External influences - social

Question 1

What are some social external influences on businesses?

Answer 1

• CSR (Corporate social responsibility)
• Income distribution
• Demographics
• Culture
• Lifestyle changes
• Ethical awareness
• Consumer trends
• Health and welfare

Question 2

How does CSR impact businesses?

Answer 2

• How the firm recruits workers
• Could lead to a loss in market share
• Reduces the chance of profit maximisation
• Could help businesses improve longevity and with finding a USP
• May cause disagreements between shareholders
• Competitive advantages

Question 3

What is CSR (Corporate social responsibility)

Answer 3

The integration of social and environmental issues into an organisations operations on a voluntary basis.

Question 4

How does income distribution impact businesses?

Answer 4

• Helps businesses pick out desired regions that have great profit potential
• A business can specialise advertising in the area to have a greater impact
• Can impact the demand and therefore the price of a product. Can make a product elastic or inelastic

Question 5

How do demographics impact businesses?

Answer 5

• Can specialise advertising and promotion
• Understand trends
• Market research can help them find a businesses most profitable characteristics

Question 6

How does the culture impact businesses?

Answer 6

• decision-making
• how employees are motivated
• the recruitment processes
• the working environment
• communication in the business
• can cause rapid changes in demands -
• forces businesses to adapt to change e.g. online

Question 7

How do lifestyle changes impact businesses?

Answer 7

• Lead to a rise in similar goods
• Increased online retailing and omni-channelling goods to customers
• requires innovation as markets tend to grow
• increasing demand for reliable 24/7 service
• Greater transparency during production –> CSR

Question 8

How does ethical awareness impact businesses?

Answer 8

• may deter certain customers that want ethical businesses
• Therefore, the business has to do appropriate market research to understand what market they want to target (ethical or low costs)
• Ethical stances usually lead to sustainability and increased brand awareness at a slower growth rate
• Attract workers –> high retention –> less redundancies costs
• Attracts investors –> higher share price
• Better PR –> less publicity risk
• increased likelihood of grants and loans

Question 9

How do consumer trends impact businesses?

Answer 9

• Greater competition leads to improved innovation and higher R+D costs
• Forced businesses to have flexible production
• Forces businesses to constantly adapt their products and continuously do market research

Question 10

How does health and welfare impact businesses?

Answer 10

• Tighter regulation on laws and employee safety
• evaluation of production methods making sure they are ethical based of cultural and social standards
• Treating staff like an asset not a cost.