working environment.

Employment law including:

  • national minimum wage/living wage
  • the Equality Act (2010).

Health and safety law including: the Health and Safety at Work Act (1974).

Consumer law including trade descriptions.

Only brief knowledge of each law is needed. More emphasis should be placed on the effects of the legislation on businesses.

3.2.6 Competitive environment

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  • Impact on businesses of operating in competitive markets
  • Uncertainty and risks businesses face

Students should be able to:

  • understand the meaning of a market and competition
  • analyse potential impacts of competition on businesses and identify situations when businesses face minimal or no competition
  • understand the risks businesses face and the reasons why all businesses face uncertainty
  • understand the reason why entrepreneurs embark on running businesses and the activities businesses can undertake to minimise risks.