UNIT 1. Chapter 6. External influences on business acitivity Flashcards Preview

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Flashcards in UNIT 1. Chapter 6. External influences on business acitivity Deck (36)
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4 main categories of legal constraints on business activity?

• Employment practices
• Consumer rights
• Business competition
• Location of businesses


What are the objectives of law of employment practices? (2)

• Prevent exploitation of employees
• Prevent loss of industrial output and national incomes due to excessive trade union actions


What do legal constraints of employment practices cover? (4)

• Recruitment, employment contracts and termination of employment
• Health and safety at work
• Minimum wages
• Trade union rights and responsibilities


Recruitment, employment contracts and termination of employment.
How?(2) Examples of unfair dismissal? (3)

• A written contracts must be signed so that employer is aware of pay, working conditions, disciplinary procedures, etc.
• There are legal constraints over termination of employment.
e.g. of unfair dismissal:
+ Pregnancy
+ Refusal to work on a holiday
+ being a member of a trade union


What do health and safety laws require business to do? Why? (4) (1)

• Equip factories and offices with safety equipment
• Provide adequate washing and toilet facilities
• Provide protection from dangerous machinery and materials
• Give adequate breaks and maintain certain workplace temperatures

These aim to protect workers from discomfort and physical injury at work. Providing a healthy and safe environment in which to work is now a legal requirement in most countries.


Positive impact of legal constraints on employment, health and safety

• Workers feeling more secure and highly valued
• Safe working environment - reduce risks of accidents
• Avoidance of court cases and heavy fines
• Business who go beyond legal standards attract better employees and good publicity


Negative impact of legal constraints on employment, health and safety

Adds to business costs
• Supervisory costs
• Higher wages
• Costs of paid leave for sickness, or holidays
• Employment of staff to give reasonable working hours
• Protective clothing and equipment


Why is there a growing demand for consumer rights? (5)

• An individual consumer has no power against a large firm
• Products are becoming more scientific and technological for consumers to understand - don’t know whether meets quality standards
• Selling techniques are more complicated for consumers - risk of having to pay large debt for years
• Increased globalisation - increase in imported goods. Consumers need protection from products that adopt different safety standards
• The need for lower costs reduces quality of products/services


Benefits and drawbacks of consumer protection laws on businesses?

• Good publicity
• Aid in marketing and sales - possibly leading to higher profits
• Higher costs to meet protection legislation
• Redesigning products
• Redesigning advertisement
• Improving quality control
• Treating consumers fairly
• Change in strategy and culture of the organisation


The law and business competition.
Benefits for consumers when there is free and fair competition? (4)
Laws to encourage and promote competition between firms? (2)

Benefits for consumers:
• Wider choice
• Keeps prices low
• Better quality
• Strengthens the domestic economy
The laws:
• Investigate and control monopolies and make it possible to prevent mergers
• Limit or outlaw uncompetitive practices between firms


Def. Monopoly

The business is the only supplier of a product in the market. (Very rare)


How do monopolies develop? (4)

• By merger or takeover of other firms in the industry
• Invention of new products or processes that are then legally patented (originator has monopoly in production)
• Legal protection - government choses to protect an industry by having only 1 business in it.
• Due to 'barriers of entry' such as advanced technology knowledge, huge costs for facilities, etc.


Examples of uncompetitive/ restrictive practices done by businesses. (3)

• Refusal to supply a retailer if they do not agree to charge the prices determined by the manufacturer
• Full line forcing - making retailers restock the whole range of products and not just popular ones.
• Predatory pricing - charging very low prices to eliminate new competitors.


Def. Information technology

The use of electronic technology to gather, store, process and communicate information.


Def. Computer aided design (CAD)

Using computer and IT when designing products


Def. Computer aided manufacturing (CAM)

The use of computer and computer controlled machinery to speed up the production process and make it more flexible.


Potential limitations of applying technology to a business (5)

• Costs: Capital costs, labour training costs, redundancy costs.
• Labour relations: reduced job security and motivation levels
• Reliability: Teething problems with new systems, or breakdowns in the system can excessively affect efficiency
• Data protection: Business must keep up to date with legal constraints of rights of holding data on staff and consumers.
• Management: lack of management skill for technological processes.


Management information system benefits and drawbacks and what it is. (1 3 2)

Computers providing data to managers.
• Managers can obtain data more quickly and frequently. Aids overall control.
• Computers can be used to process the data rapidly, making it it easier for manager to interpret.
• Managers can easily communicate with the other divisions.
• 'Information overload' slowing down the process of decision making.
• Harder to apply work in teams or middle managers -> less motivation.


How to introduce technology into the business effectively? (5)

• Analyse its potential use
• Involve managers and other staff for assessment of new ideas
• Evaluate the different systems and programs available
• Plan the introduction e.g. further training required
• Monitor the effectiveness of the system


Word processing - applications and benefits (1 3)

• All departments for secretarial tasks
• Speed
• Accuracy
• Easily amended


Publishing programs - applications and benefits (1 3)

• Marketing department for promotional material
• Reduce the need of professional publishing firms - lower costs
• Professional appearance given to the company
• Easily amended


Databases - applications and benefits (1 2)

• All department for storing and retrieving large quantities of data
• Saves costs from reducing paper work
• Saves time from easy retrieval of data


Spreadsheet programs - application and benefits (1 2)

• Finance department
• Flexibility and speed - easily amended and impact on the figures are demonstrated immediately.
• Can portray 'what if' scenarios.


CAD - applications and benefits (1 3)

• Design and architectural firms
• Saves on expensive designer salaries
• More flexibility of design for consumers
• Can be linked to other programs to show costs of the product


CAM - application and benefits

• Operations management in manufacturing businesses
• Labour costs are reduced
• Productivity is increased
• Lower variable/ unit costs


Internet - application and benefits (2 3)

• Internal and External Communication
• Research and development department
• Access to a much larger potential market
• B2B communication - obtain cheaper supplies
• Communication is quicker and cheaper


Social and demographic influences on business activity (4)

• An ageing population with reduced birth rates and longer life expectancy -> changes patterns of demand of products and age structure of workforce would change.
•Changing role of women -> more women are seeking employment
• Better provision of education -> more skilled workforce
• Globalisation causes job insecurity -> more employees accepting temporary or part time employment.


Main features of changing patterns in most business (5)

• Labour is being replaced by capital -> employment falls
• Change in demand of employees to more hi-tech industries
• Increase in women in employment
• Increase in part time employment
• More multicultural


Def. Corporate social responsibility

Objective of the businesses that considers the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees, communities, and the environment.


Arguments for adopting environmentally friendly business strategies (4)

• Marketing and promotional advantage
• Less chance of breaking laws designed to protect the environment -> avoiding expensive court fines
• Attracts highly skilled employees
• Possible financial benefits e.g. solar panels may be a long term cheaper alternative oil and gas (that is becoming more expensive).